28/10/2010 - 00:00

GEM, McKinsey set early standard

28/10/2010 - 00:00

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PERTH being Perth, it’s difficult to avoid the strong historic connections between the key players at the top end of the management consulting market.

GEM, McKinsey set early standard

PERTH being Perth, it’s difficult to avoid the strong historic connections between the key players at the top end of the management consulting market.

Some would suggest it’s a McKinsey & Company town, not just because that consultancy is seen as the most active of the global brands but also because so many other key players here have a background that, ultimately, reflects that firm’s style.

McKinsey’s influence stems from the mid-1990s, in part due to its brief presence at the time with a Perth office led by Rich Krasnoff and Jeremy Carter.

McKinsey-trained Mark Barnaba was originally expected to be part of the firm’s WA launch but he had other plans. After quitting Hartley Poynton (now called Hartleys) with a group led by John Poynton, Mr Barnaba, Errol Levitt and Geoff Rasmussen established the GEM management consulting practice as part of their Poynton and Partners business. GEM represented the first names of the key consultants and had a distinctly McKinsey flavour to its advice.

More than a decade later, much of the Perth management consulting scenery has a GEM feel about it, with so many current leaders having worked at what was the major local boutique at time.

Among the local players, only John Barrington at Barrington Consulting Group has been around as an independent player longer.

In 2003, the founders sold GEM and their allied investment banking business to South African-based AST, which installed Robert Radley and Darren Smith as joint managing directors of the management consultancy. Mr Barnaba and Mr Rasmussen stepped away from consulting completely when they formed Azure Capital. Mr Levitt has moved away from Perth.

GEM remained the powerhouse of the local market during the next few years. Its WA management bought a 70 per cent stake in the business and eventually the business was sold to PricewaterhouseCoopers (now PwC), which was looking to return to management consulting space after selling out to IBM several years earlier.

Mr Radley remains head of the PwC practice, which also bought out another local rival, Mainsheet Corporate. As a result PwC is viewed as having more of a strategy focus, especially in the corporate sector, than rival accounting firms.

But the GEM connection doesn’t stop there.

Momentum Partners founder Carl Adams left GEM seven years ago to form his own consultancy and is now the biggest of the local boutiques.

And Oyster Consulting managing director Paul Shields also has a GEM story.

“They gave us a bit of a leg up when we started,” Mr Shields said. “We actually started in their offices.”

Even Churchill Consulting principal David Prendiville has a tenuous connection to that history. He was partner at PwC when it sold out to IBM, choosing to get involved in his own business rather than joining the IT giant.

Perhaps a final instalment in the GEM story, which also closes off the McKinsey loop, is the arrival of Boston Consulting Group. BCG established permanent digs in Perth earlier this year and, just a month ago, took up the very space vacated by GEM in Exchange Plaza.

Of course that is just coincidental. BCG’s local head Angus Jaffray said global firms like BCG didn’t open new offices every day. It is a decision that must be ticked off at the top, which is rare in an operation that otherwise devolves power in a decision-making structure described as egalitarian.

“It has been on the radar for quite a while,” he said.

“To open an office in BCG we need a good flow of potential business and we need someone who is willing to put their hand up and say they will take it on.

“It is clear that Perth is going to grow, so I put my hand up and said ‘why not?’”

“This is not a decision that has been taken lightly; if you want be serious in mining and oil and gas around the world you have to be in Perth.”

While many of the players in this space ultimately compete across the whole spectrum of the management-consulting field, there are few limits and occasional outliers.

The accounting firms and Accenture, for instance, are seen to be big in the IT and process area,

competing with IBM and other pure IT groups.

In contrast to this, there are dozens of sole practitioners or two-man bands with specialist skills that earn them a keep in some of the largest corporates around, right down to the SME sector.

Some specialists have grown to become significant players in their own right. Partners in Performance, for instance, is only at the coalface and won’t do strategy.

Barrington is at the opposite end of the spectrum, largely inhabiting the strategy area and mainly getting in the door via boards and CEOs.

“We just gravitated there,” Mr Barrington said, explaining his firm’s focus.

“It is not marketing strategy or HR, it is overall corporate strategy.”

A lot of his mid-tier clients don’t have strategy teams, so Barrington runs a 12-month process for half a dozen customers.

“Strategy is not an event,” Mr Barrington said. “It is an ongoing process. Srategic thinking with the board and management together is one of the great challenges.”

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