Strategic Thinking: Deloitte Adds Monitor to the Mix

Canning says Monitor is equal in revenue to Deloitte's current strategy business in the U.S. (Deloitte doesn't report the revenue of specific practices or geographies but its overall consulting revenue worldwide was nearly $10 billion in 2012. The U.S. strategy business would just be a fraction of that amount.) "It doubles the size of our U.S. strategy practice, and it gives us the opportunity to play at a much larger scale in the marketplace," Canning says. "I think it'll be exciting to see what we can build in the next several years."

From Monitor's perspective, joining forces with Deloitte will allow the firm's consultants to stay with their clients from strategy all the way through execution, something the firm has never been able to do before, says Bansi Nagji, the former President of Monitor and now a Principal of Deloitte Consulting, co-leader of the U.S. Strategy Service Line and co-chair of the firm's Global Strategy Board.

"Now we can stay on that journey all the way with our clients when we've always had to kind of walk away [after the initial strategy work]," he says. "The ability to stay through until execution will be hugely motivating to our people."

But will that be enough to keep the Monitor people onboard as it joins Deloitte? Nagji says Monitor has had "very high levels of enthusiasm and surprisingly high involvement levels across the board.

"What's important to remember is that they are joining a strategy practice," he says. "From the Monitor perspective, we've had a few bumpy years, and I think everyone is excited to grow again. We think that's possible on this bigger platform."

The Backstory
Monitor was launched in 1983 by six Harvard Business School graduates, including Michael Porter. The firm fell on hard times with the economic collapse at the end of 2008. For a firm that cut its teeth on high-level strategy work, it was tough sledding. "Our product suite is really oriented towards growth and innovation and it was a tough market to be selling those," he says. "So, we weren't seeing the type of growth we needed to be able to continue to develop our people and provide opportunities for them."

Then in 2011, it came to light that Monitor had worked from 2006 to 2008 to help improve the image of Libyan dictator Muammar Khadafy. The firm took a huge PR hit and apologized for working with Khadafy, but the damage was done. In November of the following year, Monitor filed for bankruptcy.

"There's no secret in the public domain that we've had some struggles the last couple of years," Nagji says. "That led us to the conclusion that we were in a very tough strategic situation and the chance to combine with Deloitte was an excellent opportunity all around."

In November 2011, the two sides got together for the first of several exploratory conversations. In retrospect, both Canning and Nagji admit that they were a bit skeptical initially. After all, Monitor is a fiercely independent, pure play strategy firm with academic origins, while Deloitte is one of the Big 4 accounting firms.

But Deloitte has spent a lot of time developing a strategy and operation practice, particularly in the U.S. In addition, the two firms were more of a fit from a cultural standpoint than either had initially thought. "We have a very similar mentality of collegial and collaborative work with our clients," Canning says. "And the people and culture they have at Monitor is very similar to the types of people and the culture we have at Deloitte. So, that alleviated a lot of our concerns."

From Monitor's perspective, Deloitte made it very clear that it was absolutely committed to building out a strategy practice, Nagji says. "We've been approached by many other big firms before, including some of the Big 4, and it was always clear to us they weren't committed to strategy. Deloitte made that clear right away. And it was very clear from the start that they were committed to respecting our global model and respecting the Monitor brand, which was very important to us."

The Monitor Deloitte Brand
Protecting the integrity of the Monitor brand was particulary important for an independent firm that has stuck together through such hard times, Nagji says. "It was emotionally important for our people to see that, and it shows that what we've been doing in the marketplace has value, and it's also an important statement by Deloitte about how they see us in their world," he says. "The evaporation of the Monitor brand within Deloitte could easily have been seen as a sign of things to come."

Meanwhile, Canning says that the Monitor brand and its stellar reputation, particularly in the global strategy space has, "tremendous value and we want to be sure to take advantage of that."

The new Monitor Deloitte brand will be the name of the strategy service line where Monitor has an established presence. Where it doesn't but Deloitte does, such as Australia, "we're going to work to bring the Monitor capabilities into the practice, and then we'll start using the Monitor Deloitte brand," Canning says. "It allows us to bring distinction to our strategy service line."