Strategic Renewal

This is part A of a two-case series (311-022-1 and 311-023-1). The foundation, growth, and business model of Helvetic Management Consulting, a mid-sized Swiss consulting firm, is described from 1977 to 2004. The year 2004 marks a time when the firm faces severe problems triggered by a market downturn and a resulting misfit between its positioning, management system, and ownership model and the new market environment. It can be used to illustrate the challenges and potential shortcomings in a professional service firm's business model and positioning and to think about adequate initiatives for strategic renewal and change. This case is the first part of a two-case series. Part B describes the process of strategic renewal, that is, the actual events and strategic initiatives undertaken at Helvetic Management Consulting

This is part B of a two-case series (311-022-1 and 311-023-1).Part A describes the foundation, growth, and business model of Helvetic Management Consulting, a mid-sized Swiss consulting firm from 1977 to 2004. The year 2004 marks a time when the firm faces severe problems triggered by a market downturn and a resulting misfit between its positioning, management system, and ownership model and the new market environment (characterized by changing client demands nd increased competition). This part B describes the process of strategic renewal at Helvetic and shows the actual events. The new managing director initiates three major renewal activities between 2004 and 2007, which he implements in the face of severe internal obstacles and inertial forces. Two additional strategic growth initiatives in 2007 and 2008 are described that should set the stage for future growth of the firm. Taught together, the two parts present material that is highly suitable for stimulating discussion and analysis on the full process of strategic renewal and change in a professional service firm (PSF). Discussion themes include the triggers of strategic renewal, concrete renewal activities and initiatives, challenges, obstacles, inertial forces, and inhibitors in the renewal process, and outcomes of strategic renewal processes

After its split from Booz Allen Hamilton in July 2008, Booz & Company emerged as a globally operating strategy consulting firm. As a new organization, Booz & Company had to redefine its brand, culture, and values. The new CEO stressed the importance of knowledge management (KM) as part of the firm's competitive strategy to be foremost in foresight and provide essential advantage to clients. Adrienne Crowther, director of knowledge sharing and collaboration, and Tom Stewart, the firm's new chief marketing and knowledge officer, rolled out a new firm-wide KM-system that would act as a differentiator in enabling connections across the firm. The case shows the importance of KM to professional service firms and management consultancies, that depend heavily on knowledge for their existence and growth. It illustrates the process of renewing the KM-system at Booz & Company by describing the triggers, obstacles, and challenges encountered throughout the initiative and the major actions taken to overcome them.

We examine an intriguing paradox regarding whether interdependencies in an organization's activity system enable or hinder strategic renewal, i.e., the incremental process through which an organization continuously adapts to the environment and explores opportunities to invoke change in its activity choices and outputs. One research stream, the "inertial view", argues that the pervasiveness of interdependencies among activities increases inertia, which inhibits strategic renewal. Another research stream, the "adaptive view", argues that the pervasiveness of interdependencies among activities allows for a rich flow of resources and information, which enables strategic renewal. In this paper, we argue that both views provide important insights but arrive at conflicting conclusions because they focus on different dimensions of interdependency. To resolve this paradox, we distinguish between an activity system's interdependency patterns and interdependency rules. We propose that the dimensions of the interdependency pattern set the context in which the dimensions of the interdependency rules guide the exchange of resources and information among interdependent activities. Integrating these two components of an activity system's interdependency design leads to a "dual understanding" of interdependency as both pattern and rule and helps explain how the inertial forces of interdependency patterns may be overcome by putting appropriate interdependency rules in place.