The Hidden Gems of the Consulting Profession

Each year, Consulting magazine recognizes the Seven Small Jewels of the industry. But our annual celebration of the little firms that could has evolved from simply a way to recognize those often overlooked firms to a testament to the impact that all small firms are having on the industry. They are helping shape and redefine the consulting marketplace. In many ways, the seven firms featured this year represent a snapshot of the new consulting landscape. Smaller firms are no longer flying under the radar. Rather, they are playing in the big leagues and challenging the legacy firms by going after their clients and their talent. And, in many cases, they are winning. The 2008 Seven Small Jewels—ranging in size from $3 million to $52 million and from just 13 billable consultants to 200—are leading the charge of the resurgence of the small, niche, consulting firm that plays a major role in the profession today.

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True Partners Consulting

Sometimes, all a consulting firm needs is an opportunity. In the case of Cary McMillan, co-founder and CEO of True Partners Consulting, that opportunity came about six years ago with the passing of the Sarbanes-Oxley Act. True Partners, a tax and business advisory firm, actually didn't even launch until late in 2005, but the groundwork for that launch was laid back in 2002 with Sarbanes-Oxley. "Sarbanes-Oxley was a once- in-a-lifetime thing. It was the best thing to happen to auditors since the passage of the Securities and Exchange Act in the 1930s,” McMillan says. "But the act meant that audit firms needed to distance themselves from their audit clients. As a result, we're getting an opportunity to bid on work that the auditors would have previously done.”

Chicago-based True Partners, like so many other success stories in consulting over the last few years, was founded by six ex-Arthur Andersen partners. Five of those partners were in the tax practice at Andersen. McMillan left Andersen before its demise in 1999 and was the chief financial officer of the Sara Lee Corporation before launching True Partners.

"The genesis of True Partners was our thought of, ‘Why be partners with auditors when you can't share clients with them?' The answer was True Partners. We tried to create the same quality and feeling of a big accounting firm for our tax people without having the downside of the auditors,” McMillan says. "We offer the best of both worlds: We're a firm with Big 4 expertise, but without the accompanying bureaucracy and potential conflict of interest.”

When he launched the firm, McMillan says he was concerned about how it would be perceived in the marketplace. "We're not one of the Big 4. Will we be accepted by the types of clients we wanted with a name—True Partners—that's only been around for a few years,” he says. "The most encouraging part of this so far to me is that the client reception and reaction to us has been extremely positive. We're thrilled with our client list, and I would match it up with any of the Big 4.”

And that client list must be growing, as well. From its original Chicago office and six co-founders, True Partners has grown into a firm with seven offices and 200 billable consultants. McMillan says he expects the firm to do about $35 million in 2008—more than 50 percent higher than the $23 million the firm did the year before. Meanwhile, it increased its revenue nearly 200 percent in 2007 from 2006, when it billed $7.8 million in revenue. By 2011, McMillan expects the firm to be between 400 and 500 billable consultants and $70 million and $100 million in revenue.

"We started with six, and now we're closing in on 200 people, and we pretty much built this business from scratch,” he says. Building a firm that grows some 50 percent every year organically is no small task. And, like with many firms, finding and hiring qualified talent has been the biggest challenges and impediments to growth for True Partners, McMillan says. "That first year, our eyes were bigger than our stomach,” he says. "The problem was recruiting. If you can't find the right people, you can't do the work. And, initially, we were looking for experienced hires, which makes it even more difficult. That first year, you need experienced folks to do the client work. When you walk into a client site with an experienced workforce, you tend to get asked back.”

Now, True Partners has shifted its approach to focus on hiring more junior people coming out of school. But the recruiting game is never easy, McMillan says. "We're not going to bring someone in here who doesn't fit our culture,” he says. "I'm a big believer in culture. We're building that culture one person at a time. That culture at a firm is very difficult to articulate and very difficult to get, and it's very easy to wreck. You wreck it when you do acquisitions and bring other people's culture into your own firm.”

Which is why all of the firm's future growth will be organic, McMillan says. He is looking at two potentially two new U.S. locations—the Southwest and metro New York. Internationally, True Partners already has a Paris affiliate and eventually will have affiliated members in Western Europe, Asia and possibly Latin America.

"Good things happen to those who grow,” McMillan says. "It's what we tell recruits all the time, growth is a big opportunity presenter. At True Partners, you'll be part of a growing firm, and you'll be getting all those opportunities that come with it.”

Censeo Consulting Group

Raj Sharma knew he wanted to change the rules of consulting. So when he founded Censeo Consulting Group after leaving Booz Allen Hamilton five years ago, he set out to do things a little differently. "I really wanted to fundamentality think about consulting in a different way,” Sharma says. "I got to thinking that there had to be a better way that would allow us to address some of the core issues and problems that I've seen in my years in consulting.”

Those issues, Sharma says, focused on the way some consulting firms think about customers and their own people, treating them "essentially like commodities,” he says.

"I knew I would never run my firm that way,” he says. "I wanted anything we did to have a lasting impact on the business, things that go past just making money for the firm. I wanted to do work I'm proud of and passionate about. From the beginning, I wanted Censeo Consulting to be about the greater good.”

So Sharma, president and CEO of Censeo, started the business with a few colleagues from Booz Allen and a few more from A.T. Kearney, the kind of people "who understood the vision I had for the firm.” But coming from such big-name firms, Sharma and his co-workers understood the challenges that come with a start-up consulting firm.

"The big break for us came about 11 months into the business,” he says. "A few clients realized that it didn't really matter what the firm name was, but it was about the people that you brought to the table, and the expertise that you could provide.”

What Censeo brings to the table for clients, Sharma says, is exceptional value. That means Censeo only will take on engagements where Sharma believes the firm can truly leverage its core problem-solving and change competencies around supply chain and operations. "What do customers really hire us for? They're seeking expertise and thought leadership. Those are the only customers we want to work with,” Sharma says. "Part of a being a thought leader means going beyond what other firms have already done. Of course, we want to leverage best practices, but we need to go past that to truly deliver value to clients.”

With a Booz Allen background, it's not surprising that the roots of the business was federal government and public sector business, but that business mix is changing, Sharma says. "Originally, there was a hole in the marketplace in the federal side around strategy-type skill sets, and this fit nicely with what we were trying to do,” he says. "Our roots are in procurement, but we've started to expand that footprint and now are serving commercial clients—Fortune 500 clients who are looking at broader issues around operations and supply chain.”

And that business shift has helped fuel Censeo's rapid growth. The firm grew some 130 percent from 2006 to 2007 and is projected to grow another 50 percent in 2008. To keep up with the demand, Sharma expects to add 10 to 15 billable consultants this year, bringing the total to 50. Eventually, Sharma envisions Censeo being a $75 million to $100 million firm with 200 to 500 consultants. "My goal is not to grow this firm ridiculously,” he says. "We're not driven by top line growth. We won't incentivize or compensate our people that way. I'd rather grow the firm the right way with the right people.”

The right way with the right people means Sharma takes work/life balance very seriously, including the firm's virtual delivery model whereby consultants travel only when absolutely necessary—usually about 15 percent of their time, he says. "We will never work with clients who want us on site three or four days a week. We just don't believe in this day and age a client requires that,” he says. "We'll go to the client site as needed, but most clients understand and believe in the virtual delivery model and benefit from lower overhead costs and more productive consultants. We can deliver without being on the client site. Actually, it's been tougher convincing old-time consultants.”

Cliff Consulting

Cliff Consulting knows what it is. And Bob Cliff, founder and CEO, would have it no other way. Unlike the other six firms on this year's Small Jewels list, Cliff isn't a new, niche firm that's looking to break out. An IT and operations project strategy firm focused on financial services and healthcare delivery, it may be the profession's prime example of "slow and steady wins the race.” But don't let that fool you into thinking there's nothing flashy about Cliff. In fact, by today's consulting standards, nearly everything is flashy about the firm. It has no travel budget, it's employees don't have titles, per se, and junior staff is non-existent. Some clients date back to the Gerald Ford years, and most of its consultants date back to at least Ronald Reagan. The average Cliff consultant's level of experience is 25 years and average tenure with Cliff is 13 years.

"We're certainly a different kind of firm,” says Cliff, who founded the firm in 1972 after stints as an industrial engineer and a professor at U.C. Berkeley. "Our experience and our tenures are so remarkable, and unprecedented really, in this industry.” The reason no one leaves, he says, is because "Cliff offers people the opportunity to do what a consultant really wants to do—get embedded into an organization and really consult with them without other distractions.” And that's the way it's been at Cliff for the last 36 years. He started the firm with a few associates and grew it to a dozen billable consultants. It's pretty much stayed there ever since.

"Growth is a business choice, not a mandate,” he says. "I call it ‘right-sizing.' For us, this is the right-size firm. It allows us to preserve a healthy work/life balance that is so important to the success of the firm.” That work/life balance includes travel as a choice and the ability for consultants to manage their own work schedules. "That's one of the main reasons we have associates who have been with us for more than 25 years,” he says. But with such an experienced staff, the inevitable is finally happening at Cliff. Two senior people are going to semi-retire this year, so Cliff finds itself in the unusual position of having to hire new people.

"We're looking for very seasoned professionals, people with a minimum of ten years' experience in consulting, industry or a combination of both,” says Robin Nasatir, who was appointed president and chief operating officer of Cliff last month. Nasatir, who has been with Cliff for 20 years, was previously vice president. In her new role, Nasatir will run the day-to-day operations of the firm. Cliff will stay on as CEO and will still guide the strategic direction of the firm.

"I think hiring is a little more difficult for us,” Nasatir says. "I think we have a cultural difference in our approach. We call it the ‘Cliff way.' Our style is very collaborative with the client; we partner with them on everything we do.” The result, she says, is an approach that's different from most other consulting firms. "We try to bring out the best in our clients. We're going to work through them, empower them, train them and motivate them,” Nasatir says. "It's not all about us. We're helping the client grow and develop.”

The approach is something Cliff calls "egoless consulting.” At Cliff, "we're not looking to show off or dominate the conversation,” he says. "At the end of the day, the finished product is the client's product. They very much feel a sense of equity in the result. That means there's a high success rate.”

That type of investment from Cliff leads to those deep relationships with clients, he says. "I absolutely love what I do, and I think it shows when I'm with a client,” Cliff says. "I almost hate to say it, but I've had a lot of fun working. It's really too bad more people don't.”

Strong-Bridge

The partners at Strong-Bridge have a simple business strategy that has worked for the past five years: Do a good job for the client and that spells success for both parties. But even more importantly, Strong-Bridge does whatever is necessary to make its clients happy.

"Delivering for our clients is a priority, and the quality of work being delivered is primary over everything else,” says co-founder Brian Hartnett. "If we do that well, we figure growth will follow.” And the strategy has worked—revenue was up 39 percent in 2007 to $5.7 million, and is projected to grow another 39 percent this year. Impressive for a firm with 30 billable consultants.

But don't let size fool you—there's a lot of experience at the helm. Co-founders Ken Simpson and Hartnett came from a telecom background, having worked together at Deloitte's telecom and media practice for three years before deciding to start their own firm in the Pacific Northwest specializing in telecommunications and high-tech consulting. "We wanted to have a practice where we would be one hundred percent focused on client work and a little less focused on the peripheral things a big firm can keep you working on,” Hartnett says.

The partners also know growth doesn't happen without a good team. Their recruiting process consists of primarily hiring from their personal network, so new hires are not just a competency fit, but also a cultural fit. In order to recruit these high-end people, they offer competitive compensation and flexible work arrangements as well as valuable employee feedback. Hartnett and Simpson meet with their people every other week to resolve issues, discuss risk, and assess progress at a client site and provide any feedback or coaching necessary. "We're all about real-time, open feedback, both positive and negative, infused with the humor we instill at our company,” Hartnett says. "We try to make it fun, and that enables us to give direct feedback. By being a little humorous about it, we can take the edge off and they can take it to heart, versus feeling like they are punished. In the end, what allows me to sleep at night is the strength and capability of our people—they're the bedrock of the firm.”

Through these regular performance reviews and QA's, they can quickly detect if recruits' previous training measures up. In fact, they've had to coach people to stop thinking about sales opportunities and instead refocus on doing the work and gaining the client's trust by showing that they're focused on delivery, not on looking for new sales opportunities.

"That's probably not the fastest growth strategy in the world, but it's the trusted growth strategy that's worked for us,” says Simpson.

Even though the firm focuses primarily on the Pacific Northwest, Simpson says Strong-Bridge is planning to open a second office in California this year and add 15 more billable consultants. Most of the business comes from word-of-mouth, and satisfied clients readily offer glowing testimonials without being prompted. "Most of our work comes from our people doing great work with key clients and extending our relationships with those clients—not to sell, but to make people aware we've done good work elsewhere,” Hartnett says.

For a recent client, a large wireless carrier, Strong-Bridge led a critical initiative to implement an outsourced distribution strategy. They knew they had to understand the business, gain strong executive support in order to make decisions and manage a large, cross-functional team. That whole concept of doing whatever is necessary to help make clients successful won the day. "There was an operational glitch due to a system problem, so we jumped on a plane at 9 p.m., were on site the next morning and not only worked through the problem, but also handled inventory,” Simpson says. That project, he adds, launched ahead of schedule and under budget.

Pariveda Solutions

The name "Pariveda” is Sanskrit for "reaching for complete knowledge,” and CEO Bruce Ballengee believes knowledge is found in people. Therefore it's no surprise that the secret of his success is in cultivating the team and helping its members advance. In fact, new hires at the Dallas-based company are given a 10-level plan for climbing the company ladder on the first day of employment.

"Our mission is to acquire, develop and manage talent in IT for the benefit
of clients, it's all about people development,” Ballengee says. "We're trying to grow people to become executives, and various aspects of our business model are geared for that.”

New employees, who are usually in the top tiers of undergraduate or graduate levels, are given a path that spells out how to get to be an executive—there's no mystery.

And most people can make vice president in 10 to 12 years, though the firm also hires people at the executive level. The thinking behind this strategy is that these new employees have already gone through an education system that is based on annual promotions to get to the next level, so they know how to play the game. At Pariveda, a curriculum is set up that mimics their school career in that they have an expectations framework that is clearly defined at every level of the corporate ladder, which Ballengee sees as unique to his firm.

"People want to work on interesting projects, where they are making an important contribution, are recognized for their efforts, and where they have the opportunity to advance to the best of their abilities,” Bellengee says. "Much of the turnover in our industry is on people hitting a glass ceiling, so it's hard to know what you need to do to advance.”

Part of the employee cultivation is a lot of hands-on coaching. Staffers are given employee reviews every six months and usually are up for promotions every year to year and a half, on average. "One of our goals is to make these project reviews not a thumbs up or down thing, but on how your performance was. It's bringing career development down as granular as possible,” Ballengee says.

All reviews are in the form of a letter that speaks to an employee's strengths and weaknesses, and what the key things are to do or development areas. "What we are really trying to do is find strengths to leverage. People are generally going to succeed and advance on their strengths over their weaknesses, so we put a lot emphasis on that.” Major promotions are treated like a doctoral oral exam where the initiate is gilled before a review board to see if he is ready for the next step.

Ballengee sees this career cultivation as a key advantage for Pariveda, which specializes in the "business of IT”—helping clients optimize their value chain and transform their business and technical architectures to deliver value. With the right team in place, consultants apply the best value and resources to their mostly IT clients at their six locations.

The plan is working as its revenue is up 42 percent and the number of billable consultants has almost doubled in the past year to 90. Ballengee, who himself brings 25 years of experience to the table, foresees more growth in the future—a projected 85 percent increase in revenue—as Pariveda expands between one and three offices a year in new markets: On tap for 2008 is a new location in Los Angeles.

"We are a long way from becoming a dominant player in major markets, but since we are small and people are able to work locally, we are able to attract and maintain good people [to keep our clients satisfied],” he says. "We're already in six of the top twenty-five markets in the world, and we just want to continue expanding. Our team will help realize this goal.”

MarketSphere Consulting

When Steve Sestak set out to launch a different kind of consulting firm in 2002, he knew he wanted a name that said something about the business. So Sestak, along with the three other ex-Arthur Andersen co-founders of the firm, settled on the name MarketSphere Consulting. "The firm was founded on a market-centric business philosophy,” says Sestak, who is president and CEO of MarketSphere Consulting. "That market orientation is the key dimension of our business. That approach really keeps us anchored on the local companies. We're investing the time to be knowledgeable to their business, their issues and their challenges.”

Sestak says that MarketSphere has found that a blend of national expertise and local support "is the best way to serve those clients,” he says. "And because we are committed to local companies and communities, we are able to develop deeper relationships and be more responsive to our clients as needs arise.”

The market-centric approach focuses on 10 offices clustered in the three areas—the Midwest (Kansas City, Omaha, Neb., Indianapolis and St. Louis), the Southwest (Dallas and Houston) and North Central (Chicago, Pittsburgh and West Orange, N.J. MarketSphere also has an Atlanta office and will be looking to open more locations in the Southeast and Northeast, "depending on where clients want us to be,” Sestak says. Some 90 percent of MarketSphere's revenue is generated from companies in local markets.

MarketSphere goes to market around two main strategic areas—enterprise technology and business advisory services, two fast-growing niches in the industry. Sestak says MarketSphere tries to keep about a 50/50 balance between those two practice areas. The positive growth has helped fuel revenue growth to the tune of 36 percent and 20 percent the last two years.

"Growth isn't our primary strategy, it was more of a good outcome for doing the right things,” Sestak says. "Growth is certainly a good thing. Our industry is one where you have to grow or you don't provide opportunities for your people.”

So, what's the sweet spot for MarketSphere? " We believe if we stay the course on our strategy, we'll probably be in the $75 million to $100 million range in three years or so,” Sestak says. "But, I'd rather be a $75 million firm staying true to our principles than a $100 million firm that got there the wrong way.”

The wrong way, he says, is by rapid expansion through mergers and acquisitions. "Certainly, there is an M&A strategy, and we'll continue to look for the right opportunities, but the organic track we're on should take care of most of the growth,” Sestak says. "When you take acquisitions, there's some risk there as well around culture. And that's something we take very seriously.”

Preserving the culture at a firm that's rapidly expanding is no easy task. One big plus, Sestak says, is the local focus means fewer days on the road for the consultants. "Our people certainly appreciate that,” he says. "And our new hires tend to be excited by the opportunity to be more relevant to the community in which they live.”

Another attractive feature of the firm, Sestak says, is the work that it does. "We're a very well-rounded firm in terms of the work we do, while a lot of firms our size tend to specialize in just one or two areas,” Sestak says. "But we introduce a broad enough platform of solutions to attract good people to the firm.”

The Claro Group

Legacy means a lot to the founding partners at The Claro Group—the roots of which stemmed from working together at Arthur Andersen Consulting. When the company went bust in 2002, the future founders went on to other consulting firms, but longed to get back to what they liked about Andersen. So they created The Claro Group in 2005, where the goal was to create an environment where a group ran and owned the company and its team could eventually take their places as the owners of the business.


"We wanted to create a firm where we could control our own destiny and focus on things that mattered to us the most—the clients and the people,” says managing director George Hansen. "We're one hundred percent owner operated, meaning that the senior partners are the only owners of the firm—there are no third-party financial interests. If you're public or have third-party investors that's just another entity that has the power, and they are the ones who should matter the least in a consulting firm.” As a result, the firm is flexible in dealing with clients in terms of adopting fee structures and other customizable options.


Clients also can expect a wealth of experience from Claro, which provides financial and management consulting services in three core areas: Insurance claims, healthcare revenue cycle consulting, and strategic sourcing and supply chain consulting as most of the team has years of experience to parcel out. And while you're not going to find a CEO, there's no lack of leadership: The managing directors run the show as a group, with two senior members assigned to almost every client engagement to supply the best experience to each situation.

"We really understand our clients. With insurance, we understand how to work with insurance companies to get the insured what they are entitled to whether it's the largest [Hurricane] Katrina claim or large asbestos claims,” says managing director Venanzio Arquilla. "We take the knowledge we have in each of the three core areas to make an impact which is really powerful.” It's that kind of benchmarking that helped an international benefits consulting firm reduce its employee healthcare costs by 15 to 20 percent by working with Claro.

Claro's business model also helps it attract and retain top employees by linking compensation to performance and providing time and work solutions to accommodate people's lifestyles. "We're very much focused on our people having a good, flexible place to work,” says managing director Mark Hargis. "We want them to get the work done and have it be high quality—how they do it or where [they do it] is less important. They need to be part of a community, but if they have things they need to get done in their personal life, we accommodate and work around that. Then we link and reward their performance based on how they do and how the firm does.”

The strategy works as it brought Claro 56 percent growth last year to $25 million in revenue. And while all growth is good, the firm's leaders don't want to grow just for the sake of it. "We want to continue looking for ways to take our skills and apply them to client situations, which helps clients solve problems and make money or save money—ultimately leading to more business,” Hargis says.

Claro is in Chicago, Houston and Los Angeles now, and Hansen and Arquilla say they plan to expand further by launching in New York this year, as well as adding 20 more consultants.

But even looking forward, the firm's founders don't forget their roots. "We were fortunate to work together prior and we all felt strongly that there were good attributes at Andersen,” Hargis says. "That gave us a common bond to build off of. We wouldn't have gotten to where we are without it.”