KPMG's Transformation Imperative

The second is KPMG is bringing real assets to the table, such as tools and insights. I think the consulting landscape will change where it's no longer just about bringing brilliant consultants to the table. It's about having that intellectual property as part of something else that will be critically important. So, when I see some of those areas where we've had significant wins in 2013, having those assets was critically important.

Then I think the third differentiator is having the breadth and depth and functional capability across KPMG and bringing all of that to bear. I'm not talking just about linking specialized skills within the Advisory business, but attacking a problem as an entire firm. The value of a multi-disciplinary firm, the power of a veteran audit partner with deep industry expertise as part of a major change initiative for a non-audit client. And I think the other aspect is building tax capabilities into each and every service offering we have. We are not going to market in silos. I know that's different at KPMG because I hear that when I talk to clients every day. That one-firm approach and how we go to market is a differentiator for us.

CONSULTING: How does that one-firm approach happen?

DOUGHTIE: Well, it comes from the top. Our CEO and chairman says this is how we are going to go to market. It's not looking at it just from an Advisory point of view but from a firm-wide point of view. We build it into our goals, what gets measured and what gets rewarded. Many of our financial rewards for incentive compensation is tied to how we teamed, how we linked specialties across the business. That's celebrated across KPMG. Our clients want that from us. And it's just good business.

CONSULTING: What can we expect from KPMG Advisory in 2014?

DOUGHTIE: In 2014, we're expecting even stronger growth. We have a healthy pipeline so there is a lot of backlog that we'll benefit from, for sure. Some of that growth will come from areas where we've traditionally been market leaders, such as Risk Consulting, for example. We're known for that globally and in the U.S. Even though that's a mature business for us, we're expecting double-digit growth. And again, part of that is about linking across the organization; some of it is part of the transformation imperative. In 2014, we'll also be building out more broadly the functional capabilities in finance transformation.

We acquired Optimum Solutions to build out our Oracle space. We have a number of acquisition priorities at various stages that will help in that regard, so that's a big area of emphasis for us.
There's another area where we saw great success in 2013, and where we'll continue to see success—that's in the area of Health and Human Services, specifically in the area of transformation. This is an area where we led the U.S. market, and it was being driven by regulatory change as part of the Affordable Care Act. How are organizations complying with and implementing the ACA? In 2013, we were working with 20 states on everything from strategy and implementation to technology and processes.

That's been a great opportunity for us. We're very strong in state and local, and we saw this coming and put a team in place to handle all the client needs as a result. These are multi-year engagements that we'll be reaping the benefits of in 2014 and beyond. And it's important work because we are making an impact in people's lives. Public Sector is now our fastest growing sector in terms of both federal and state. And when I say fastest growing, I'm talking 60 percent and 70 percent growth rates, and much of that is being driven by health and human services. Our teams are certainly delivering and it's been a huge success story.

CONSULTING: What about new lines of business? Are there new areas of focus?

DOUGHTIE: I mentioned before that we are bringing assets to the table. Some of those come through acquisitions and others we're building from the ground up. I think when you look at a few of the megatrends and how those will impact our business and impact 2014, I do think the data and analytics story is real, and we're seeing the impacts of that. We just did a study with the Financial Times where we surveyed the C-level executives and they're really struggling with the volume of the data, but more importantly the insights they're getting out of the data.

There really isn't any market leader in this space. You have a number of firms that are looking at it from very different perspectives—hardware, software, data cleansing etc. But we're looking at it from a business insight perspective. What is the intellectual property we can bring to solve these problems? There is so much work to be done in the space. I think historically, the traditional model was to bring more people. But now, I truly believe in this new environment we're in—where more data will be created this year then ever before—new technologies such as cloud, mobilization, digitization will have an even bigger impact.

The way of solving clients' problems will be radically different in the future and we have to evolve. We will continue to use brilliant consultants, that will not change, but what will change is that we are bringing more assets into enabling those services. We're also creating new services around those assets and I think eventually, just those assets themselves will be able to continue to help clients long after we're gone. Our traditional service will be gone, but that asset will remain and can create some stickiness with clients. That's an area we've been investing in and will continue to invest in, and I see that shift to an asset-based approach continuing.

CONSULTING: Sounds like you're talking about a pretty significant shift to an assets-based approach. I assume that will coincide with advisory services?

DOUGHTIE: Some of those assets will enable our services, but some will stand alone because those problems are pretty intense to solve. You're right, it is a big shift and I think it will continue to be a bigger and bigger part of our overall strategy. I think what will be different, from our perspective, at least, in 2015 and beyond will be the shift to greater assets and how that will change out business. I see that side of the business becoming more and more prevalent.

CONSULTING: Is that part of a bigger shift in the overall consulting market? Where do you see the consulting profession going?

DOUGHTIE: I absolutely believe that convergence is happening and will continue to happen. There are some interesting dynamics we've seen over the last few years. You have the traditional strategy firms that are attempting to build out the end-to-end capability, but without a global footprint that can be very difficult. I think on the other side you have more traditional IT service providers, and we're seeing the pressure that this environment is having on their growth. That's because the initiatives today are not IT led; they are clearly business led and that plays very well into KPMG's offerings. We come to the table with a business perspective, we have the IT capability and we have the eco-system of partners. But, we need to be able to tap into that capability of our alliance partners and others to enable the total business transformation. I do think the firms that are in the business advisory space, like KPMG, that can provide strategy through execution on a global scale, will ultimately be the winners.

CONSULTING: As this convergence happens, there will undoubtedly be a shaking up and out of the industry. How do you see that impacting KPMG in terms of acquisition opportunities?

DOUGHTIE: We have a very robust pipeline of acquisition opportunities. Some of the areas that we talked about, such as data and analytics, as well as being able to provide services end-to-end, from strategy through implementation. We're looking at those opportunities where it would make sense to acquire those capabilities rather than build them. We have a long list of things that we're pursuing. We're going to do some deals in 2014.

CONSULTING: Strategic tuck-ins or are you talking about a big-time acquisition in 2014?

DOUGHTIE : I would say everything is on the table from an acquisition perspective in 2014. We are not looking to do an acquisition to put revenue growth on our books; that is not what we're about. We have a history of looking at very targeted acquisitions, it's got to be a strong strategic fit. It's got to be in an area that's makes sense. And, of course, equally important is the cultural fit. We've been very fortunate with our recent acquisitions; they've been excellent strategic and cultural fits. Were going to do our due diligence, that's for sure. And anytime you acquire a firm, you have to be very deliberate about bringing on those new people. Part of our training program at Advisory University is around core capabilities, but we also use that as an opportunity to get everyone together to talk about our core values and what we believe in and what we stand for as a firm.

CONSULTING: Speaking of onboarding and talent. There were 7,000 consultants in Advisory when you took over. Where is that number today and where is it going?

DOUGHTIE: We're over 10,000 across the Americas and we're clearly going to have to bring on some new talent in 2014. In the U.S., we're projecting to bring on more than 2,000 professionals over the next year. We're also looking to add over 100 partners and managing directors from outside the organization. So, it will be a big year on the talent front. Those are very big numbers. And, I listen to our competitors and they're saying some of the same things so there will be a war for talent in 2014, that's for sure. And it won't stop there. When you look at the convergence in our profession, I think it's a high likelihood we'll be at 20,000 consultants in just a few years.

CONSULTING: That's a lot of hiring, and you mentioned that competitors are also looking to hire. How do you win the talent war? What's the value proposition? Why choose KPMG over another firm?

DOUGHTIE: That's the big question. That's what it all boils down to, right? At the senior level, I'll personally meet with every candidate. So, it'll be a busy 2014 just from that perspective. It comes down to a couple of things: The conversation starts with our strategy and what we're trying to build and how they fit into that. That gets the conversation started. But culture also plays a big part if it. Is this a good fit for you? Is this the place to build your career? Last year, we hired close to 2,000 people in the U.S., and I think those people were attracted to KPMG because we're a fast growing firm where they can really make an impact. A place where they can be a part of some big career-altering opportunities. I feel good about where we're growing and where we're building and what career opportunities that will create for our people.

I'll tell you this story because it's fresh on my mind: I was just with one of our largest engagement teams and they've been slugging it out on this engagement for about two years and they're were just sort of wrapping it up and this was sort of a celebration. And even though toward the end they were working these ungodly hours, and it was right down to the wire, they would not give up, they would not let the client fail. It was not expected that this team would put forth this type of heroic effort at the end, but they did. The passion and the drive was unbelievable and this was a career-defining moment for a lot of them. The bonding with each other and with this particular client is really what consulting is all about.

CONSULTING: You've talked a lot about differentiators, but I would imagine one of the biggest differentiators when you're recruiting is you. You are a woman leading Advisory for a multi-billion firm. That's unique, and I would think that sends a pretty powerful message…

DOUGHTIE: It does. I probably didn't appreciate what a message it sends until I was in this role for a little while. Look, leading a consulting business is tough work, whether you're a man or woman, but I do think that as we are trying to ensure that we have a diverse workforce that looks like the clients we are serving—whether it's women or an ethnic minority—you need to see different types of people. A diversity of thought is key. I do think the tide will be turning where we will have more diverse leaders in consulting. It's something that I'm extremely passionate about and something the firm is very diligent about. We hold all of our leaders accountable for it, whether it's gender or ethnic diversity… that all comes from the top.

CONSULTING: Doesn't it also make good business sense?

DOUGHTIE: It absolutely does. I think about the big pitches we were a part of last year. When I think of the biggest win we had in 2013, the sponsor was a woman and I would say that 80 percent of the selection committee were women. I really think they liked that KPMG brought a diverse and well representative team to the table. It is good business. In Advisory, we're at 35 percent women, which is well above the industry average. Women come up to me all the time and say that just seeing me in that role makes them believe that they could do that, and they especially could do that here at KPMG. I don't think I fully appreciated that until I was in the leadership role that I am in right now.

CONSULTING: KPMG, for sure, is ahead of the curve, but how do you think the consulting profession is doing overall when it comes to women leadership?

DOUGHTIE: When I look at women and the consulting profession, there's still a lot that we need to do to create opportunities for them to succeed. I think the profession has some catching up to do. I know this from talking to woman from other firms, or woman that may be interested in joining KPMG. As a profession there's a lot that we can do. There have been several initiatives that we have to stress that the consulting career path does not have to be linear. I think there's still a lot firms—too many—that have the up or out mentality. It's not smart. We invest a lot of time and money training people and it makes no sense to have a policy that doesn't allow someone the opportunity to step out and then back in from a career perspective.

At KPMG, we do everything possible to make sure they know they own their career. And by the way, this isn't just women; men want to have that conversation, too. It's not just about having kids, it could be other passions or goals, as well. How do you achieve life goals and have a fulfilling career? And this next generation has completely different expectations than I had when I entered this profession. And, more power to them—they are absolutely brilliant. The people that we are hiring off campus are way impressive, that's for sure.

CONSULTING: When you look out at 2014 and beyond, what are some of the major challenges you see?

DOUGHTIE: Overall, I'm optimistic about the future. However, I do think there are some economic, regulatory and political events that could trigger a lack of confidence out there. Generally, even if that happens, I do think the consulting profession fares pretty well with whatever type of change or disruption comes about. But yet, as we sit here, we just went through the recent government shutdown and who knows what the future holds on that front? Talent will remain a top priority because I know most of our competition is in the same boat we are.

So, it'll be fierce, I'm sure. And, there's always the challenge of retaining your top people in this environment. We do internal surveys that indicate we're really on the right track with that. Some of our retention scores are at all-time highs and 80 percent of people within Advisory said KPMG is the place where they want to build their career. So, we feel really good about that and we take all of that feedback very seriously. As with most things, it's an ongoing process, especially when you're in the people business as we are.

But all in all, as I've indicated I'm very optimistic about the road ahead. And I'm very optimistic—and confident—in the capabilities of KPMG to deliver exceptional service to our clients.