“Our people tell me

that this feels like

‘A.T. Kearney in the
mid-’90s’ or ‘Gemini Consulting
in its early years.’ And what they
mean is that we are working
together. We’re working
to do things.”
— Archstone CEO & President
Todd Lavieri
LOREFFREY
BY
PHOTOGRAPH

16
 THE AGE OF
ARCHSTONE
It is the age of no big ideas, an age when

less is more and small is better,

an age when good listeners hold sway

over serial advice givers.

BY JAC K SW E E N EY

W H AT M AY B E T H E MOST DEFINING

characteristic of the current age of consulting is how

the profession’s leadership uniformly struggles to

define it. In general, most leaders agree that the latest

epoch began in 2002 with the collapse of Andersen —

a grim signpost if ever there were one. Nonetheless,

➤
this was a marker that has influenced the profession in

visible and not so visible ways.

C o n s u l t i n g March/Apr il 2007 17

Now watch Archstone
Principal Mark Schmeling
discuss the firm’s CFO
services offerings on
This Week in Consulting at
www.consultingmag.com.
Archstone’s Early Milestones
2002
B Downturn in
consulting services
Andersen shutters purchases causes
L
its offices under a overall consulting
cloud of scandal market to shrink
for the first time
on record
18
In the past, such murky episodes of introspec-
tion have come sandwiched between waves of
client opportunities — none lasting perhaps more
than two or three years.
Now, five years after the fall of Andersen, con-
sulting leaders still persist in defining the current
age by what it lacks rather than by the client
opportunities it yields. It is the age of no big
ideas, we have routinely been told. However, as
with every other age of consulting, the present
one is arguably best revealed by the clients con-
sultants serve.
Listening to Clients
Ric Noreen, senior director of growth channels
for Kraft, says that the company’s current
approach to working with consultants calls for
Kraft executives to be more precise when defin-
ing problems up front.
“Manufacturers like Kraft are using consul-
tants in a much more narrowly defined project
scope, and the firms that can respond to this sort
of pinpoint targeting of problem-and-solution are
in a great position to continue to bill,” says
Noreen, whose company’s growing appetite for
narrowly scoped projects and more specialized
services appears to be part of a larger trend on the
part of industry, according to research completed
by Kennedy Information, of Peterborough, New
Hampshire (see chart, p. 20).
As narrowly scoped engagements grow as a per-
centage of overall consulting spending, corporate
clients have more frequently been opening the door
to smaller firms that now compete and win against
larger firms that sometimes struggle to maintain
their profit margins on smaller engagements,
according to Kennedy Information.
“I see far more projects with narrowly defined
outcomes or solutions initiated by Kraft over the
last couple of years than I do the large, multidi-
mensional, $2 million dollar engagements,” says
2003
Deloitte rejects
the profession’s
Firm is
established with
popular wisdom three principals;
and nixes a plan Todd Lavieri
to split off serves as CEO
consulting and president
Noreen, who first agreed to be interviewed by
Consulting Magazine upon hearing that our arti-
cle was on a small but growing consulting firm
known as Archstone Consulting. According to
Noreen, Archstone is exactly the type of firm that
Kraft tends to do business with these days:
focused, nimble, and with its seniormost people
routinely involved.
Elise Klein, a vice president at Berlex Inc.,
shares Noreen’s opinion of Archstone and believes
that the firm is extra cautious when it comes to
reusing content. “You never get the sense that Arch-
stone is recycling material, and if they are, they tell
you,” says Klein.
Suzanne Doft, Director/Team Leader of
Oncology at Pfizer, believes that Archstone is high-
ly attentive to individual client needs.
“They listen really well,” explains Doft. “They
listen and then they understand, and they not only
understand the problem, they also understand our
people roles very well so that they are able to adjust
their content and allow the different disciplines to
be able to digest it.”
Defining the Age
Having captured 13 new clients in January of this
year alone, Archstone appears to have specialized
offerings whose appeal extends well beyond the
above-mentioned clients. Archstone grew by 34
percent last year, while capturing $59 million in
annual revenue and expanding its client portfolio to
150 clients.
Not bad for a three-and-half-year-old firm that
was launched in the midst of a calamitous consult-
ing sales downturn. In fact, the year before
Archstone was launched, the global market for con-
sulting services shrank for the first time on record.
Certainly, the idea that such a newbie firm has
come to have a hand in defining the latest age of
consulting is a notion that is rejected, not surpris-
ingly, by larger, more established, consulting firms.
Lake Capital
invests $75
Newly
named
Opens offices:
Chicago, New York,
G
million in firm Archstone Stamford
known as Consulting
Candlewood grows to 39
Consulting employees
March/Apr il 2007 C o n s u l t i n g
 “Archstone who?” is the frequent refrain echoed behind the rise of Archstone largely bears
from one super-sized consulting rival to the next. one thumbprint more than any other.
But, while Archstone may still be flying under
the radar, the concept behind the firm already The Perfect Place in Time
looms large. It’s a concept that Archstone can now The plan to split off Deloitte Consulting from
fully exploit, having been conceived at what Deloitte was made public in early 2002 — nearly
might be deemed the perfect place and time — a five years after KPMG Peat Marwick had first
junction where a confluence of market and regu- announced its own consulting split-off strategy, and
latory forces pounded the profession’s Big Four two years after the sale of Ernst & Young
consulting organizations and helped to shake Consulting to Cap Gemini was first announced. At
loose bushels of top talent. the time, the market for consulting services was
“We had a concept that there was room in the experiencing the worst downturn in its history, and
market for a specialty consulting firm that was in light of this, the split-off’s payout was
constructed with world-class profes- expected to rank among the smallest
sionals focused on critical client ever of Big Four returns.
needs in certain specialty
“Manufacturers If only Deloitte Consulting
areas,” recalls Paul Yovovich, like Kraft are using had split off before Enron
president and cofounder of consultants in a much more reared its ugly head or
Lake Capital Partners, a before the NASDAQ
Chicago-based private narrowly defined project scope, tumble of March 2000,
equity firm that helped and the firms that can respond things may have been
launch Archstone by different. But, caught
investing $75 million in
to this sort of pinpoint targeting between a rock and hard
the firm in September of of problem-and-solution are place, Deloitte took a
2003. Archstone was the in a great position to path that had been rou-
second consulting firm tinely discarded by its Big
Lake Capital helped to start continue to bill.” Four rivals: In March 2003,
up within only 18 months, hav- — Kraft’s Noreen the firm opted to reintegrate its
ing invested $40 million in Huron consulting arm.
Consulting of Chicago in March 2002. When Lake Capital first talked to
Today, the seasoned consultants found within Todd Lavieri about its specialized firm concept, he
both Huron and Archstone confess that their firm- told them that he was not interested. His future, he
building ambitions are in part fed by discontent believed, was with Braxton — the planned consult-
with their past professional lives. While the rise of ing spin-off that Deloitte had already spent tens of
Huron is viewed by many of its consultants as a vin- millions of dollars to plan and rebrand. When Lake
dication of their Andersen heritage (160 former Capital contacted Lavieri again after Deloitte had
Andersen consultants joined Huron on day one), the announced a change in plans, Lavieri was less cer-
rise of Archstone is more a tale of emancipation tain about where his future might lie and began hav-
rather than vindication. ing discussions with a number of business people he
And, unlike the tale of Huron’s launch — respected and had learned from over the course of
a collective work writ by many — the story his career. (continued on page 20)

2004 2005 2006 2007

C
Grows to Sales: Opens Grows to Sales: Opens Sales: Number First Signs 13 Grows to
100 $22 San 150 $42 London $59 of clients acquisition: new clients 225
employees million Francisco employees million office million grows to The in single employees
office 150 Hazelton month and 7
Group offices

C o n s u l t i n g March/Apr il 2007 19
 “Todd believed that it was the perfect place in
time to launch a consulting firm, and it turns out that
he read the tea leaves correctly,” says Charles
Biggs, a current board member for Quest
Communications who headed Deloitte’s strategy
practice in the 1990s and has mentored Lavieri
throughout his career.
Clients favor specific capabilities over broad experience
Understanding of Specific Needs
Depth of Functional Expertise
Depth of Industry Expertise
Price
Selection Criteria
offered Archstone some valuable insight into the
months ahead, different factors made Archstone’s
start-up challenges unique. First, unlike Huron,
Archstone’s early workforce was not augmented
by a mass migration of Andersen talent.
Moreover, the consultants who did join Lavieri
from Deloitte or other Big Four consulting firms
often were unable to serve their vet-
eran clients due to two-year noncom-
pete contracts, often standard among
Big Four employers. For their part,
Andersen consultants received some
leeway where “competes” were con-
cerned in light of the firm’s collapse.
Whereas Huron could immediately
focus largely on client work,

Prior Performance Archstone faced a greater recruiting

Reputation hurdle. According to Lavieri, the start-
Strategic Thinking up challenges were made less of a bur-
den because of Lake Capital’s help.
Speed of Work
“Our role was a combination of seeing
Firm Location
the opportunity, making certain that
Breadth of Services we had a shared vision, and for us to
0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% provide them with the financial sup-
Client Weighting of Importance port necessary for them to scale the
Source: Kennedy Information, Inc., 2006 business,” explains Yovovich.
Lavieri recalls the early division of
labor between Lake Capital and the
“We have all known bright, smart people over fledgling Archstone this way: “Todd, you focus on
the years who have made bad decisions, but Todd is trying to find the right people, you sell the work. We
not one of them. He studied the market, understood can help you with getting the other things rolling.”
the fundamentals that were required, and went for Asked what the “other things” were, Lavieri
it,” says Biggs, who ultimately acted as a reference quickly responds: “Finding real estate in Chicago;
for Lavieri when Lake Capital sought to evaluate setting up an e-mail system; getting our financial
his credentials to build and lead a firm. systems identified, procured, and implemented.”
Today, when asked whether Archstone would During the remainder of 2003, Archstone grew
have existed without Lavieri, Lake Capital’s to 60 employees as it opened offices in Chicago,
Yovovich says that the equity firm’s concept in part New York, and Stamford, Connecticut. The follow-
bears Lavieri’s thumbprint. “It’s hard to figure ing year, it grew to more than 100 employees and
which came first. We did contact Todd. We did have $22 million in sales, while in 2005 it leaped to $42
a concept. But that concept was quickly refined. million in sales and 150 employees. Along the way,
Todd really gave it flesh and executed the launch of the firm beefed up its initial beachhead industry
it. I think that the chicken-and-egg metaphor is a practices in manufacturing, consumer packaged
good one, because it’s really insoluble when it goods, and life sciences by adding new recruits and
comes to Archstone,” says Yovovich. service lines. In addition the firm began adding new
functional practice areas such CFO advisory ser-
Putting Flesh on the Bone vices. By the end of 2006, Archstone had opened
Lake Capital’s investment in Archstone came only offices in London, Amsterdam, and San Francisco,
six months after Lavieri exited Deloitte Consulting. while completing its first acquisition of another spe-
During the months in between, the fledgling firm cialty firm.
did business as Candlewood Consulting, a project
name assigned during the initial due diligence phase The Roots of Leadership
of Lake Capital’s investment. Asked how someone who has built a career in an
While clearly Huron’s executed flight plan organization as mature and sizable as Deloitte

20 March/Apr il 2007 C o n s u l t i n g
would qualify to lead an entrepreneurial venture, enveloped the summers he spent working at an
Lake Capital’s Yovovich says that entrepreneurs aerospace company cofounded by his grandfather.
reside in both big and small organizations, but are As the youngest of five children being raised alone
not always easy to identify. by their mother (his father had died when he was 2),
“Not everyone is able to do it, and in addition to he found that the family business, perhaps, became
having an entrepreneurial spark, there are a whole a kind of extended family — a place where the rudi-
set of requirements for running a successful enter- ments of business as well as collaborative values
prise. For instance, you need to be able to build a could be learned.
team that works cohesively and pulls in the No matter where Lavieri’s team-oriented val-
same direction,” says Yovovich, touch- ues may be rooted, there’s little ques-
ing upon, perhaps, the one quality “It’s hard to tion that they are now part of the
above all others that made figure which came first. character of his young firm,
Lavieri a unique candidate. according to interviews with
As the leader of
We did contact Todd.We did multiple clients.
global manufacturing have a concept. But that concept was “There are no walls at
for Deloitte, Lavieri had Archstone. Whether it is
quickly refined.Todd really gave it
ascended to the top of people or capabilities, we
the firm’s largest indus- flesh and executed the launch of it. have found that every-
try practice. He was I think that the chicken-and-egg thing is available to us
widely recognized as from everyone at any
belonging to an inner cir- metaphor is a good one, because it’s time,” explains James
cle of senior partners “who really insoluble when it Shillaber, vice president of
called the shots” inside human resources at Berlex
Deloitte’s consulting opera-
comes to Archstone.” Laboratories, who says that
tions, and yet, unlike certain battle- — Lake Capital’s Yovovich when partners from different firms
scarred peers, he appeared not to have are selling business, they often resist let-
lost favor with the rank-and-file consultants as he ting other partners become involved, and they often
climbed the ladder. One former Deloitte senior require that they be included at every meeting
manager recently echoed what a number of past and involving their firm. He continues: “I don’t know
present consultants in essence told us: “He was one how their compensation and incentive structure
of us. We were a team, and he was this rare-bird works, but I can tell you that it is not an obstacle.”
partner who did the walk as revealed by his actions When asked about the collaborative nature of
day in and day out.” Archstone consultants, Lavieri quickly points out
Lavieri’s Deloitte career had begun in 1989 that one of the firm’s founding principles was to be
when Deloitte merged with Touche Ross, where a an organization that behaves and acts likes a part-
26-year-old Lavieri had only months earlier landed nership, even though Archstone is a company. It’s
a consulting job after business school. a principle that many consulting companies vow to
“When we together joined Deloitte, we were live by but often stray from as they grow larger.
entering a period when consulting was ready for a “Our people tell me that this feels like ‘A.T.
great growth spurt, and the Stamford office, where Kearney in the mid-’90s’ or ‘Gemini Consulting in
Todd joined, quickly became an important part of its early years.’ And what they mean is that we are
the firm’s consulting base,” explains Biggs, who working together. We’re working to do things,” Now watch Archstone
had first joined Touche Ross in 1968 and subse- explains Lavieri, who says that consulting firms, as Principal Maryann Gallivan
quently became an early mentor of Lavieri’s when they grow larger, often struggle to raise the “ener- discuss the firm’s Life
he went on to oversee the Deloitte Consulting’s gy” of their people around their brand. Sciences offerings on
northeast region following the merger. “The passion and optimism around the brand This Week in Consulting at
While Lavieri no doubt can in part thank and what we want to do in the market is red hot with www.consultingmag.com.
Deloitte’s partnership culture for developing the this group, so we know that the culture is right,”
team-building skills that helped Lake Capital says Lavieri, who quickly identifies another core
view him as an attractive leader, the profes- value: “discipline, not bureaucracy.”
sion’s leadership gurus tell us that such qualities “This is a simple business,” he concludes. “It’s
often take root earlier in a person’s more forma- people, times rates, times time. In my mind, if we
tive years. get the services right and the right people, the finan-
In Lavieri’s case, those years may have cials and everything else falls right into place.” C

C o n s u l t i n g March/Apr il 2007 21