Understanding Deloitte Strategy & Operations
Monty (not his real name, but the name he asked us to use!) is a principal with Deloitte’s Strategy & Operations practice in the tri-state area, primarily working out of the New York office. He holds an MBA from a top-5 school, an engineering degree and has worked around the world for Deloitte.
He offered to pay for lunch. I am not saying this will sway the writing in a positive way, but if he lets me order the lobster…than I can only be so strong. He has gratefully agreed to an interview in Toronto, Ontario’s King West restaurant scene on this cooler June morning.
Could you introduce Deloitte Strategy & Operations, Deloitte Consulting and Deloitte to our readers?
Deloitte is a global professional services firm based in the UK; it is no longer a Swiss Verein. It comprises tax, audit, consulting and financial advisory services as the core businesses. Each of these divisions is wholly owned by Deloitte, although the employees belong to separate legal entities – partnerships as you call them on the blog.
Deloitte Consulting is one of the largest divisions hiring tens of the thousands of consultants. Consulting focuses on human capital work, technology and strategy & operations (S&O). There are other areas but these are the largest of them all. So S&O is the part of Deloitte Consulting which only focuses on strategy and operations work. Leadership and organisational design consulting, for example, would be done out of Human Capital and technology consulting work would be done out of technology consulting.
S&O is large and growing rapidly. It is a multi-billion dollar business, the largest strategy and operations consulting team worldwide, by revenue and has a presence in 75 countries around the world. We are structured around a number of focus areas; strategy, operations, innovation, cost reduction, supply chain and finance transformation. We have about 15,000 consultants in the practice worldwide.
Tell us about the culture of the firm?
The culture is one of being collegial, innovative and driving excellence. We see ourselves as a home to consultants who want to stay and build a long-term career, and not just race to the top. Therefore, we do not have, or will have, an up-or-out policy. That said, poor performers will be asked to leave, like any firm which cares about its clients. Without this pressure of constantly needing or having to impress, Deloitte consultants can focus on solving problems. We believe in executable strategy, strategy which can be implemented by our clients and that is what counts for us. Our culture is about encouraging people to seek opportunities to develop ideas and solutions which work for clients.
That said, we do creative things and inspire excellence. We have strong relationships with the Harvard Business School, Stanford GSB and other top schools. To bring in this top people, we need to do inspiring work and make a meaningful impact at clients. So the culture is very creative but we do our work in a collegial way. We compete for the clients and not against each other for personal gain.
On a lighter note, we have so many Indians working in some of our offices that Diwali leads to the office being almost deserted. This is not just in India. I am talking about Manhattan. Clearly Deloitte S&O has a culture which embraces diversity.
Is there a memorable engagement or story which shows Deloitte’s rise in management consulting?
Yes – one more than any other shows our rise. When HP and Compaq merged, Deloitte S&O, McKinsey, BCG and another firm where in contention to help with the post-merger integration. After a tough process of getting to know the client and really understanding what they needed to make this work, we submitted a formal proposal. At the time, the odds were stacked against us and although Punit Renjen pushed us to go for the work, I think internally we were worried whether we would get it. HP did give us the work. One of the largest ever post-merger integration engagements in the US.
The McKinsey partner actually called the HP executive and asked why Deloitte was awarded the work over McKinsey! We did nothing and it was the client who defended the award! That award, and the way we overwhelmed our competition, along with their response shows that Deloitte S&O has been playing in the highest levels of management consulting for a long time. It is just that only after we started sharing what was happening “under the engine” that people have realized there is much more going on here. For example, we set up special sessions with Kennedy Research so they would not make assumptions about the business but understand what we are actually doing.
Let’s talk about some landmark engagements which Deloitte runs, which our readers would typically expect to go to McKinsey and BCG?
I will have to be careful in answering this and will only speak to engagements which do not give away confidential client data. The first one that comes to mind is us helping execute a strategic rebalancing of Agilent’s business unit portfolio to help position several multi-billion dollar global divestitures. We concurrently performed a global cost reduction program targeting $450 MM in annual cost savings (38% reduction). The fees for that engagement were up in the low $20 millions.
I also do not want the readers to think that Deloitte S&O only performs major work in the US. I want to talk to some landmark projects outside the US. Turquality comes to mind – this is in the media. Our Turkish office, with strong support from the Dutch, German and UK offices are helping to literally transform the Turkish economy. We helped the Turkish government review all Turkish companies across all sectors and find those who could be helped, through improved strategies and business practices, to become more profitable and stronger. This 4 year engagement is the center of Turkey’s plan to make sure its economy can grow, and the results speak for themselves. At its peak, we had 40 consultants on the engagement generating fees well in excess of $40M
We helped ABM set the strategic guidance for all Mexican banks on pricing, growth, and technology adoption. Deloitte S&O developed an interchange fee structure for card transactions in the Mexican banking system to maximize growth of electronic payments domestic network while optimizing benefit. Just a couple million dollars in fees, this engagement was of great importance to the Mexican government and economy.
In another engagement, growth for CNN International had slowed as multi-channel TV penetration peaked and profitability was being challenged by local channels. We delivered a real and robust growth strategy, adding incremental revenue exceeding $100M. This engagement was led from the UK practice.
Finally, Bluescope Steel faced increasing maintenance costs and needed sustainable cost reductions. We beat all our peers to design and deliver an improved maintenance program, enabling a data-based approach to find and resolve bottlenecks. The fees exceeded $2M on this engagement.
This list can go on and on. Yet, I think your readers get the point. We do great work.
Why do you think many, rightly or wrongly, consider Deloitte tier-2?
I just think people need to take more time to learn about Deloitte and not go on perceptions and hearsay. For example, you taking the time to ask these questions is a good example of what candidates need to do. You would not be asking these questions if you already knew about Deloitte. Granted, we should be doing more to make it easier for candidates to learn about Deloitte S&O. I have for long time advocated a separate website and I think that will help. However, even without the separate website, as I explained earlier, we still do outstanding work and a serious candidate would dig behind the misperceptions to find out what is happening.
What is happening with the Deloitte Review?
It is still going strong. It is the flagship publication of Deloitte S&O and captures our best thinking. It can be found on the Deloitte website. There are plans to expand the review and I think in a year it will be a very different, and more exciting, initiative.
Tell us about the strategy laid down by Punit Renjen (previous S&O leader) and the results so far?
Punit’s vision was simple. He wanted us to be within the top-3 recognized consulting firms by 2009. Granted, we are still not there on laymen perception, but he made huge strides, and we are there in terms of quality and client perception. We now have one consistent and unique identity and branding worldwide. The momentum we built attracted a drove of McKinsey, Bain and BCG partners to come across to Deloitte S&O. Profits surged, we started winning major assignments and recruitment went through the roof. We are one of the largest recruiters of MBA candidates worldwide. In terms of eminence, Deloitte partners wrote more books than most of our peers last year and we repositioned the Deloitte Review.
He also had some specific themes he pushed very hard. He pushed hard on training and teaching the consulting fundamentals, as well as giving recognition through internal awards. He also worked aggressively to integrate the different offices around the world and encourage coöperation. He pushed heavily into improving our practices in cost reduction & shared services, growth & corporate strategy, supply chain, and M&A. Finally, but not least important, he focused on raising salaries, fixing our business and training models, and developing more support systems for consultants.
All good news, but most importantly, Punit showed our clients that we were their best partners for their business and he changed the markets perception of Deloitte.
Why was Jeff Watts, a partner leading the smallest S&O practice, Japan, appointed to succeed Punit Renjen?
I am not sure if Jeff led the smallest practice! However, even if he did, should size correlate to ability? Jeff is a widely respected partner, who was groomed to work in one of the fastest growing regions in the world. No one questioned Dominic Barton’s appointment to lead McKinsey and the logic is roughly the same. Jeff had the values the firm needed and had exposure to a key region.
That’s the first time I have heard Japan referred to as “one of the fastest growing regions in the world.” Let’s talk about Deloitte S&O around the world?
I meant Asia-Pacific in its entirety. As mentioned earlier, we are in most major countries and cities. We generally served about 30% of the largest companies in all economies where Deloitte is present. In major economies Deloitte S&O serves up to 80% of the largest companies.
Let’s talk about the implications of having separate P&L’s across Deloitte S&O. How do you manage the challenges associated with this?
There are definitely challenges, but we manage them well. The fact that we continue to grow aggressively would show that our clients feel we are handling things very well. S&O has 91% of work from repeat clients. That is a figure we are proud of. Logically, we want that to be lower, around 85%, and still grow, since it implies we are bringing in newer clients.
What about staffing? Why would the Australians, for example, put in place an international team and “give” revenue to another partnership at their expense?
They would rather have 30% of a big pie versus 100% of a tiny pie. Seriously though, yes it does happen at times, but that is normal with human nature. When it counts, the partners will always do what is best for a client. Our clients will bear testimony to this.
So the UK partnership (separate P&L) is buying up partnerships across Europe, the US led partnership (separate P&L) is buying up practices in South America and others are doing the same. What is the end-game?
If we can manage the risk of integration, then integration is the end game. But I am sceptical we could.
I have always wondered this. If Deloitte Consulting has a separate technologies consulting practice from S&O, who is on the technology strategy projects? Is it the SAP implementors?
Yes and no. Technology strategy projects are led by our technology practice, but if needed, S&O will have people on the engagements. It depends on the nature of the engagement. Our strength is our ability to field these teams which have strategy depth, technology ability, finance skills and more. Is there any firm in the world today which can help you restructure your entire technology base, run your IPO, develop and carry out your strategy, align your organization’s culture and finally make all these pieces work? We have a unique base of skills.
What is the S&O practice looking for in new hires?
Passion, intellect, a track record of accomplishments, entrepreneurial, inquisitiveness and a bent for interesting work. There is no need to be obsessed about your school, GPA, GMAT Score and so on. We look at the application in its entirety and rely heavily on the fit and case interviews. I think the most important thing is to be sincere. We can quickly see whose resume, background and style does not mesh.
What is the application process?
Although we have peak seasons for recruiting, we look at talented people all year round. So it is best to contact the office you would like to join and get advice from the HR team.
We also work through campuses and you should see if we visit your campus. If so, try to attend our sessions and learn more about us.
I have offers from BCG and Deloitte S&O. Why would I pick you?
If you want to learn, grow as a business thinker, add value to clients and join the world’s fastest growing, and largest, strategy and operations team, you will want to be one of us.
And the salaries?
It really depends on the country and level. Depending on who is reading this, the numbers may be irrelevant. I can say that we offer highly competitive salaries which match or exceed our peers.
Do you have any fast-facts or memorable sound bites to remember?
These numbers are just for Deloitte S&O and not for Deloitte Consulting!
We are committed to management consulting for the long-term and did not cut or sell the business during the last 3 recessions/downturns
~ $3bn revenue
~ 15,000 consultants worldwide
Fastest growing management consulting firm worldwide
Largest management consulting firm worldwide
Presence and opportunities in every major city and country
Exposure to landmark clients on critical projects
Rapid growth opens up tremendous promotion opportunities
What about my lobster?
Let’s see what you write-up first!
- Which Consulting Firms are Hiring & Where (May 2011 Edition) (firmsconsulting.com)
- Unsung Icon of Management Consulting…Booz & Co. (firmsconsulting.com)
- The True Gate Keepers to BCG, Bain & McKinsey (firmsconsulting.com)
- McKinsey is no longer the top-ranked management consulting firm! (firmsconsulting.com)
- McKinsey Engagement: Exclusive Behind-the-Scenes Story (firmsconsulting.com)