I. The Firm

Founded in 1914, Booz-Allen & Hamilton (BA) is a global management and technology consulting firm that provides strategy, systems, operations and technology services to clients on five continents through two business sectors: (a) Worldwide Technology Business (WTB), which provides technical expertise to government and public agencies; and (b) Worldwide Commercial Business (WCB), which works with top management of major international corporations. BA targets clients based largely on the potential for true partnership, not simply size, growth potential and market leadership. The firm has almost 7000 professionals in 85 offices worldwide, serving clients from more than 50 countries. 1995 sales: $1.1 billion.

The Need to Change: Triple Crown, Vision 2000

Several years ago, WCB realized that McKinsey, their main competitor, had pulled into the lead, forcing BA scrambling to outdo them on McKinsey's terms. WCB then launched an assessment of its competitive position and began to see the high cost of their old way of doing business - one-off assignments, short-term contracts based on individual relationships, and unfocused client strategies. In response to this, WCB developed the Triple Crown Strategy which focused on selling the full-range of services - strategy, operations, technology - to all their clients, rather than packaging each service in isolation. In 1994, CEO Bill Stasior challenged WTB to take a fresh look at their business as well. Although WTB's going-in position was different from its commercial counterpart, with growth steady at 13% and long relationships with many of its major clients, WTB found that individual practices were good at selling what they knew, but not so good at selling collective capabilities of the firm. They were good at focusing energies toward their own clients, but not at joining with other practices to target opportunities together. They also saw that the WTB markets were changing: federal priorities were shifting; budgets were shrinking; competition was growing even stiffer, driving down profits. The nature of contracts was changing as buyers sought greater flexibility and lower risk through bundled omnibus contracts. At the same time, new markets were opening up, presenting growth opportunities. To compete successfully amid these changes, WTB realized that they would need to restructure from 'stovepipe' practices to a team-based organization and to a culture conducive to greater collegiality, communication, and staff opportunity. The result was the formation of Vision 2000, a new paradigm whose goal is to develop long-term relationships with clients. This calls for a new way of working where teams manage resources for the benefit of the firm, no longer 'owning' clients, contracts, staff, or information.

II. The Competition (Management and Technology Consulting Industry)

Source: Mel Bergstein, Chairman, Diamond Technology Partners, 2/14/1996 Presentation to Sloan IT Class

III. Value Proposition/Core Competencies

The equation on the left summarizes what BA can offer its clients. What distinguishes them from the competition is the way they address each element by leveraging their core assets/competencies, the most notable of which are:

Intellectual Capital - Multi-skilled knowledge workers are the firm's primary asset. Recruitment involves a stringent screening process (including case-based interviews by industry experts) to select top-notch graduates and industry professionals. Formal training is supplemented by a mentorship program that helps build relationships between senior staff and recent arrivals. BA's value proposition for employees includes the opportunity to work with the firm's industry and functional experts as well as top executives in leading companies early in their careers. Employees have considerable influence in choosing their clients.

Practice Structure - To provide focused expertise, BA's professionals are organized into practice groups according to their backgrounds and interests. Each practice is global in scope and brings expertise in applied strategy, operations and systems technology. WCB is divided into five broad strategy groups organized by industry. These are complemented by cross-industry functional practices that include Information Technology (IT) and Operations Management. Consulting work is always done in multi-disciplinary teams that work with clients across all levels of the organization to identify their agendas, design change processes, build their capabilities for continuous improvement, institutionalize best practices and implement joint recommendations. Each practice or geographical region has a Group Director of Operations who, together with Partners, makes decisions regarding client teams based on the analytic, managerial and industry expertise needed to serve the client and the experience needed to further develop their consultants' careers. Consultants are often placed based on the work they have shown they can do, rather than the arbitrary constraints of a job title or their geographic location. These project teams of knowledge merchants, the source of revenue of the firm, are usually small and consist of: a Partner or Principal that manages engagement deliverables, a Principal or Senior Associate who manages the team and works with the client day-to-day, and Associates/Consultants that do data collection and analysis and work with client's staff. Because of the importance placed on building client relationships, BA has two other engagement roles: Client Service Officer who leads development of overall client relationship and Officer-in-Charge who's responsible for building client relationships. The range of knowledge and talent allows customization of multi-functional teams for each client, integrating diverse perspectives.

Professional Communities (PC) - To foster cross-fertilization of expertise, sharing of knowledge across practices, and a sense of camaraderie, each consultant also belongs to a much broader PC which includes other functional professionals who are dedicated to serving a similar array of clients. These cross-cutting teams coordinate cross-client/market campaigns.

Triple Crown Strategy, Vision 2000 - Triple Crown is WCB's strategy of integrating functional expertise in strategy, operations and technology during all phases of work with a client. This was borne out of the realization that the probability of success was greater if these three areas were addressed in concert with each other, rather than in isolation. This enabled WCB to sell the full-range of services to their clients, a 'white-space opportunity' not easily duplicated by their competitors. To build upon this, in 1994, Vision 2000 was launched to develop long-term relationships with clients and position BA to be partners with them, rather than 'order takers'. This vision encourages actions that are good for the firm as a whole, such as practices joining forces to target opportunities together, or tapping the embedded base of one practice to introduce the services of another practice. For instance, if Citibank is a client of the Financial Services (FS) practice, a partner in Communications & Computing might collaborate his or her counterpart in FS to land an engagement with Citibank.

Knowledge Program - Central to this is Knowledge On-Line (KOL), a multi-media internal resource containing firm knowledge, available on the company intranet to any employee from anywhere, anytime. Teams from various practices are responsible for identifying knowledge sources, extracting industry information, project results and frameworks developed from various engagements and recording these in the KOL database. Information is carefully distilled to remove client identities and categorized for easy reference by consultants. Contribution to KOL is looked upon favorably by the professional community (like having a paper published) and presents the consultants with opportunities for global recognition. This in turn makes the contributor more 'valuable' in the network world and positions him or her to be recruited for better assignments and get broader exposure. The KOL promotes knowledge leverage and reuse within and across practices, helps alleviate the problem of high turnover and brain drain, and is useful in identifying gaps in knowledge that's available currently and that will be needed for the future.

IV. Why This Works In Context of Traditional Practice

Ability to manage two dimensions simultaneously, to leverage core competencies - BA is able to manage market alignment vs. functional scale by: (a) segmenting its business to truly reflect its target markets; and (b) unleashing the power of serving multiple industries simultaneously by capturing the functional synergies between them (i.e. aggressively leveraging the cross-industry functional practices as well as the knowledge captured across industries). As more companies go global and venture into new businesses, their problems cross functions, industries, markets and technologies. BA's 'deep intellectual bench' and agile team formation offer the breadth of expertise and flexibility necessary to respond to clients' needs.

Customer focus/partnership - The firm's partnership with client senior management gives BA the clout to recommend and implement major changes. The long-term nature enables them to obtain an in-depth view of the business and its change process and to understand the client process and its people better. Their ability to offer a full range of services locks clients in even more tightly and provides a steady source of revenues.

Congruency of strategy with customer focus, organizational structure, roles, processes, IT, culture - BA's practice structure, agile team-based approach, meritocracy, and strong culture that thrives on complexity work well together in supporting their full-service, client partner-oriented strategy.

Balanced score card - In terms measures of success, BA does not focus solely on the financial perspective. From the customer perspective, the firm seeks long-term relationships and measures success based on client results. As regards innovation and learning, BA strives for technology leadership and knowledge leverage. Firm-oriented teamwork is an internal business goal.


V. What's Interesting

Elected Leadership / 360 degree Senior Staff Appraisals - As part of Vision 2000, for the first time, WTB partners elected their sector leader, and when the new Client Service Teams were in place, the partners elected their team leaders. Another new initiative is that of 360 degree appraisals for senior management where staff at all levels may be asked to provide input.

Knowledge Management - Based on BA's experience with 'knowledge on demand, the following critical success factors for knowledge management may be deduced: (1) A network management structure to: (a) debrief busy people soon after engagements; (b) address the psychology of network management (providers, users); (c) capture and present information carefully and intelligently; (d) distribute information quickly; (e) provide users with swift access to experts; (f) measure use/effectiveness; (2) A culture that rewards contribution through formal and informal incentives; (3) Presence of a core leadership group and expert network.

Knowledge/Process Leverage - BA's knowledge-sharing system can be depicted in terms of Malone's process model paradigm. The essence of this is that data or methodologies developed in an engagement for a specific industry can be 'reused' at another phase of an engagement in a different industry. For instance, techniques used to sell a project in Financial Services (FS) may be adapted for the Communications Industry, or successful implementation of a problem is FS can be used to prepare a proposal for a Manufacturer.