_ The Mitchell Madison Story/Second of Three Parts Dc ren Dna Cea) een 40 It’s undoubtedly Ste an interview intended to spot long consulting career. But no matter how many years go by, a ill a sore point for Fred graber and one he'd rather not revisit, particularly during the high points of a 36-year- mention of the firm formed by 135 insurgent A.T, Keamey consultants never fails to evoke a response. After some gentle proddi chairman of A.T Keamey concedes: “There was a group of people who were what you might say innocent about the motivations of the leadership ... and, of course, we know now what's happened to them, and all the rest of it.” Like that of an outlaw relation long buried and best forgotten, the name Mitchell Madison Group never crosses his lips. This is ‘one tomb Steingraber prefers no stone to mark, but like any rebel who once cradled a cause, MMG can’t seem to stay buried, , the bank: ruptey of its Cayman Islands limited-life company, the ongoing nst the firm's hard-partying CFO, or the allegations Whether it’s the ousting of five of its board member lawsuits ConsultingWhile some partners describe the \\! of v erging points Special as a classic built-to-last versus built-to-flip divide, others suggest that the schism was more directly linked to an attrit oard s governing po distrust of th In June of 1998, one year before USWeb/CKS announced its plan to acquire MMG, a the firm’s manag boar droom up oust Here’s the Jirector inside story of the events that led to the fateful meeting. concerning the firm’s “in-house” shrink — the house of MMG appears to have more ghosts than any one firm can afford, And while Steingraber’s words may not have been intended asa eulogy, it’s clear that the specters of MMG’s past will be put to rest only when “all the rest of it” is known, Innocents Abroad In May of 1998, twelve months before MMG and USWeb’s wedding plans got underway, six of MMG's 14 board members and one senior partner arranged to meet secretly on the outskirts of London at a hotel near Gatwick Airport. ‘Together, the seven partners drafted a letter to the firm’s shareholders beneath the heading “Renewing Our Shared Vision of the Firm." In addition to advocating the creation of “transparent and collaborative management model” for the firm, the letter contained several admonitions, ‘The text read: “A large and growing number of partners have grown fundamentally to distrust the motives, actions, and competence of the firm’s leadership. ...We are on dangerous ground, ... We must IMMEDIATELY ensure that there is an ‘open environment for debate, including prohibitions against any efforts to inappropriately consolidate leadership by a few through deals or retaliation against partners who are staking their claim for change.” ‘The letter advocated the formation of three task forces — ‘one for govemance, one for strategy, and one for compensation — to be installed at the next board of directors meeting to be held the following month, The new task forves were 10 be charged with developing strategic proposals for the partner- ship “to review, modify, and ratify” at a general shareholders ‘meeting in September. Key among the group’s concerns was that the partnership’s board, and not the managing partner, secure the right to determine the makeup of the firm’ different committees. In addition, they advocated changes to the aneee The Mitchell Madison Story/Second of Three Parts $3000 In millions How MMG’s Sales Grew ‘CARG '95~'98 = 52.5% ‘ware: Mice Madson Group Documents firm’s shareholder agreement that would ensure a separation ‘of powers under which proposal, approval, signoff and audit responsibilities were never performed by the “same people.” Finally, the letter requested a redesign of the firm’s sharehold- cer agreement and the election of a new board of directors. ‘The attending partners agreed that the leter would be signed by the three among them deemed to be the most trusted of least ‘controversial across the partnership — board members James Parker and Clarence Hahn, and senior partner John Kocjan. The letter was mailed to MMG shareholders only days before a June 1998 board meeting that a number of MMG partners now describe as “the last stand.” A Management Trifecta When the original 135 A.T. Kearney consultants exited the firm in 1994, the vision for the yet-to-be-named consultancy included becoming a ‘type one” consulting firm — a broad- ‘based consultancy on equal footing with McKinsey & Co., Boston Consulting Group, and Bain & Co. Having established its consulting credentials by helping Keamey clients lower their product sourcing costs in the automotive sector, the new firm now planned to take its sourcing “product” into large financial clients. Once it had established a beachhead inside the financial sector, the idea was to broaden the base of client offerings and introduce additional consulting products. Sourcing proved to be far more than just a door-of-entry. As the firm’s revenue and head count shot upward, it became clear that MMG was clinching the tail fin of consulting’s latest fad. 42 Sourcing’s trajectory was closely monitored by MMG partners, ‘Amab Gupta and Vikas Kapoor, the two men credited with being the chief architects of MMGs sourcing practice, and who in the aftermath of a boardrrom scuffle became part of a kind ‘of management trifecta, when the firm’s managing partner, ‘Thomas Steiner, split the firm beneath him into two geograph- ic groupings — one headed by Gupta, the other by Kapoor, “Today, neither of the former MMG board members can be accused of being shy when it comes to taking credit for establishing MMG or even sourcing. ‘When I started this thing which became a fad, it was a ‘genuinely a new area. The 1980s was the decade of reengineering, so everyone was looking at labor and process improvement, and in the early 1990s I started sourcing with the very simple assertion that a very high fraction of everyone's cost is pur- chased,” says Kapoor, whose visibility within the firm grew as he gamered such marquee accounts as American Express. Just how long the sourcing fad would last became a central question ‘within the firm, and one frequently posed to Gupta and Kapoor, whose clients continued to ingest the lion’s share ofthe firm's people and experience. “We had, I'd say, about 500 people who had on-average five years apiece of experience in doing this stuff, so we had a very intense focus and a very strong skill base in doing sourcing — and I don’t think anyone has had that kind of skill base since,” says Kapoor. ‘Today, while many MMG partners would likely challenge Kapoor's numbers, no MMG partner would deny that sourcing dominated the firm’s portfolio of strategic offerings. (While analyst estimates peg MMG's 1997 sourcing workforce at 200) Consulting