Consulting: Fast food (for thought)

McKinsey's Indian arm has launched an accelerator that promises to
leverage the Firm's formidable knowledge-equity in digitising business.

Surely, the Indian arm of the best known among the world's strategy consulting companies, McKinsey & Co, could have found a better time to launch its Accelerator (labelled ma or McKinsey Accelerator)? After all, it has been a bad year for dotcoms, and veecees. It's easy to turn that logic on its head. The new economy's scarcest commodity, it turns out, isn't ideas, capital, or people as popular wisdom had it, but management. And who's better equipped to help companies in that regard than the Firm (as McKinsey is called).

The ma does just what its name suggests it will: speed up the process of building new economy businesses. Not just tech ones, Ramesh Venkatraman, a principal at McKinsey & Co who heads the Accelerator project, hastens to add, but others as well. ''The internet has generated opportunites to create new businesses in traditional sectors like healthcare, foods, telecom, financial services, retail, and media.'' To enter the realm of specifics, the ma helps companies launch ''an integrated and fully functional online business in between three and six months''.

The Indian Accelerator may have been launched late last month, but the concept isn't really new. The first ma-there will eventually be six of them-got off the ground in 1998, in the US. Market imperatives drove the creation of the Accelerator: McKinsey and, to a lesser extent, other strategy consulting firms like the Boston Consulting Group and Bain & Co hadn't really moved into the implementation domain. But with companies having to launch online businesses in a hurry, there was a huge demand for consulting services that could help them do so.

Smaller technology services companies like Scient and Viant were riding this wave and it seemed a pity to let, as one McKinsey consultant describes it, ''a formidable domain knowledge of over 100 industries, and a resource pool of the world's best-in-class service providers, technology-vendors, and our own consultants'', go waste. Competitive compulsions also necessitated that some of the firm's clients launch e-businesses in a hurry and speed was what the Accelerators were about. Indeed, by end-1999, the ma had worked with close to 350 companies around the world on their new economy initiatives.

Get to Know These New Economy Species

1. ANGEL (Gabrielus Riskus): The kind that'll bet a not inconsiderable inheritance on an idea just because it seems cool. Typically execs who made it big and retired early playing sugar-daddies now

2. VENTURE CAPITALIST (Shylockus Poundus): The type that'll invest only after assessing the market worthiness of the idea and the management team that's running with it. Used to be a little generous once; now suffering from cheque-signers thumb

3. INCUBATOR (Hatchus Helpus): Mother-hens that protect start-ups till they're ready to face the world on their own. Pride themselves on ability to provide an environment conducive to growth

4. ACCELERATOR (Rapidus Locomotus): Supersonic jets that promise to ferry companies into the new economy in double-quick time. Adept at Rolodex-punching and managing a business through its lifecycle

The MA, then, is different from an incubator that sort of mentors a new business into existence. Nor is it in the business of funding. The Firm is, well, firm that its involvement will be limited to its core competence: consulting. And equity-based payment options aren't exactly welcome. ''We prefer cash,'' says Venkatraman simply. "This certainly didn't look smart a year ago. Today, it does. Look at the worthless stocks that many are left holding. But I think we would certainly be open to alternatives like deferred payments.''

Creating a new business for an existing one isn't exactly easy. Most business processes in existing companies are set, and characterised by hierarchy and protocol. Paresh Vaish, one of the members of the team overseeing the Accelerator's initiatives in India identifies this as the most critical issue in the Indian context. "One of the first things we recommend is to distance (the new business) spin-offs from the traditional outfit," he says. Indeed, unlike a venture capital firm which is primarily concerned with the business of funding, and an incubator that washes its hands off once a company is up and running, the ma manages the ramp-up in the business up to the IPO, and beyond, across its life-cycle.

There's no questioning the need for services like the ones offered by accelerators in general. Still, the emphasis on speed placed by these firms means they often end up helping a client launch a new economy initiative without really understanding the business it is in. This is all about change, mouth critics, and it won't work unless the facilitators understand the nuances of an organisation's internal working. That criticism may not be pertinent in the case of the ma; the firm does boast expertise in several business domains. Elaborates Ashwin Parekh, Managing Director, Arthur Andersen: ''There is a clear difference between shelf-knowledge and applied knowledge."

Some of the companies that operate in the angel-veecee-facilitator domain, however, believe accelerators have an important role to play. ''They help speed up the process of creating a business,'' says Muneesh Chawla, senior Vice-President, IL&Fs Venture Corporation. ''Look at Silicon Valley. You can virtually set up a business of the shelf in 24 hours.'' IL&Fs is currently discussing an informal alliance with McKinsey on the Accelerator. Rashesh Shah of Edelweiss tends to agree. He sees the coming together of veecees, incubators, and management consultants: ''Every start-up needs inputs from several sources and part of the process of speeding things up is to have an integrated facility where one can access all inputs.''

Venkatraman argues that this is already happening through informal networks: ''There's no reason why we can't work together and work well.'' The integration of angels, veecees, and consulting firms may be difficult. The first's strengths lie in taking calculated idea-based risks; the second's, in assessing market demand and the ability of the management team to deliver; and the third's, in helping the start-up manage its internal processes and cut its time-to-market. With that-t-t-m-emerging as a critical ingredient of success in the new economy, expect to hear more about accelerators. What next? Turbo-chargers?