| | By Mick James
The news that
BearingPoint has filed
for Chapter 11
bankruptcy protection in
the US will have – at
least initially – sent
shock waves through the
consultancy industry
(note - this story
relates to
BearingPoint's US
business and not it's
other international and
indeed UK businesses).
If such a well-known
brand, the former KPMG
Consulting, can get into
such difficulties, who
will be next?
But although these
are clearly difficult
times, BearingPoint may
not seem be the
harbinger of doom it
appears. For a start,
BearingPoint’s history
is atypical. After
enormous amounts of
faffing around, it ended
up as the only one of
the former Big Four
consultancy arms to
become an independent
consultancy. Who knows
how “Monday” (PwC) or
“Braxton” (Deloitte)
might have fared if they
had not been,
respectively, sold to
IBM or kept by the
parent firm. It seems
likely BearingPoint
itself would no longer
be with us had the
credit crunch not dried
up money at the point
when it seemed sensible
to seek a buyer.
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BearingPoint was also
handicapped from the
start. Ironically, while
it was the only Big Four
consulting arm to make
it over the wire, it
wasn’t a clean break.
While the other Big Four
firms managed to make
relatively
straightforward
separations, KPMG’s
consulting network
fragmented, leaving
BearingPoint with major
gaps in its global
footprint, notably in
the UK. The subsequent
cost of acquisitions and
hiring may well have
contributed to the
mountain of debt that
the company now
struggles under. I say
may, because nothing
about BearingPoint’s
finances is clear. In
2005 it was the subject
of an investigation by
the Securities &
Exchange Commission, and
the subsequent critiques
of its financial and
internal controls have
been a PR disaster for a
business consultancy
with an accounting
heritage.
The final and most
puzzling aspect is that
for all of its problems
with debt and internal
controls none of them
should have mattered.
The last five years have
been staggeringly
successful ones for the
consultancy industry, | |
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| | quickly. The worst fate
that can befall a
consulting firm is death
by a thousand leaving
employees. If people see
no clear direction or
future in a firm, they
will leave – at least,
the good ones will.
You might argue that
now is no time to be
looking for a
consultancy role, but
it’s not true. There’s
still a formidable need
for really talented
people in consultancy
and the inadvertent
arrival on the job
market of hundreds of
mediocre ones will do
little to help that.
The other problem
with being in financial
difficulties – apart
from the financial
aspect – is that they
come to dominate the
public presence of a
company. It doesn’t take
much to weld the term
“Troubled X firm” to the
front of a brand but it
takes major surgery to
remove it. For
consultants, especially,
this is poison. If the
firm is seen as obsessed
with solving its own
financial problems, the
obvious client reaction
is, “when you’ve sorted
out yourself, come and
look at mine” – thereby
creating a vicious
circle of decline.
What BearingPoint | |
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| | needs – and this is
where everyone has
something to learn – is
a rapid and powerful
restatement of what the
firm is and what it can
do for clients, right
now, not last year or
the year before. Brand
is a concept that has
become increasingly
better understood by
consultancies.
BearingPoint itself won
awards for its
rebranding exercise,
spearheaded by its
sponsorship of golfer
Phil Mickelson (as
befits a story in which
every aspect is tinged
with irony, Mickelson is
now back with KPMG). The
trouble is that most
consultancies have been
struggling with the
problems of building a
brand – reinventing a
brand for radically
changed times is a very
different challenge.
If someone asked you
“what exactly is your
firm for, right now?”
would you have a ready
answer? BearingPoint
will not only have to
have one very soon but
it will have to get it
100% right, 99.5% just
won’t do. Either way, it
will be exemplary. The
BearingPoint story may
have been something of a
one-off up until now –
that doesn’t mean that
we can’t all watch and
learn from now on. | |
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