Chief Development Officer
Execution is what makes a strategy count. Our Chief Development Officer Patrick Palmgren elaborates on our strategic moves leading up to the 2020 goal of one billion euros in revenue.
In the 2015 Annual Report, BearingPoint explained how the firm validated its strategy in 2015 and that the focus would be on execution from 2016 onwards. Now that we can look back at 2016, where is BearingPoint on that journey overall: behind, on target, or ahead?
Overall, we are pleased with the execution. After five very strong quarters, we are closing in on the 2020 revenue trajectory set out in 2014 leading to one billion euros in revenue by 2020. Both our Solutions and Consulting units are growing strongly, providing further evidence that we have accelerated growth since the mid part of last year. Our innovation focus is generating significant activity and supports sharper client-value propositions enhanced by incubation and venture activity. Our M&A activity is now accelerating again after a slower period, and our global reach is once again on an expansion course.
Digging a bit deeper, managing BearingPoint’s portfolio means making choices. Where does the firm want to do business and which services would it like to offer and in which markets? Where does the firm stand in terms of its portfolio and market development? How mature are the focus areas of digital, regulation, and analytics?
At the highest level, our strategic choice is the market we define, which is Consulting, Solutions, and Ventures. More importantly, how we combine these is what makes us distinct. It means we can help with the strategic development of a new business model or platform, offer the software or Accelerators that enable it, and also engage with start-ups and around new innovation through direct or indirect venturing activity. We try to restrict these activities on a firm-wide level to three strategic focus areas: digital transformation, advanced analytics, and regulatory technology.
I think it is fair to say that most of our value propositions developed; recruiting and investments are now being integrated into those three areas. We have made significant investments in enhancing our products and services and developing our distinct culture and style during 2016 in the areas of Consulting and Solutions.
One of the big moves in 2015 was the reorganization creating the three pillars of Consulting, Solutions, and Ventures. How far has BearingPoint come with the development of Solutions and Ventures?
We needed to organize the Solutions part of our business, given its different focus. This means different career tracks, recruiting profiles, and ways in which we measure and track this business. But, at the same time, we have organized Solutions closer to Consulting in the way we go to market. One great example is digital ecosystem management, which is a combined Consulting-and-Solutions play that received significant attention in the marketplace and where we have seen a very strong demand from clients. In the area of Ventures, we have made three transactions and are looking at a handful of opportunities right now. We have been through a learning stage, but analysts tell us that we are already doing more than many of our competitors that claim they also engage in venture and innovation activities.
You have a lot of client experience in strategy development. Is it any different for BearingPoint?
Every company has some unique characteristics in terms of history, legacy, culture, and people (who and how we service), so this needs to be considered in a strategy. Apart from this, the building blocks of our firm’s strategy are similar to those of any of our successful clients. This means that a good strategy is focused on the ambition to win in the market by making strategic choices and bets on where we play, how to win, and how to best organize for performance and achieve the winning ambition.
Therefore, we, like any company, also need to be clear on what we are not doing in order to be able to afford investment in our strategic choices. Our digital ecosystem management offering is a good example of where we differentiate ourselves through an end-to-end offering (strategy, software, operations) enabling us to win through our unique ability to combine these disciplines.
What is your focus for 2017?
“Without strategy, execution is aimless; without execution, strategy is useless,” said Morris Chang, CEO of TSMC. All our Partners are now focusing on executing our 2020 strategy. In order to ensure a successful execution, you need a good strategy-development process, so this is my key focus in 2017.
What I mean by strategy-development process is how we review performance progress versus strategy-to-results development for 2020, how we evaluate our strategic choices and organize for performance versus progress, and how we make decisions on any mitigating actions. Actions can include changing or fine-tuning a strategic choice we have made or investing more or less in specific capabilities. Another important part of successful execution is to have frequent and transparent communication, both internally and externally, on our strategy-to-results development, performance progress, and any mitigating actions.
Acquisitions are part of BearingPoint’s strategy. How do they fit with the overall strategy?
M&A – including Ventures – are important parts of our growth and strategy-to-results development. We aim to integrate smaller, bolt-on teams that can quickly and sustainably expand our capacities so that our clients will rapidly enjoy the benefits of the respective additions to our team. In this way, we concluded five acquisitions in the last three years and we will keep on adding capabilities and geographic coverage in line with our strategy.
Client intimacy also means that clients can lead the firm in new directions. How does BearingPoint make sure it adapts its strategy, if needed?
Yes, being adaptive is critical for our success! We often experience change and volatility with clients. There are many external factors influencing our clients, and therefore us, such as geopolitical events (Brexit, political elections, European refugee/immigration situation, etc.) and the fusion of different technologies (digitalization, artificial intelligence, robotics, nanotech materials, etc.). This leads to new business models and also causes market disruption within our own professional services market. We have to work closely with our clients, alliance partners, and our people to manage change and continuously adapt our strategy. Our innovation process is a good example, and you will hear more about how we will engage our people and further invest in innovation.