The last decade has been a tumultuous one for the consulting firm A.T. Kearney. Now, it is mapping out an ambitious growth path to 2020. Carly Chynoweth reports.
Corporate culture can be a remarkably resilient thing; even ten years under the control of an IT company wasn’t enough to destroy A.T. Kearney’s unique identity, although it was touch and go towards the end. “The culture changed remarkably little despite being on an enormous rollercoaster,” says Johan Aurik, the consulting firm’s Managing Partner. “The basics did not deteriorate – there are still elements you can trace back to Tom Kearney, who founded the firm in 1926. Was it close? Yes. But it did not happen.”
Spotting links with the past comes naturally to the Amsterdam-born leader, who trained as a historian before moving to the US to continue his studies and to work for a while in finance.
“I did not like finance,” he says. “It was only one game, one gig. I hated working for only one company with only one set of problems.” Management consulting, however, promised more and trickier problems (if they were easy, clients would solve them themselves, he explains) as well as an interesting bunch of people.
It was not a hard choice to make. He had offers from a number of leading firms, including A.T. Kearney, and went with the Chicago-based firm because it was the most international. “It didn’t have a lot of country borders so I could work wherever I wanted, which appealed to me, and it didn’t expect me to stay in one sector, so I could gain broad experience. Plus I liked the culture of the firm. The people there were relatively normal and I could see myself spending long hours with them, because that’s what you do.”
This focus on culture has stayed with Aurik throughout his career and now forms the core of the firm’s Vision 2020, its clearly but unimaginatively titled plan for the next seven years. For a while, though, it seemed possible that the firm itself might not make it through the noughties, let alone do so with its corporate culture intact.
When Aurik joined in 1989, aged 28, the firm had 35 partners and annual revenues of around $100m – respectable enough but on the small side in the consulting industry. By the year 2000 it had hit $1.5bn and had more than 300 partners. “At the time we were the clear number three globally,” says Aurik. “McKinsey was still the biggest but we were the talk of the town. It was just unbelievable growth.”
But it was not just its growth that triggered conversations. In 1995, the firm had been acquired by EDS in a deal worth $596m. This gave the IT giant access to some big new clients and the chance to sell management consultancy on top of its IT outsourcing services; A.T. Kearney, in turn, could use EDS funds to support its expansion, while some partners chose to cash in their share of the business. The first five years were judged a financial success despite some cultural friction during the integration, but when the dotcom bubble burst in 2000 both companies faced difficulties.
“In 2000 there was a change of CEO at EDS,” says Aurik. “He believed that consultants would make great sales reps for his outsourcing and IT business. But consultants do not make great sales reps for outsourcing and IT. So what happens? They start to leave. So we were at our peak in 2000 but less than five years later we were less than half. We were almost dead.”
Aurik prepared himself for the possibility that the firm itself might go under. “I have a family and had to ensure our financial security. I had offers waiting – everyone did.” Before it came to that, however, he and the other 173 partners bought the firm back.
“The investment banker who advised us described the firm as a patient on chemotherapy. So it was a big decision of whether or not to stay and buy into the new firm.” However, Aurik and his fellow partners went ahead with what turns out to have been a very good choice. Since the 2005 management buyout, the firm’s fortunes have picked back up “miraculously.” The recovery is also a tribute to the motivational powers of being genuinely self-directed – or, as the Dutchman puts it, “the magic of partnership.”
The firm is now fully owned by its partners – 174 at the time, now more than 300 again – and operates democratically, with a one-partner, one-vote model. Aurik, and other managing partners before him, are all elected with a majority of at least 50 per cent plus one. “That is crucial in this business. This business is run by culture and it is run by the ability to make long-term decisions, and you need a partnership structure for that, not corporate P&L with quarterly profits.”
The admiration goal
Aurik is relying on that culture to underpin his ambitious growth plan for the firm: to double its revenue to $2bn by 2020. This is not simply ambition for its own sake, either, but something essential to the firm’s survival. “The industry is in flux. There are a lot of consulting companies going belly up, getting sold or merged, so doing nothing is not an option for us. We are cherishing and treasuring what we have, but we also need to add to it. We need more scope, more scale so then we can have more in-depth expertise.”
But it is a soft measure rather than a hard number that matters most to Aurik. “The real important goal is to become the most admired. This is a differentiation goal, an excellence goal. It’s what sets us apart.”
Obviously this raises the question of just who is doing the admiring. The firm is not in Fortune’s latest list of the world’s 50 most admired companies (Accenture and IBM make it in) but it is ninth in Vault.com’s list of the best consultancies to work for and 14th in Consulting magazine’s list of the best firms to work for. For Aurik, however, there is a very specific list of people whose opinions matter. “Clients, first of all. Second, the people who join us. Our former people and our network of friends and family third of all, and finally the broader public that is interested in our business.”
He is just as specific about what he wants the firm to be admired for: the results it delivers to clients and its ability to attract, develop and hang on to the very best people. These two factors and whether or not it hits its target are intrinsically connected. The firm will have to find “fat double-digit year-on-year growth” right through to 2020 to stay on track, says Aurik. “Is this going to be easy? No. If it was easy we would not have done it. But is there a lot of demand out there? Yes there is. We believe there is an infinite demand for our services, there is no limit to it. The world is so complex and uncertain and only getting more complex and uncertain. Everyone is struggling to work out how to do things better, how to achieve their goals. Lack of demand really isn’t the issue. The issue is lack of great people who can grab these opportunities and help make it happen.” Senior people are particularly difficult to find, he adds.
The firm is adding some staff through acquisition but is even more keen to develop people internally. “This is the biggest and best way to grow,” says Aurik. “It’s the one that sticks.” It’s also a significant long-term investment; growing a great partner takes ten to 15 years. “This is where our relationship with London Business School will play a hugely important role in helping us to deliver our strategy. We are working together to educate and develop more and more of our people so that we can ultimately become most admired.” The initiative has begun with some of the firm’s partners and senior people but will eventually expand to cover a much wider remit. “We want this to be a long-term partnership – really long term, not just a one- or two-year deal. We hope that the School will invest and grow with us as we invest and grow with it so that over time we mutually reinforce each other,” says Aurik. Such a partnership will support better teaching, as academics and trainers get to know A.T. Kearney, and will create possibilities for mutual learning and coaching, he says. And that’s a key piece, he affirms, in the form’s overall ambition of becoming the most admired, “It’s an ambitious goal, audacious even, but one we fully believe we can achieve.”