{"id":17940,"date":"2016-11-18T14:32:59","date_gmt":"2016-11-18T19:32:59","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/slideware-to-software-ventures-a-new-kind-of-consulting-firm\/"},"modified":"2016-11-18T14:54:05","modified_gmt":"2016-11-18T19:54:05","slug":"slideware-to-software-ventures-a-new-kind-of-consulting-firm","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/slideware-to-software-ventures-a-new-kind-of-consulting-firm\/","title":{"rendered":"Slideware to software ventures: A new kind of consulting firm"},"content":{"rendered":"<p>Imagine the offices of The Boston Consulting Group (BCG), the $5b consulting firm [1].\u00a0 You may visualize people drawing on white boards, debating vigorously in meetings, and crunching numbers.\u00a0 And you\u2019d mostly be right, with one exception: the Manhattan Beach offices of BCG Digital Ventures (BCGDV), BCG\u2019s corporate startup builder, incubator, and investing vehicle. Here, Sublime Text conquers PowerPoint, and you\u2019re as likely to see a deep V-neck as a Brooks Brothers coat.<\/p>\n<p>BCGDV launched in response to the threats and opportunities of digitization, piloting a new business model and operating model launching digital startups for clients, developing internal digital IP, and making venture investments.\u00a0 As it scales, it\u2019s opening a new means for corporate titans to participate in the digitized future being created by startups and tech companies.<\/p>\n<p><strong><em>An opportunity and crisis<\/em><\/strong><\/p>\n<p>Prior to BCGDV, BCG partners had a problem.\u00a0 As Silicon Valley tech rose to stratospheric valuations, established industry leaders felt increasingly threatened by the agility of startups and the potential for displacement.\u00a0 Jamie Dimon\u2019s Q2 2015 letter to J.P. Morgan shareholders sums up these sentiments best: \u201cSilicon Valley is coming.\u201d\u00a0 [2]<\/p>\n<p>Solving this particular issue for clients would require a business and operating model radically different from traditional BCG projects: enter BCGDV.<\/p>\n<p><strong><em>Products, startups, and investment, not recommendations<\/em><\/strong><\/p>\n<p>BCGDV\u2019s first innovation was in the consulting business model itself, both in terms of the actual \u201cproduct\u201d offering, and in the economics of its delivery.<\/p>\n<p><a href=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/venture-rooms-at-dvmb.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-17941 aligncenter\" src=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/venture-rooms-at-dvmb-300x200.jpg\" alt=\"venture-rooms-at-dvmb\" width=\"477\" height=\"318\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/venture-rooms-at-dvmb-300x200.jpg 300w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/venture-rooms-at-dvmb-768x512.jpg 768w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/venture-rooms-at-dvmb-1024x683.jpg 1024w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/venture-rooms-at-dvmb-600x400.jpg 600w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/venture-rooms-at-dvmb.jpg 1440w\" sizes=\"auto, (max-width: 477px) 100vw, 477px\" \/><\/a><\/p>\n<p>While BCG traditionally used variations of a fees-for-services model, digitization presented new opportunities for BCGDV: venture investment and productization of BCG IP. \u00a0These business models complement the BCGDV customer promise of building and launching digital startups that drive growth, and co-exist with BCG\u2019s traditional fees-for-services model.<\/p>\n<ul>\n<li><strong><u>Building and launching startups<\/u><\/strong> is the core of the BCGDV offering.\u00a0 While specific companies are confidential, BCGDV engages beyond strategy in the full startup lifecycle, from ideation, to product development, and commercialization.\u00a0 A successful BCGDV project results in new ventures, not recommendations.<\/li>\n<li><strong><u>Investments in digital startups<\/u><\/strong> provide BCGDV with access to cutting-edge digital technologies that are of strategic relevance to clients.\u00a0 Takt, for example, is a customer analytics and personalization startup, in which BCGDV led the $30m Series A investment [3].\u00a0 Personalization is a hot topic in many client industries \u2013 retailers, financial services, and more \u2013 and as a result of this investment, BCG\u2019s expertise in personalization is greatly enhanced.\u00a0 To broaden its investment capability further, BCG became the partner and an anchor LP for B Capital Group, a new $143m venture capital fund led by Raj Ganguly and Eduardo Saverin [4].<\/li>\n<li><strong><u>Productization of IP<\/u><\/strong> is the final way in which BCG leverages digital to better serve clients.\u00a0 Through project experience, BCG identifies common problems that can be better solved with technology solutions, and productizes them.\u00a0 For example, BCG built a digital platform to help clients make optimal pricing decisions based on its experiences in pricing engagements.<\/li>\n<\/ul>\n<p>Going from slides to software, however, is not trivial, and necessitates a significant evolution in BCG\u2019s operating model in terms of recruiting and people processes.<\/p>\n<p><strong><em>A new operating model for new people<\/em><\/strong><\/p>\n<p>BCGDV has grown like a weed, from zero to 500+ people in two years, in functions that previously did not exist at BCG: product management, engineering, and design [5].\u00a0 Hiring and retaining this talent is a major challenge.\u00a0 Used to recruiting grad students, BCG has developed different recruiting approaches, for example working with agencies and targeting industry experts rather than new graduates.<\/p>\n<p>BCG has also developed new career mechanisms for this talent, with significant implications for employee turnover and utilization.\u00a0 Unlike the traditional model, BCGDV doesn\u2019t always operate under a strict \u201cup-or-out\u201d policy, because of the ongoing need for expertise in niche functional topics.\u00a0 BCGDV also reworked the BCG staffing model to allow junior staff to work across multiple projects, reflecting, for example, that a solution architect might not be needed in a 100% capacity.<\/p>\n<p><strong><em>Moving forward<\/em><\/strong><\/p>\n<p>Ultimately, BCGDV startups must compete with their Silicon Valley cousins.\u00a0 BCGDV can take two concrete actions to hedge its eventual success:<\/p>\n<ul>\n<li><strong><u>Coordinate ventures across clients<\/u><\/strong> \u2013 By virtue of relationships, BCG is uniquely positioned to develop platforms that coordinate multiple stakeholders in an industry (e.g. comparison sites like Kayak). BCGDV should identify clients with aligned interests and help them pool resources to launch the digital business that will disrupt them \u2013 before someone else does<\/li>\n<li><strong><u>Involve outside venture funds<\/u><\/strong> \u2013 Scaling a true rocket startup requires hundreds of millions to billions in investment, capital beyond what BCG or its clients alone can provide<\/li>\n<\/ul>\n<p>Time will tell who will be the ultimate digitization winner in consulting, but BCG is gearing up for the long haul.<\/p>\n<p>(Word count: 779)<\/p>\n<p>&nbsp;<\/p>\n<hr \/>\n<p>&nbsp;<\/p>\n<p>[1] Forbes, America&#8217;s Largest Private Companies,\u00a0http:\/\/www.forbes.com\/companies\/boston-consulting-group\/<\/p>\n<p>[2] USA Today Money, &#8216;Silicon Valley is Coming&#8217; Warns JP Morgan CEO, April 9 2015, \u00a0http:\/\/americasmarkets.usatoday.com\/2015\/04\/09\/jp-morgan-warns-silicon-valley-is-coming\/<\/p>\n<p>[3] Venture Beat, Takt Raises $30m Series A Funding Led By BCG Digital Ventures, July 25 2016, http:\/\/venturebeat.com\/2016\/07\/25\/takt-inc-raises-30-million-in-series-a-funding-led-by-bcg-digital-ventures\/<\/p>\n<p>[4] Finsmens, Eduardo Saverin\u2019s Venture Capital Firm B Capital Group Closes Fund, at $143M, May 20 2016,\u00a0http:\/\/www.finsmes.com\/2016\/05\/eduardo-saverin-s-venture-capital-firm-b-capital-group-closes-fund-at-143m.html<\/p>\n<p>[5] LinkedIn Company Pages, BCG Digital Ventures,\u00a0https:\/\/www.linkedin.com\/company\/bcg-digital-ventures<\/p>\n<p><em>Credit for images goes to Glassdoor, Feelgrafix, and BCG Digital Ventures<\/em><\/p>\n<p><em>Blog post written based on publicly-available information and reflects the opinions of only the author<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Consulting and corporate partners gear up to battle Silicon Valley startups for digital supremacy<\/p>\n","protected":false},"author":1940,"featured_media":18138,"comment_status":"open","ping_status":"closed","template":"","categories":[493,2270,94,461,706],"class_list":["post-17940","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-consulting","category-digital-disruption","category-startup","category-venture-builder","category-venture-capital"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/digitization-challenge-2016\/","yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - 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