If the typical consulting firm is a democracy, then A.T. Kearney, a subsidiary of EDs, is a protectorate of sorts. Henner Klein is the first among equals at the traditional pure consulting firm. Klein was in India in late November, a few days before he was scheduled to take over as Managing Officer (read: CEO) of the firm. He spoke with BT's R. Sukumar on Kearney, the challenges facing consulting, and corporate agendas. Excerpts:

Consulting firms are pretty much democracies, aren't they? You don't normally have CEOs being elected.

As you know, most of the classical management consulting companies are partnerships with one exception, A.T. Kearney, since 1995 when we sold the business to EDs. But we've maintained the spirit of the partnership. And we've maintained the governing model of partnership. There are certainly a couple of decisions where in the end you have to respect that you have a 100 per cent owner and shareholder.

Aren't you the first Kearney chief executive from Europe?

That would be the second because my predecessor was a German too, but he studied in the States, he also lived in the States, and has an American wife. Actually, both my predecessors had German roots.

I know certain people try to interpret this as a shift in culture in global economy: BCG elected a German, A.T. Kearney elected a German, McKinsey elected a UK person, so the top three management consulting firms are (headed by) non-US born executives. I would not interpret this as any kind of political sign. I think, from time to time, leadership changes as companies become global. It's more natural that people have grown up outside the US with broad experience. In the end, it's more natural that you are competing across a broad variety of candidates and not just the ones that come out of the US.

I was leading up the same thing, not so much of a political sign, but it does seem to be more of a cultural sign because you look at the traditional American CEO leadership model, it is one of authority, you associate a little bit of arrogance with it. If you look at the European model, it's much more nurturing, it's much more one of consensus...

That's true. You could also argue that Europeans who serve long enough in international firms, and this is true in my case, have experience working in other countries. I think this type of experience was certainly a strong argument behind my candidacy and my election.

What's your mandate at A.T. Kearney? Whenever a new person takes charge, he comes with his own ideas, how things should be, and what the focus needs to be? What are your themes for the organisation?

I guess my colleagues expect that I focus primarily on three issues. Number one is and I'm sure you observe a bit of the consulting industry, this industry has seen some tough times, actually, the first tough time it has seen in its history. For the first time in its history the industry got a hit. I used to tell my younger colleagues that the industry would return to normal before I went into retirement.

The big (consulting) boom of the 1990s was fuelled by it-supported big process redesign, ERP implementation, e-commerce and the internet. Everybody knows that the bubble unfortunately burst quicker. We have all suffered. So one thing (on my agenda) is to inspire the organisation to make sure to focus on the right market segments.

I guess, a second thing (expected of me) would be to reinforce the partnership culture that has suffered a little bit over time. The last leadership and particularly the previous leadership in EDs wanted us to work in a much more integrated fashion with EDs; this has proven to be a not-so-successful strategy. And we need to correct certain administration and governance-related issues. So, I would say that my colleagues expect me to really enhance our partnership spirit and the way a management consultancy is typically run, relative to how you run an outsourcing business.

I think there's a third element. We must make sure that we keep our place as a global firm. This is organised along three dimensions: geographical footprint and understanding of the way people do business in different parts of the world; establishing industry leaderships and thought leaderships across industries; and functional leadership- we are known to have more operational focus than the pure strategy focus that a BCG or McKinsey have.

"All consultancy has one challenge—to advice less on cost and more on revenue"

You were speaking about how this integration strategy didn't work. For sometime in the 1990s every consulting firm and technology firm wanted a similar partnership. IBM, for instance, acquired Pricewaterhouse Cooper's consulting arm. Do you think the integration not working had to do with specific problems in the partnership between EDS and A.T. Kearney or do you think this is an industry-wide problem and that such a partnership can never work?

It was probably a mix of both but I would also say that it was a function of existing market conditions. When we joined forces with EDs in '95, we knew it would be a difficult route. We knew it would be difficult to bridge parts of the high value-added high-impact consulting work with outsourcing work. (But in 1995) the market was expanding and traditional consulting firms, The Big Five, with expertise gained from it assignments were entering our territory upstream. What we found out-the difficulty is in the detail-that it probably takes longer to effectively merge things together. In retrospect, if you look at it, there were certain areas where EDs and Kearney worked very well together. Our UK business, the largest pure consulting firm in that country, has done very well because of the collaboration.

As the market contracted, it became hard to find a client not only willing to put big money on the table for an IT implementation project but to buy bundled (management consulting) services from you.

I feel this collaboration will work in the area of Business Process Outsourcing. Our role is to advise clients how to outsource, when to outsource, how to structure an outsourcing, and if it makes sense to do so with with our parent company EDs, we will; if not, we will recommend to the client that it does with somebody else.

If the market, especially the IT market, hadn't collapsed the way it did, I would have seen more hope for this bundling. The philosophy is: you can only try the collaboration in selective ways, and you cannot make it a large, across the board integrated business. The businesses (of management consulting and it implementation) are very different.

Since the latter half of the 1990s, 1996 onwards, has management consulting become more hands-on, more operational? In the early 1990s there were a lot of management buzzwords that emerged; the number seeme to have tapered off towards the end of the decade.

I have titled my position paper to my colleagues Leading Us Back Of The Future. I wouldn't say that in the late 1990s consultancy became very practical. What happened to us in the late 1990s was, we didn't solve too many problems for clients that the management of these companies considered conceptual. We started implementing things rather than answering a client's question at an intellectual level and then following up with the implementation. I think consultants were used too much in some areas because it was popular, it was easy, and clients had the money.

Kearney has always been a very practical, hands-on consulting company. I think we are the only consulting company, among the classical ones, to have the ability to speak both top floor and shop floor. Clearly, our number one competitor has a big gap to close, that is to speak shopfloor. A.T. Kearney has, in the industry, a reputation as consultants who achieve results. If we ever failed on an assignment-no one is perfect-it wasn't because we couldn't deliver results but because we couldn't handle the politics. That's probably why we play more in the operations field-which is our sweet spot-than on the pure strategy side. Also, we do more strategy than the market believes and McKinsey does more operations than the market believes.

There was this popular book about the consulting industry, Dangerous Company. I think Kearney was the only consulting company that wasn't written about negatively. In this regard, I believe consultants need to be self-critical. If we cannot do that, how can we do better for our clients.

Consulting is still a young profession and there are still markets where consulting has growth potential. The world has also become more complex. So, companies will need advice that can open their eyes. I see more companies today who are interested in learning from companies in other industries that we have have worked with, than their competitors. The automotive companies say let us understand how consumer product companies do branding while the consumer products companies turn to automotive companies to understand supply chain management.

I think what consulting firms need to do is to regain a reputation for thought leadership. I think consulting is about thought leadership.

So, in effect, consultants need to know what's coming before others do?

Yes, consultants need to know what's coming, they need to be a step ahead of their clients, but need also to have enough managerial insight and practical understanding that whatever they suggest is, in the end, implementable. So it doesn't stay academic advice but is something a company can truly bring forward. I would assume all consultancy has one challenge, which is to advice less on cost and more on revenue.

What are the big challenges facing your clients today?

The big challenge in the so-called developed world, is certainly how to grow again. What are the comparative success factors in order to regain growth. The developed world has to understand how they compensate for the labour cost difference-it is clear they will lose too many jobs to the emerging world, if they don't have a lot more to offer than just say the same at higher cost.

You have been working with a lot of European companies. What is the perception of Europe about India?

You actually don't hear about India very often. China was always a big threat-the yellow fear in the 1960s. China has always enjoyed more mindspace than India. There's a perception that India is complicated, that it is poor. Very few people in Europe recognise the high-class education system you have in India. India is seen as a country where the social system and the cultural system are very difficult to understand.

I believe the history of Taiwan as an early capitalist country was the best marketing vehicle for China. In this regard, Taiwan, being part of the eastern wave in consumer products and consumer electronics-the consumer electronics industry is de facto gone in Europe-has helped China. People speak of Japan, Korea and China in the same breath and they do not differentiate between the mainland and Taiwan. India, for them is a different world. China has a communist regime that is clear. Simple and clear. India is not simple and clear to understand.