C ove rSto ry

By Jack Sweeney

The
Origin of Species

While New York City sustained
an enormous blow some two
years ago, it has since lost none
of its hard-nosed swagger.
Now, that temperament long epitomized
by New York’s sharp-tongued citizenry
appears to be ebbing somewhat — an
intriguing development that many believe
is now altering the psyche of Gotham.
However, what is defanging New
Yorkers, we are told, is not Orange
Alerts or treacherous acts of terrorism,
but an information resource commonly
referred to as 311.
It may be too early to access the full
impact of the high-tech offering — a
kind of public hotline on steroids —
but few doubt that 311 is now altering
the relationship between the city’s
government and its citizens.
In effect, New Yorkers have less
reason to shout, or at least they believe
that their government may have finally
gotten the hearing aid it’s always needed.
Arecent page one New York Times article
discussing 311 ’s growing positive
impact quotes New York City mayor
Michael Bloomberg as saying, “It is the
most powerful management tool ever
developed for New York City.”
Yet the experienced management
C o n s u l t i n g Ja n u a r y / Fe b r u ar y 20 04
problem-solvers,
specialized systems ana-
lysts, and programmers who were
largely behind the tool’s creation and
deployment escape any mention in the
Times article. So goes the all-so-hidden
life of consultants, the invisible knowl-
edge brokers who trace their organizational
roots to the early part of the last century —
a time when men like Edwin Booz and
James McKinsey first distin guished
themselves as trusted advisers to both
American business and government,
and established partnerships grounded
by shared values and principles.
However, unlike the independent
partnerships that came to define con-
sulting during the past century, the
consultants behind 311 belong to a
more commercial species — one that
answers to clients and shareholders in
all parts of the world.
Nothing Like It in the Wo r l d
Of course, it wasn’t always that way.
The purveyor of 311 wisdom has con-
sulting roots that run deep into the past.
And if truth be told, its roots run nearly
as deep as those of such enduring partner-
ships as McKinsey & Company and
Booz Allen Hamilton. But for the
c o n s u l t i n g firm known as Accenture,
its American roots became an obstruction
in the way of its global future, or at
least it seems to have appeared that
C ove rSto ry
way to those
who’d prefer to have us
believe that Accenture came
into being a mere four years ago.
This is perhaps a pesky footnote to a
much larger and grander tale of a con-
sultancy that arguably, unlike any firm
before it, is outwardly exposing to the
world at large the impact consultants
can have on business, government, and
the world’s economies.
“How the consulting profession
grew up — developing smart people
with broad general skills — is not the
way it will succeed in the future,” says
Accenture Chairman & CEO Joe
Forehand, beginning what’s become a
familiar discourse on how, in the
world of consulting, specialized con-
sultants are now trumping the impact
of “generalists,” or those consultants
that typically fill the rank-and-file of
strategy partnerships.
“No one ever thought that consulting
— in the industry that we are in — that
there were any advantages to scale, and
we’re now changing the game through
scale,” says Forehand, emphasizing the
latter half of A c c e n t u r e ’s one-two
punch: specialized skills and global
reach. It’s a wallop that has given rise
to a new species of consultancy, one
capable of supplying governments and
businesses around the world with the
economic knowledge and infrastructure
needed to compete globally.
There’s never been anything quite
like them on the planet. Within the
business world’s sea of knowledge, we
are being compelled to think of global
consulting firms as the Gulf Stream —
a massive and freewheeling current
pushing knowledge from continent to
continent, from boardroom to board-
15
C ove rSto ry

room, from government to government.
And, as with the private partnerships
that helped establish consulting in the
last century, client confidentiality
remains the linchpin that undergirds
their existence. However, given the
demands shareholders now place upon
them and the borderless nature of their
work, global consulting firms now face
challenges — both economic and political
— all but unknown to their consulting
predecessors.
The Profession’s Lightning Rod
For its part, Accenture has unwittingly
become the lightning rod for the new
consulting species, given its size
(83,000 employees) and the number of
geographies (47+ countries) it currently
operates from. What’s more, its publicly-
held status continues to illuminate the
nature of the $11 billion firm’s work
and actions through the foggy filter of
routine Securities and Exchange
Commission filings and government
reports. Such filings have led to ever
widening press reports noting the
firm’s incorporation in Bermuda, its
push to privatize governments around
the world, and its escalating lobbying
fees. More recently, there was the revela-
tion that the firm’s Middle East operation
is being investigated by the Securities
and Exchange Commission and the
Department of Justice for possibly
v i o l a t i n g the U.S. Foreign Corrupt
Practices Act (FCPA), a law that bars
companies from bribing foreign officials
to obtain deals.
Then there’s the growing offshoring
strategy through which Accenture and
its global competitors such as IBM
Business Consulting Services and Cap
Gemini Ernst & Young are adding
knowledge workers to cheap labor
locations around the world, a strategy
that critics charge is putting American
jobs at risk. (Accenture expects that its
offshore capability will ultimately create
new jobs in the U.S.)
And as if that weren’t enough to
keep Accenture in the political hot seat,
there’s the consulting firm’s push into
e-democracy services — a label for the
firm’s Internet voting push involving
offerings facing heightened scrutiny
within this national election year. Such
technologies, a growing number of critics
c h a rge, are vulnerable to hackers
capable of manipulating votes, thus
undermining democracy.
Adding to the hubbub around
Internet elections was the revelation in
Newsday last year that Election.com,
one of Accenture’s premier e-govern-
ment partners, had sold controlling
power to an investment group made up
of unnamed Saudi nationals. Last June,
Accenture bought out the Saudi
investors as part of a deal under which
it acquired Election.com’s public
assets. Not more than 60 days later,
Accenture had expanded its list of e-
democracy clients to include the U.S.
Department of Defense, as part of an
effort to design and build an Internet
voting capability for thousands of
absentee uniformed services personnel.
“The Pentagon’s program was
adopted with disturbingly little publici-
ty or debate. The public is entitled to
know more about how it will work, and
how it will be protected,” read the lead
editorial in the Sunday, January18,
edition of The New York Times.
No doubt Accenture would prefer
that the Pentagon speak for itself on the
subject of Internet elections, but the
firm remains steadfast in its efforts to
make the technology more secure.
So far, Accenture appears to be coping

“Unless you are willing to fire those people who

— while delivering results — care nothing about
the values of an o r g a n i z a t i o n ,
then you will not be sending the right
message to the organization.”
— Accenture’s Forehand

16 Ja n u a r y / Fe b r uary 2 004 C o n s u l t i n g
The Last Elected C E O
A Talk With Accenture’s “A p p ro a c h a b l e ” L e a d e r
It’s been more than four years since Joe Forehand
became the final partner ever to be elected CEO of Accenture.
In the years that have followed, Forehand has overseen the
conversion of the Andersen Consulting partnership into the
publicly-held entity we know today as Accenture. With the
conversion complete, change still remains a constant at the
firm, where Forehand is leading Accenture’s 83,000-member work-
force to the outer edges of business transformation outsourcing.
CM: Is the growth of outsourcing services within Accenture
likely to undermine the types of consulting opportunities it
offers your people?
Forehand: Consulting is a very important part of our future,
always will be. If you look at what matters a lot to people, it’s
being on a winning team. Being on a winning team is hugely
important when it comes to attracting the best consultants
away from our competitors. ... If you look at the transformation of
outsourcing, it involves what may be the highest form of consulting
— in fact, some of our people call it “extreme consulting.” It’s
about being able to take the hardest, toughest challenges our
clients have and doing the front-end transformation needed to
meet them with an outsource model. And then, if you also look
at the career opportunities we have and where we’re creating new
businesses around business process outsourcing, our people
have the opportunity to be the chief operating officer or the VP
of sales for some of these businesses. This offers a combination
of consulting and operational experience that will make them
much better consultants.
CM: What part of Accenture’s workforce should we expect
consultants to make up in the future?
Forehand: It’s a little hard to be real precise with that. We have
three growth platforms: our business in high-value consulting, our
whole technology services, and the services workforce or outsourcing,
which we are increasingly growing as we take on client employees
and re-skill them to be a part of our front office as we grow.
But I could see, over the next three to five years, where it —
if you look at just the type of work we do, there could be a
roughly equal split between the two (consulting and outsourcing
services). And we’ve moved from where outsourcing was about
15 percent of the mix over the last couple years to now it’s
where it’s above 30 percent, and I think you’ll continue to see
that trajectory over the next three years with the continued
growth in the outsourcing type of work. We do see this as not
just two separate lines of business entirely, because outsourcing
stimulates consulting demand. And even though our revenues
often times are counted as outsourcing, oftentimes consultants
may be involved in the transition and transformation.
CM: Going forward, are we likely to see a larger portion of
Accenture’s solutions workforce become distributed to other
C o n s u l t i n g Ja n u a r y / Fe b ru ar y 20 04
low-cost “offshore” markets?
Forehand: If you look at a lot of what’s happened, and how
buyers are saying, “As certain types of technology skills get
more mature, we want to pay a price of X,” often this is less
than what that price point is in the U.S., for example. However,
it’s important to understand that as we look at our workforce
of 83,000 people, we see that only 5 percent of these people
are located in “of fshore,” lower-cost locations. ... A lot of
what’s been going on is that the more complex consulting projects
— which is where we excel — have in the last couple of years
not been what clients have been buying. And that’s been part
of the reason for some of the decline in consulting. However,
we’re starting to see the size of consulting projects get bigger
as companies come out of the downturn. And it’s important to
realize that when you get in and look at some of the bigger
change programs, the IT content of a typical large-scale project
that can go offshore is still relatively small.
CM: But you still have to price competitively?
Forehand: Yes. Recognizing that, to be competitive, we have to
be able to provide a price point for certain types of skills and a
price point at which we can be competitive. There are countless
examples of how we’ve won pieces of business today where 80
or 90 percent of it is sourced within the U.S. But having 10 or
20 percent of it sourced in a low-cost country is enough to be
the competitive edge to give us an advantage in landing work.
So I look at that on the contrary: The ability to have some of
that capability gives us the ability to be much more competitive
for our U.S. workforce. We hired 800 people just within the U.S.
within the first two months of our fiscal year. So we view us as
now coming out of a cycle from what was truly an abrupt jolt to
the whole industry to where we are formulating new jobs.
CM: Certain competitors of Accenture pride themselves on
leadership training. What can you tell us about changes in
Accenture’s approach to developing leaders?
Forehand: This past year, we began holding three-day leader-
ship development seminars for our newly-promoted partners.
And we have made a sizable commitment — going back over a
year ago, now we have some 1,500 partners who have gone
through this. They spend three days with all of our leadership,
and each of our leaders has teaching assignments. I teach a
part of the class, about two hours on just how we developed
the things that we believe are important in terms of leader-
ship. We go through sessions on our core values, business
ethics, a whole host of things related to how you increase your
effectiveness with clients. Things like how to work better in
teams, as a partner leading teams. So this has been extremely
successful with our newly-promoted partners — to get hands-on
within a leadership type of environment and to find out what’s
important to maintain us and them at the top.
17
C ove rSto ry
% Incre a s e
( -1 % )
45%
rather well with the extra wattage illumi-
nating its activities. Such scrutiny should
perhaps be viewed as a rite of passage,
given the ambitious trajectory
Accenture management has set for the
firm. Still, the firm’s footing at any
given time is only as certain as the values
its consultants espouse, and to its credit,
Accenture’s management doesn’t hesitate
to speak up when asked how the firm is
making sure its people continue to
abide by the firm’s values. (See
Forehand interview, page 17.)
“Unless you are willing to fire those
people who — while delivering results
— care nothing about the values of an
organization, then you will not be sending
the right message to the organization,”
says Forehand.
“We have had to work harder at
instilling our values, because they really
now need to be built deep into the
organization. This is no longer a club
of a couple of thousand people, but an
83,000-person organization in over 47
countries,” he explains, while con-
trasting Accenture with the “clublike”
partnerships credited with having
established the consulting profession.
The Immaculate Conception
The firm’s challenge has been com-
pounded by the fluidity of its structure,
a series of altered states each now rep-
resenting a chapter in an evolutionary
18
How Accenture’s Consulting Shrank
(in millions)
$2,095
$2,126
$1,166 $804
Q1 2003 Q1 2002
Source: Accenture Q1 Reports (Period ending November 30, 2003)
tale filled with leadership endeavors.
It’s a tale whose most recent chapter
a rguably begins with the exit of
F o r e h a n d ’s predecessor, Georg e
Shaheen. As the CEO of what was then
known as Andersen Consulting,
Shaheen opts to become the CEO of ill-
fated grocer WebVan, thus giving the
consulting profession an episode of
biblical poignancy.
Having helped galvanize Andersen’s
consulting army behind a plan to split
off from Arthur Andersen, Shaheen
courageously leads Andersen’s consul-
tants to the edge of the Promised Land,
only to be tripped up by the temptation
of dot-com riches. For his indulgence,
Shaheen is barred from ever tasting the
fruits obtained by the firm’s windfall
divorce from Arthur Andersen, and
Accenture’s subsequent IPO.
The divorce windfall came as the
result of a somewhat controversial
a r b i t r a t i o n decision that guaranteed
Andersen Consulting its freedom after it
forfeited all rights to the Andersen name
and forked over to Arthur Andersen $1
billion — a sum many times smaller than
was anticipated.
Strangely, Accenture’s management
continues to argue forthrightly that
since the arbitrator’s decision stated
that Accenture was not owned by
Arthur Andersen, Accenture cannot be
characterized as having broken off or
spun off from Arthur Andersen. What’s
more, Accenture management argues
Consulting
O u t s o u rc i n g
just as fervently that the defunct Arthur
Andersen should not be characterized
as having any parental link to
Accenture. Today, nowhere is Arthur
Andersen mentioned in the corporate
history on the firm’s Web site.
But if George Shaheen is the biblical
equivalent of Moses in Accenture’s tale of
creation, the accountant Arthur Andersen
is undeniably Adam. You only need to
examine the executive bios on Accenture’s
Web site to discover that its CEO “joined
Accenture in 1972.” 1972? (Think: Nixon
vs. McGovern, Munich Olympics, Pet
Rocks.) While it would be another 27 years
before Andersen Consulting was officially
divorced from AA, it would be another 15
before the name Andersen Consulting was
even coined. In fact, when Forehand joined
Arthur Andersen, consultants resided in
what was known as AA’s management
information consulting division.
Forehand’s is not the only fuzzy bio.
While Jackson Wilson, chief executive
of Accenture’s new business process out-
sourcing business, “joined Accenture in
1975,” Stephan James, Accenture’s chief
operating officer, “joined Accenture in
1968.” For its part, James’s bio should
perhaps be considered a historical
a r t ifact, given that it appears to confirm
Accenture’s existence as far back as the
Johnson Administration.
No matter. While Accenture’s past may
be foggy, its vision of the future has never
been more clear. Or so those who praise
the leadership of Accenture’s CEO tell us.
Ja n u a r y / Fe b r ua ry 20 04 C o n s u l t i n g

Accenture’s
Watershed Chapter
1999
33 years after joining
Arthur Andersen,
Andersen
Consulting CEO George Shaheen
jumps ship for dot-com grocer WebVan.
Joe Forehand is elected head of
Andersen Consulting.
2000
Arbitration windfall: While a divorce
settlement for Arthur Andersen and
A n d e rs e n Consulting gave AA all rights to
the Andersen name, it requires Andersen
Consulting to pay AA $1 billion, a meager
sum at the time, considering that
Andersen Consulting had an estimated
market value of $25 billion.
Arthur Andersen
CEO James
Wadia resigns after
arbitration outcome
is announced.
Accenture initiates a vast reorganization
that will roll 40-plus partnerships into a
holding company.
2001
Andersen Consulting launches a $175
million rebranding campaign to establish
its newly-minted name — Accenture.
Accenture incorporates itself in Bermuda.
Newly-branded Accenture raises $1.67
billion with its initial public offering.
Arthur Andersen comes under scrutiny as
Enron investigation heats up.
2002
Arthur Andersen is found guilty of
obstruction of justice, relinquishes its
permits in all states where it was
licensed to practice public accountancy.
C o n s u l t i n g Ja n u a r y / Fe b r u ar y 20 0 4
The CEO Partner
Always Joe, never Joseph, Forehand is
shorthand; that is, Accenture’s CEO
prefers none of the longhand protocol or
divine detachment his predecessor was
known for. It’s been said before and
bears repeating that George Shaheen
was the managing partner of a partner-
ship, who thought of himself as the
CEO of a corporation — i.e., he
thought of the partners as his employees
— while the ever approachable Joe
Forehand is the CEO of a $11 billion
corporation, who thinks of himself as a
managing partner: He views his vice
presidents as more or less his partners.
Just how this ironic management twist
has impacted the firm’s ability to instill
values in its people is anyone’s guess, but
clearly the firm has needed to enhance
the reinforcement of its values as certain
cultural mechanisms found within the
Andersen partnership are no longer pre-
sent. At the same time, people’s actions
can seem to be more transparent within a
corporate organization where lines of
reporting have been more rigidly drawn.
Following the arbitration’s outcome,
Accenture’s first order of business was
to create a vehicle to take public. To do
this, the newly-branded Accenture had
to undergo a vast reorganization that
would roll 40-plus independently-
owned, local country partnerships into
a single holding company.
“When you move to become a global
corporate entity, you can assume that
the mother ship is going to be charged
with a lot more knowledge of its global
activities than when it was a loosely
knit set of partnerships,” says Timothy
Dickinson, a Washington attorney who
specializes in FCPA cases.
Dickinson says that any firm experi-
encing vast structural change such as what
Accenture has recently experienced will
want to be extra vigilant of those people
residing in geographies where firm busi-
C ove rSto ry
ness is conducted through joint ventures
and other shared investment models.
To date, Accenture’s people appear to
have little doubt what industry they
belong to. For their part, the firm’s
consultants frequently speak of their
career goals not just within the firm, but in
a larger context relative to the consulting
profession.
“There’s a sense that we do things
better than other firms,” says an Accenture
senior consultant, who asked us to not
to use his name. “Accenture’s people
development programs are what have
kept me here the last few years, and
going forward it will be all about gaining
experience. I don’t think that other
firms can offer all the sorts of opportu-
nities Accenture now does.” Several
Accenture consultants echoed similar
comments about how they perceived
the firm stacks up with its rivals.
Moreover, they praised the firm’s lead-
ership and the emphasis that has been
placed on the firm’s values.
Do the Right Thing
“We’ve had a consistent message that, if
we do the right thing for our clients and
we do the right thing for our people, then
the stock price does not have to be thought
of as something that matters,” explains
Forehand, who also cites the firm’s efforts
to enforce a lengthy code of ethics spe-
cially tailored to be infused throughout a
culturally diverse organization.
For its part, the firm management
also cites its independent positioning as
helping to deter potential conflicts.
“We’re not carrying any kind of a
proprietary solution or technology that
anybody has to be suspicious about in
terms of what our motives are. We have
alliances, certainly, and that’s a part of
doing business,” says Forehand.
Still, rivals argue that this positioning
has been undermined by Accenture’s
19
C ove rSto ry
Accenture’s 2003 Revenue by Region
(in billions)
$.79
$5.35
$5.67
(2003 total net revenue, $11.82 billion)
Source: Accenture Ltd.
willingness to accept marketing and
remarketing fees from different technology
partners. Such rivals point to the induction
of Microsoft CEO Steve Ballmer as an
Accenture board member and to
Avanade, a consulting joint venture
between Microsoft and Accenture.
Meanwhile, rivals within consulting’s
strategy encampment routinely charge
that Accenture isn’t any longer a consulting
firm at all. It is instead an outsourcing
company, they say, that offers clients
consulting services. Why, even Forehand
has on more than one occasion commented,
“You really can’t call what we do consult-
ing any longer.”
Another pesky point? Or is there a
pattern here?
It’s a consultant; it’s not a consultant.
Its roots run deep; it has no roots at all.
It’s an American success story; it never
was American.
It’s independent; it’s not independent.
Clearly, the consulting firm poised
to define consulting’s New Age faces a
20
E u ro p e
A m e ri c a s
Asia Pa c i fi c
definition challenge all its own.
“We’re not an easy enterprise to
understand,” begins Accenture’s chief
operating officer, client services, William
Green (bio note: Green “joined Accenture
in 1977”), when asked whether the firm
will be further escalating its Capitol Hill
lobbying efforts. “We’re a very well
known company within the United States.
There are not many people who don’t
know someone who has worked for
Accenture, or was a customer or some-
thing like that, so we’ve had to go
through an education process — that’s
how I’d describe it.”
Translation: We are well known; we
are not well known.
The Story of Creation
The “education process” Accenture has
undertaken has undoubtedly been made
more challenging due to the complexity
of the firm’s story of creation.
“Being a public company is not
mutually exclusive from having core
values and doing the right things for
clients,” says Forehand, underscoring
once more his mantra to ignore the stock
price.
Indeed, Forehand’s thought gains sup-
port when you consider that one of the
more strident examples in recent memory of
a business falling victim to values erosion
involves a partnership — Arthur Andersen.
Besides avoiding legal entanglements
related to AA’s collapse, Accenture’s delib-
erate efforts to obscure its shared lineage
with AA may be rootedin a fear that future
clients will view it as being more suscepti-
ble to such values erosion. After all,
Shaheen’s hasty exit seemed to underscore
a theme all too familiar to Arthur
Andersen: It’s about the money.
Be that as it may, Accenture’s clients
appear to routinely find value in the
firm’s one-two punch.
“We were very pleased by the expertise
the people from Accenture brought to the
table on this project, and the commitment
they made to us,” says Gino Menchini, New
York City’s commissioner for information
technology and telecommunications, who
oversaw the 311 project for the city.
“We have had a number of city gov-
ernments from around the country, and
even from other countries, that have
either met with us or called us about
311, and they want to know how we
did it, and what worked well, and what
didn’t,” says Menchini, who remembers
speaking to government o fficials in
Chicago and Baltimore before moving
forward with Accenture.
In a way, 311 is about new beginnings.
For just as 311 is arguably helping New
York cut the corners off its hard-nosed
past, it is helping Accenture turn the page
and reveal to the world a new species of
consultant. C
Ja n u a r y / Fe b rua ry 20 04 C o n s u l t i n g