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In the last few years we've recognized that a startup is not a smaller version of a large company.
There's been lots written about how companies need to be more innovative, but very little on what stops them from doing so. Companies looking to be innovative face a conundrum: Every policy and procedure that makes a them efficient execution machines stifles innovation. This first post will describe some of the structural problems companies have; follow-on posts will offer some solutions. Facing continuous disruption from globalization, China, the Internet, the diminished power of brands, changing workforce, etc., existing enterprises are establishing corporate innovation groups. But paradoxically, in spite of all their seemingly endless resources, innovation inside of an existing company is much harder than inside a startup. We know that a startup is a temporary organization designed to search for a repeatable and scalable business model.
A company is a permanent organization designed to execute a repeatable and scalable business model. Once you understand that existing companies are designed to execute then you can see why they have a hard time with continuous and disruptive innovation. Every large company, whether it can articulate it or not, is executing a proven business model(s). Somewhere in the dim past of the company, it, too, was a startup searching for a business model. It's worth looking at the tools companies have to support successful execution and explain why these same execution policies and processes have become impediments and are antithetical to continuous innovation.
In the 20th century business schools and consulting firms developed an amazing management stack to assist companies to execute. For example, the Boston Consulting Group 2 x 2 growth-share matrix was an easy to understand strategy tool - a market selection matrix for companies looking for growth opportunities. Strategy Maps are a visualization tool to translate strategy into specific actions and objectives, and to measure the progress of how the strategy gets implemented.
Product management tools like Stage-Gate® emerged to systematically manage Waterfall product development. Once the business model is known, the company organizes around that goal and measures efforts to reach the goal, and seeks the most efficient ways to reach the goal. Paradoxically, these very KPIs and processes, which make companies efficient, are the root cause of corporations' inability to be agile, responsive innovators.
Finance The goals for public companies are driven primarily by financial Key Performance Indicators (KPI's). HR Process Historically Human Resources was responsible for recruiting, retaining and removing employees to execute known business functions with known job spec's. The conundrum is that every policy and procedure that makes a company and efficient execution machine stifles innovation. While companies intellectually understand innovation, they don't really know how to build innovation into their culture, or how to measure its progress. It may be that the current attempts to build corporate innovation are starting at the wrong end of the problem. Corporations that want to build continuous innovation realize that innovation happens not by exception but as integral to all parts of the corporation.
To do so they will realize that a company needs innovation KPI's, policies, processes and incentives. Although in practice their work overlaps, the two have until now remained distinct businesses. Just as the workload from Sarbanes-Oxley began to dwindle, the 2008-09 financial crisis hit, causing consulting revenues to dip (see chart). Both Booz and PwC say that the two sides of consulting are converging, and that more clients want a one-stop shop that can both devise a strategy and execute it. Most important, each of Booz’s 300 partners would have to trade meaningful sway over the direction of a highly profitable firm for a minuscule stake in a diversified, lower-margin empire. Next in United StatesXNew York Where will you go, Bill de Blasio?The Big Apple has been well run for 20 years.
The companies that appear in this gallery garnered the greatest number of recommendations in the Strategy functional area on the full list of America's Best Management Consulting Firms. Contact and relation with the EU Authorities: European Medicines Agency (EMA), European Pharmacopoeia and National Agencies.
Big Four firm KPMG is currently in the process of launching a new practice that will specialise in strategy consulting. KPMG’s move to bundle its services and in a consolidated manner enter the strategy consulting market is driven by three main considerations.

Secondly, the decision to bolster its strategy offeringsis in line with KPMG’s long-term plan to grow its market share in the Advisory space. The impact of KPMG’s push into the strategy space on its overall Advisory objective should however be placed into perspective.
Thirdly, KPMG’s decision to bundle its already existing strategy services into a separate platform will enable the firm to more effectively respond to client requests from all over the globe. What strategy?The key question for KPMG will be how it can differentiate itself from its competitors. According to Lynne Doughtie, Vice Chair of KPMG Advisory and the Lead-partner for KPMG Strategy, the firm will be able to set itself apart from the competition through its unique mix of integrated offerings. KPMG StrategyThe new KPMG Strategy platform is currently being rolled out within the firm and staffing is well under way. In many cases you the owner knows what needs to be done but either don't have the time or ability to develop the strategy or experience to execute the plan.
The Maximize Team will create the company's profitability strategy by developing a three to five year business plan.
You benefit from the Maximize team's experience and expertise which covers several market segments and nearly all management disciplines.
We offer the combination of business experience driving performance improvements, access to capital sources, and -- most importantly -- the commitment to build a business with exit strategies. Some 39 percent of major companies say that Ernst & Young is the sustainability consulting company they prefer, and Microsoft leads the software category with the same score, according to a Verdantix survey. KPMG achieved the highest preference score in the sustainability assurance market with 36 percent, and the Global Reporting Initiative topped the preference list (61 percent) among the not-for-profits, according to Verdantix Global Sustainability Survey: Brands. The global study is based on interviews with 250 senior sustainability decision-makers at firms with annual revenues greater than $250 million, across 21 industries in 13 countries.
KPMG ranked second in the sustainability consulting category with a score of 37, followed by Deloitte (33 percent) and PricewaterhouseCoopers (30 percent). Ernst & Young achieved the second highest preference score in the sustainability assurance market with 35 percent — just 1 percentage point behind the No. In other categories, SAP has the second highest preference among sustainability management software providers with 38 percent, followed by Oracle (29 percent) and IBM (27 percent).
When it comes to actually hiring a company to provide sustainability management software, however, the majority of sustainability leaders say they are unlikely to engage any of the software firms (see chart). Among the not-for-profits, Carbon Disclosure Project scored 57 percent, while the World Wildlife Fund (WWF) reached a preference score of 48 percent and the UN Environment Program 44 percent.
A 2011 Verdantix study found only a handful of firms – notably Deloitte and PricewaterhouseCoopers – have excelled when providing major companies with corporate-wide sustainability visions.
The compliance challenges that entities such as chemical, energy, or mining companies face are seemingly endless – and endlessly complex.
These groups are adapting or adopting the practices of startups and accelerators - disruption and innovation rather than direct competition, customer development versus more product features, agility and speed versus lowest cost. For most companies it feels like innovation can only happen by exception and heroic efforts, not by design. But now, as the business model is repeatable and scalable, most employees take the business model as a given, and instead focus on the execution of the model - what is it they are supposed to do every day when they come to work. These tools brought clarity to corporate strategy, product line extension strategies, and made product management a repeatable process.
This systematic process of execution needs to be repeatable and scalable throughout a large organization by employees with a range of skills and competencies. One of the least obvious but most important HR Process, and ultimately the most contentious, issue in corporate innovation is the difference in incentives.
Strategy firms like McKinsey, Bain and the Boston Consulting Group hire from the top universities, are packed with highly paid partners and whisper their counsel in CEOs’ ears. In January Deloitte became the largest of the Big Four by scooping up the assets of Monitor, a strategy firm that had gone bust.
But once the economy recovered, the climate for the Big Four started to resemble the 1990s.
During the 2000s they had mostly prospered on their own, and their partners shuddered at the thought of being subsumed into giant bureaucracies. In 2010 the company’s partners voted down a proposed merger with AT Kearney, another midsized strategy firm.
If the sale is approved, the test of its success will come in a few years, after Booz’s partners receive their full payout and can head off.
They are presented here in alphabetical order and by rating.For the full list of America's Best Management Consulting Firms 2016, click here. Over the past years the large professionals services firms have witnessed relatively low growth, or even contraction, in their traditional Accounting and Assurance market, and as a result they have turned their eyes to the quicker-growing management consultancy segment.

KPMG chooses to build its new unit largely from the talent it already has in house, unlike its Big Four rivals, which respectively acquired strategy businesses within the last two years (in July EY acquired The Parthenon Group). In some countries the move is expected to have little impact – in for instance the UK and Germany KPMG already has a mature Strategy practice within Advisory, while in other countries the selection process will take more time and a larger external recruitment drive will be launched. Among the management consulting firms, Accenture achieved a score of 22 percent, beating McKinsey (21 percent) and Bain (15 percent).
1 KPMG — while Bureau Veritas reached 22 percent, the highest brand preference for a supplier outside of the Big Four accounting firms (Deloitte, Ernst & Young, KPMG and PwC).
Specialist software firms CarbonSystems and Credit360 both achieved the highest brand preference score of 16 percent. And because the word “compliance” means different things to different people, there are various ways to consider the state of being in compliance. They measure their success on metrics that reflect success in execution, and they reward execution. It represents where employees fit in an execution hierarchy; showing command and control hierarchies - who's responsible, what they are responsible for, and who they manage below them, and report to above them.
Staff functions in finance, human resources, legal departments and business units developed Key Performance Indicators, processes, procedures and goals to measure, control and execute. But they still get the girls and get rich.” Like so many caricatures, this one is cruel but contains a grain of truth.
In contrast, operations specialists such as IBM, Accenture and the Big Four accounting firms (Deloitte, EY, KPMG and PwC) employ armies of lower-paid grunts; and tend to answer to the client firm’s finance or tech chiefs.
And on October 30th its closest rival, PwC, said it would buy another strategy firm, Booz & Company, for a reported $1 billion.
But in 2001 Enron, an energy-trading firm, went bust and took its auditor, Arthur Andersen, down with it. They began to rush back into consultancy, encouraged by its high margins and double-digit annual growth rates at a time when revenue growth from auditing and tax work had slowed.
High-profile deals like the Booz-PwC tie-up put the conflict of interest between auditing and consulting back in the spotlight: after it was announced, Arthur Levitt, a former head of America’s Securities and Exchange Commission, warned that the firms were “slipping back” towards old, bad habits. Against the backdrop of the fast-paced changes in the external landscape, clients are increasingly asking consulting firms for more forward-looking services such as strategy. An analysis from reveals that between 2008 and 2013 growth in consulting services has significantly outpaced the other functions*, with Deloitte the strongest performer (+52%), followed by PwC (+45%).
For instance, in the major European markets strategy consultancy’s share hovers between 10% to 12%. This will allow KPMG Strategy clients to take advantage of the deep expertise KPMG has outside of the specific strategy unit, says Doughtie.
Operations consultants—the fine-detail guys who tinker with businesses’ internal processes to make them run better—generally do not enjoy the same glamour or financial rewards as strategy specialists, whose job is to advise firms on make-or-break deals, adopting new business models and other big stuff. In response, America’s Congress passed the Sarbanes-Oxley corporate-governance reform, which banned firms from doing systems consulting for companies they audited. In particular, Deloitte and PwC began gobbling up operations consultancies as they sparred for the top spot. Cost-conscious companies with globalising businesses wanted either to hire boutiques with deep knowledge of their industries, or to benefit from the scale of generalist firms with offices everywhere. A significant number of Booz’s clients would immediately be in doubt because PwC audits them—strategy consulting for audit clients is banned in many countries, and even where it is legal it is frowned upon (not least in America).
Any gains from pushing into strategy work might end up being outweighed by the cost of another regulatory crackdown. From rapidly changing business models to new technologies or increased regulatory pressure, clients are struggling keeping up with the pace of change, and even more so, dealing with the potential disruptions in their landscape.
And although KPMG’s Advisory practice still is ~$300 million larger than that of EY, its growth rate is lagging the Big Four, risking the firm to lose ground, and this has internally led to a new strategy aimed at boosting its presence in the consulting market.
As a consolation prize, the Big Four made a fortune helping clients comply with the new law.
Too big for some clients and too small for others, Monitor went under, and Booz—a spin-off from Booz Allen Hamilton, which now focuses on operations work for governments—went on the block. Since the Big Four are structured as associations of national partnerships, Booz’s staff would probably end up being divided by country, hindering the global co-operation that many big clients seek. Their advisory businesses, full of potential for conflicts of interest with their auditing side, by now seemed dispensable.

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