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The Age of Archstone
The Age of Archstone
The Age of Archstone
16
THE AGE OF
ARCHSTONE
It is the age of no big ideas, an age when
BY JAC K SW E E N EY
W H AT M AY B E T H E MOST DEFINING
➤
this was a marker that has influenced the profession in
C o n s u l t i n g March/Apr il 2007 17
In the past, such murky episodes of introspec- Noreen, who first agreed to be interviewed by
tion have come sandwiched between waves of Consulting Magazine upon hearing that our arti-
client opportunities — none lasting perhaps more cle was on a small but growing consulting firm
than two or three years. known as Archstone Consulting. According to
Now, five years after the fall of Andersen, con- Noreen, Archstone is exactly the type of firm that
sulting leaders still persist in defining the current Kraft tends to do business with these days:
age by what it lacks rather than by the client focused, nimble, and with its seniormost people
opportunities it yields. It is the age of no big routinely involved.
ideas, we have routinely been told. However, as Elise Klein, a vice president at Berlex Inc.,
with every other age of consulting, the present shares Noreen’s opinion of Archstone and believes
one is arguably best revealed by the clients con- that the firm is extra cautious when it comes to
sultants serve. reusing content. “You never get the sense that Arch-
stone is recycling material, and if they are, they tell
Listening to Clients you,” says Klein.
Ric Noreen, senior director of growth channels Suzanne Doft, Director/Team Leader of
for Kraft, says that the company’s current Oncology at Pfizer, believes that Archstone is high-
approach to working with consultants calls for ly attentive to individual client needs.
Kraft executives to be more precise when defin- “They listen really well,” explains Doft. “They
ing problems up front. listen and then they understand, and they not only
“Manufacturers like Kraft are using consul- understand the problem, they also understand our
tants in a much more narrowly defined project people roles very well so that they are able to adjust
scope, and the firms that can respond to this sort their content and allow the different disciplines to
of pinpoint targeting of problem-and-solution are be able to digest it.”
in a great position to continue to bill,” says
Noreen, whose company’s growing appetite for Defining the Age
narrowly scoped projects and more specialized Having captured 13 new clients in January of this
services appears to be part of a larger trend on the year alone, Archstone appears to have specialized
part of industry, according to research completed offerings whose appeal extends well beyond the
by Kennedy Information, of Peterborough, New above-mentioned clients. Archstone grew by 34
Hampshire (see chart, p. 20). percent last year, while capturing $59 million in
As narrowly scoped engagements grow as a per- annual revenue and expanding its client portfolio to
centage of overall consulting spending, corporate 150 clients.
Now watch Archstone clients have more frequently been opening the door Not bad for a three-and-half-year-old firm that
Principal Mark Schmeling to smaller firms that now compete and win against was launched in the midst of a calamitous consult-
discuss the firm’s CFO larger firms that sometimes struggle to maintain ing sales downturn. In fact, the year before
services offerings on their profit margins on smaller engagements, Archstone was launched, the global market for con-
This Week in Consulting at according to Kennedy Information. sulting services shrank for the first time on record.
www.consultingmag.com. “I see far more projects with narrowly defined Certainly, the idea that such a newbie firm has
outcomes or solutions initiated by Kraft over the come to have a hand in defining the latest age of
last couple of years than I do the large, multidi- consulting is a notion that is rejected, not surpris-
mensional, $2 million dollar engagements,” says ingly, by larger, more established, consulting firms.
B Downturn in
consulting services
Deloitte rejects
the profession’s
Firm is
established with
Lake Capital
invests $75
Newly
named
Opens offices:
Chicago, New York,
G
Andersen shutters purchases causes popular wisdom three principals; million in firm Archstone Stamford
L
its offices under a overall consulting and nixes a plan Todd Lavieri known as Consulting
cloud of scandal market to shrink to split off serves as CEO Candlewood grows to 39
for the first time consulting and president Consulting employees
on record
18 March/Apr il 2007 C o n s u l t i n g
“Archstone who?” is the frequent refrain echoed behind the rise of Archstone largely bears
from one super-sized consulting rival to the next. one thumbprint more than any other.
But, while Archstone may still be flying under
the radar, the concept behind the firm already The Perfect Place in Time
looms large. It’s a concept that Archstone can now The plan to split off Deloitte Consulting from
fully exploit, having been conceived at what Deloitte was made public in early 2002 — nearly
might be deemed the perfect place and time — a five years after KPMG Peat Marwick had first
junction where a confluence of market and regu- announced its own consulting split-off strategy, and
latory forces pounded the profession’s Big Four two years after the sale of Ernst & Young
consulting organizations and helped to shake Consulting to Cap Gemini was first announced. At
loose bushels of top talent. the time, the market for consulting services was
“We had a concept that there was room in the experiencing the worst downturn in its history, and
market for a specialty consulting firm that was in light of this, the split-off’s payout was
constructed with world-class profes- expected to rank among the smallest
sionals focused on critical client ever of Big Four returns.
needs in certain specialty
“Manufacturers If only Deloitte Consulting
areas,” recalls Paul Yovovich, like Kraft are using had split off before Enron
president and cofounder of consultants in a much more reared its ugly head or
Lake Capital Partners, a before the NASDAQ
Chicago-based private narrowly defined project scope, tumble of March 2000,
equity firm that helped and the firms that can respond things may have been
launch Archstone by different. But, caught
investing $75 million in
to this sort of pinpoint targeting between a rock and hard
the firm in September of of problem-and-solution are place, Deloitte took a
2003. Archstone was the in a great position to path that had been rou-
second consulting firm tinely discarded by its Big
Lake Capital helped to start continue to bill.” Four rivals: In March 2003,
up within only 18 months, hav- — Kraft’s Noreen the firm opted to reintegrate its
ing invested $40 million in Huron consulting arm.
Consulting of Chicago in March 2002. When Lake Capital first talked to
Today, the seasoned consultants found within Todd Lavieri about its specialized firm concept, he
both Huron and Archstone confess that their firm- told them that he was not interested. His future, he
building ambitions are in part fed by discontent believed, was with Braxton — the planned consult-
with their past professional lives. While the rise of ing spin-off that Deloitte had already spent tens of
Huron is viewed by many of its consultants as a vin- millions of dollars to plan and rebrand. When Lake
dication of their Andersen heritage (160 former Capital contacted Lavieri again after Deloitte had
Andersen consultants joined Huron on day one), the announced a change in plans, Lavieri was less cer-
rise of Archstone is more a tale of emancipation tain about where his future might lie and began hav-
rather than vindication. ing discussions with a number of business people he
And, unlike the tale of Huron’s launch — respected and had learned from over the course of
a collective work writ by many — the story his career. (continued on page 20)
C
Grows to Sales: Opens Grows to Sales: Opens Sales: Number First Signs 13 Grows to
100 $22 San 150 $42 London $59 of clients acquisition: new clients 225
employees million Francisco employees million office million grows to The in single employees
office 150 Hazelton month and 7
Group offices
C o n s u l t i n g March/Apr il 2007 19
“Todd believed that it was the perfect place in offered Archstone some valuable insight into the
time to launch a consulting firm, and it turns out that months ahead, different factors made Archstone’s
he read the tea leaves correctly,” says Charles start-up challenges unique. First, unlike Huron,
Biggs, a current board member for Quest Archstone’s early workforce was not augmented
Communications who headed Deloitte’s strategy by a mass migration of Andersen talent.
practice in the 1990s and has mentored Lavieri Moreover, the consultants who did join Lavieri
throughout his career. from Deloitte or other Big Four consulting firms
often were unable to serve their vet-
eran clients due to two-year noncom-
Clients favor specific capabilities over broad experience pete contracts, often standard among
Big Four employers. For their part,
Understanding of Specific Needs
Andersen consultants received some
leeway where “competes” were con-
Depth of Functional Expertise
cerned in light of the firm’s collapse.
Depth of Industry Expertise Whereas Huron could immediately
Price focus largely on client work,
Selection Criteria
20 March/Apr il 2007 C o n s u l t i n g
would qualify to lead an entrepreneurial venture, enveloped the summers he spent working at an
Lake Capital’s Yovovich says that entrepreneurs aerospace company cofounded by his grandfather.
reside in both big and small organizations, but are As the youngest of five children being raised alone
not always easy to identify. by their mother (his father had died when he was 2),
“Not everyone is able to do it, and in addition to he found that the family business, perhaps, became
having an entrepreneurial spark, there are a whole a kind of extended family — a place where the rudi-
set of requirements for running a successful enter- ments of business as well as collaborative values
prise. For instance, you need to be able to build a could be learned.
team that works cohesively and pulls in the No matter where Lavieri’s team-oriented val-
same direction,” says Yovovich, touch- ues may be rooted, there’s little ques-
ing upon, perhaps, the one quality “It’s hard to tion that they are now part of the
above all others that made figure which came first. character of his young firm,
Lavieri a unique candidate. according to interviews with
As the leader of
We did contact Todd.We did multiple clients.
global manufacturing have a concept. But that concept was “There are no walls at
for Deloitte, Lavieri had Archstone. Whether it is
quickly refined.Todd really gave it
ascended to the top of people or capabilities, we
the firm’s largest indus- flesh and executed the launch of it. have found that every-
try practice. He was I think that the chicken-and-egg thing is available to us
widely recognized as from everyone at any
belonging to an inner cir- metaphor is a good one, because it’s time,” explains James
cle of senior partners “who really insoluble when it Shillaber, vice president of
called the shots” inside human resources at Berlex
Deloitte’s consulting opera-
comes to Archstone.” Laboratories, who says that
tions, and yet, unlike certain battle- — Lake Capital’s Yovovich when partners from different firms
scarred peers, he appeared not to have are selling business, they often resist let-
lost favor with the rank-and-file consultants as he ting other partners become involved, and they often
climbed the ladder. One former Deloitte senior require that they be included at every meeting
manager recently echoed what a number of past and involving their firm. He continues: “I don’t know
present consultants in essence told us: “He was one how their compensation and incentive structure
of us. We were a team, and he was this rare-bird works, but I can tell you that it is not an obstacle.”
partner who did the walk as revealed by his actions When asked about the collaborative nature of
day in and day out.” Archstone consultants, Lavieri quickly points out
Lavieri’s Deloitte career had begun in 1989 that one of the firm’s founding principles was to be
when Deloitte merged with Touche Ross, where a an organization that behaves and acts likes a part-
26-year-old Lavieri had only months earlier landed nership, even though Archstone is a company. It’s
a consulting job after business school. a principle that many consulting companies vow to
“When we together joined Deloitte, we were live by but often stray from as they grow larger.
entering a period when consulting was ready for a “Our people tell me that this feels like ‘A.T.
great growth spurt, and the Stamford office, where Kearney in the mid-’90s’ or ‘Gemini Consulting in
Todd joined, quickly became an important part of its early years.’ And what they mean is that we are
the firm’s consulting base,” explains Biggs, who working together. We’re working to do things,” Now watch Archstone
had first joined Touche Ross in 1968 and subse- explains Lavieri, who says that consulting firms, as Principal Maryann Gallivan
quently became an early mentor of Lavieri’s when they grow larger, often struggle to raise the “ener- discuss the firm’s Life
he went on to oversee the Deloitte Consulting’s gy” of their people around their brand. Sciences offerings on
northeast region following the merger. “The passion and optimism around the brand This Week in Consulting at
While Lavieri no doubt can in part thank and what we want to do in the market is red hot with www.consultingmag.com.
Deloitte’s partnership culture for developing the this group, so we know that the culture is right,”
team-building skills that helped Lake Capital says Lavieri, who quickly identifies another core
view him as an attractive leader, the profes- value: “discipline, not bureaucracy.”
sion’s leadership gurus tell us that such qualities “This is a simple business,” he concludes. “It’s
often take root earlier in a person’s more forma- people, times rates, times time. In my mind, if we
tive years. get the services right and the right people, the finan-
In Lavieri’s case, those years may have cials and everything else falls right into place.” C
C o n s u l t i n g March/Apr il 2007 21