In the mid 1990s Gemini Consulting was a darling of the industry. It was posting explosive revenue and margin growth, hiring the best and brightest from the Ivy Leagues, winning some of the largest management consulting engagements and producing some of the most jaw-dropping and exquisite strategic analyses. The merger of the MAC Group (Strategists) with United Research (Operations Specialists) gave Gemini a massive boost in the sector. Many believed that Gemini had what it took to displace McKinsey. Yet by 1999 Gemini had lost is fizzle and was a mere shadow of itself. By 2001 it was on a clear downward curve and today you would be hard pressed to find any proof that this once mighty firm existed. The ruins of Rome seem to have been preserved better.
The reasons why Gemini Consulting failed 10 years ago still afflict the Capgemini consulting practice today.
1 – Gemini was, is and may always be fad driven. Gemini was built on the transformation fad. The concept of going into a company and conducting an exhaustive and wide-ranging top to bottom analyses followed by a complete overhaul of the business. Hence the word transformation. The fad was borne out of the re-engineering craze made famous by Michael Hammer.
Gemini Consulting became too closely associated with this fad and when the fad lost its luster, Gemini was tarnished with the same brush. There were other reasons why this failed. How many companies want to go through a root-canal type transformation? Not many. If they do choose to do this, how often do you think they want to do it? Not often. Do you think employees want to work with the consulting firm which caused all the pain with questionable results? It’s unlikely.
2 – Besides Gemini’s affinity for the transformation concept, which they seem to market less today but if you look carefully it is still woven through their literature, they have fundamentally flawed approach to consulting. Gemini’s model is built on the concept of selling a short, high-impact and usually lower priced business case/strategic assessment of the business. They will send in a case team to do a McKinsey style analyses over 8 to 10 weeks. This team goes a mile wide and an inch deep to develop a business case for changing the client. Their aim is to convince the client to bring in Gemini for the implementation.
Clearly they need to sell the implementation to recoup the lower fees on the analyses. How can this be impartial advice up front?
There are some inherent problems with this approach. For one, Gemini is conflicted. Clearly they need to sell the implementation to recoup the lower fees on the analyses. How can this be impartial advice up front? The quality on these analyses is not uniform. Some of these business case teams are very good and do excellent work. Others do really poor work and are just trying to secure the implementation. Contrast this with a McKinsey, BCG or Bain team who views the strategic assessment as a separate study. They are willing to give an impartial assessment since they are not dependent on the fees from the next stage. Impartiality is critical to the client.
3 – Gemini Consulting does not seem to be interested in building a proper management consulting business. When times are good and the economy is doing well, they pump money into the consulting business. When times are bad, they not only cull staff, they shut down entire divisions and offices, and ultimately lose key people. There is a fundamental problem here. If they lose key people and are willing to do this, then it means Gemini believes consulting can be easily built by simply hiring a few good people when the times are good again. So where is the continuity, where are the people who keep up the meaning of the brand and culture?
4 – 90% of Capgemini is a technology shop. They are after all a massive technology outfit. In their larger offices, the technology employees form the bulk of employees. In fact, the technology staff can strangle management consulting projects. If EDF (a massive French utility), for example, wants the strategy group to check the payment systems, the technology group can easily say “no” since an unpopular strategy recommendation could potentially jeopardize larger and lucrative technology projects. Firms like Deloitte and Accenture are riddled with this problem.
An unexpected outcome of this is that remnants of the strategy capability have survived in some weird places. Places where the corporate office and the technology team are weak or non-existent. These are usually in the far-flung offices like Buenos Aires, Argentina and Johannesburg, South Africa. These offices license the Capgemini brand, are smaller, were originally set up for strategy work and have no technology presence. They are islands fighting alone to do strategy work. So when they present their credentials as a part of the Capgemini group, it means very little. Their skills, depth and experience are only as deep as that of their local office.
5 – Gemini consultants don’t have uniform pride and don’t really believe they are as good as McKinsey, Bain or the BCG. If they don’t feel they are as good it does show through in their work, culture and advice. A colleague with a PhD in Computer Science from Caltech and a MBA from Wharton relayed the following story to us. He interviewed at Capgemini’s London office last year and the interviewer asked him “why does someone with your background and qualifications want to work at Gemini Consulting? Wouldn’t you prefer McKinsey?”. You would think that at least the London office believed in themselves.
Capgemini is a technology shop, brands itself this way and promotes people who nurture this core.
6 – Capgemini is a technology shop, brands itself this way and promotes people who nurture this core. The management consultants have limited opportunities to run the business. Investments which do not support the technology base are curtailed. Back in the day when Gemini Consulting was still a powerhouse, the US management consulting partners provided a counterweight to this. They set up a separate head office in Morristown and made the necessary investments in the consulting business. That is now over.
7 – Since when does a management consulting firm license its brand? A management consulting brand should not be a MacDonald’s line where every project can be run off a production line. Image and quality is so important in management consulting that any firm even thinking about licensing its name does not understand the sector. Capgemini continues to do this and charges a rather steep licensing fee of about $1m per an office per annum in using its name and having access to its databases and qualifications.
8 – If you are going to license your name, you would think Gemini Consulting would insist on certain standards and controls. You would expect regular interaction between the licensees and head office. This does not happen.
Since when does a management consulting firm license its brand? A management consulting brand, like Gemini Consulting, should not be a MacDonald’s line where every project can be run off a production line.
9 – Capgemini alienated the US management consulting partners and never built them as a succession line into the business. Proper management consulting firms must be international in all respects. Capgemini is French and wants to be French. It sees that as its strength.
10 – Capgemini never exploited it’s rather central place in Europe. It has built no real presence in Eastern Europe. A market which is exploded for management consulting services. Roland Berger has done the opposite and has built an enviable presence and track record in the former Soviet Union. In fact, only McKinsey has a better presence and track record.
11 – Capgemini is not a training ground for executives. That is after all the true long-term test of a management consulting firm. How many executives today, in France or the Fortune 500 can you find who earned their stripes at Capgemini?
12 – Capgemini really was on the right path. All those resources, intellectual property and knowledge are just lying in the firm and are dormant. If the company cannot leverage its own capabilities, how can it advise clients?
13 – Awfully poor knowledge management. This is the lifeblood of management consulting. Having the right knowledge and bringing it to the right problem at the right time. Capgemini’s knowledge exchange is IT dominated and most of the management consulting material is never uploaded. Offices don’t share and each creates its own silo of information. All of this flies counter to proper management consulting values.