Name: Kristian Gonzalez

Student ID: 1480403

Course: GM4811 - EMBA XXIII
Date: 19/9/14

GROWING PAINS AT STROZ FRIEDBERG

I.

Executive Summary
There are three key issues at hand discussed at the onset of the S&F firm in 2009.
The first issue is the lack of uniformity and solidarity within the EMC
(Executive Management Committee) to forecast planned revenue growth.
The second issue is process standardization across various tiers/offices of the
firm - this results in the inconsistent delivery of consulting services. Stroz
& Friedberg both need to hold themselves to higher accountability by applying
consistent process standardization for establishing measurable consulting
billable rates and utilization. They need to shape org culture and relinquish
control.
This signals the third key issue which stems from lack of organizational
structure- communication, an organizational framework to provide efficient

decisions and providing transparent reporting channels that can delegate

authority and true empowerment.
Two approaches resulted from the estimation of revenue growth. Submitted by
office executives, a conservative plan based on their 70/30 split between
consulting/e-discovery segments evolved based on historical efforts in 2007-2008.
However, due to the state of the economy in 2009 and planned output/utilization of
the firms resources, the office heads conservatively targeted $53 million (rate of
-10.2%) in revenue. A second, more aggressive estimation and growth plan by Stroz,
Freidberg and Lynch reflected growth of $72 million (a 27% gain from 2009) was based
on a 50/50 split between e-Discovery and consulting activities on the basis of
headcount. Based on growth goals, hiring activities and cost structure need to be
primary core activities in order to increase the firms growth and process
standardization needs to be solidified to outflow to all offices. The plan of action
to address these identified problems of uniformity of management to project
attainable goals- Lynchs plan of EBITDA for 30% growth which accounts for the $72m
STRATplan and balance this with an org structure that can help achieve this goal- is
not trivial in execution.

II.

Statement of the Problem

Stroz & Friedberg is operating in a challenging and soft economic market during
2009. The financials list the company as one that grew too quickly through private
investment capital, office expansion and through acquisition. What this means is the
firm is still relatively small in size and acts like a mid-size to large corporation
with a billable headcount of 128 (according to Exhibit 6 - 2010 YE Plan). It doesnt
help that the CFO pushes execution of an aggressive revenue plan that requires both
headcount and core focus in their domain expertise: EDG and Digital Forensics
consulting.
The executives need to look for ways to balance its market expansion through
marketing efforts (increasing their brand awareness/penetration) and firm growth with
EDG being the primary market area and digital forensic consulting being a secondary
area in order to increase consultant utilization and billable rates by strategically
hiring experienced headcount and by changing the way the firm uses process
standardization that can be applied across all offices. The disjointed management
structure and communications exacerbate existential organizational issues.
Short Term Issues:

1.

Process Issues - 11 offices are operating in a disconnected state as 11

regal fiefdoms, with a different pay and bonus structure, based on various
factors such as billable hrs. that are not controlled by a centralized office or
by Stroz and Freidberg methodology.
2.

Scale of consulting engagement resources - Sharing consultants and

engagement managers among all eleven offices does not scale internally although
that is what the client perceives externally.
3.

Practices are inconsistent - while each office targets 100% consultant

utilization, rarely do all offices reach that level because of variances in

office size, performance and consulting talent.
4.

Cost controls / expense structure - Salaries, bonuses and fringe benefits

account for 50% of expenses (Case, p. 5) when in fact 50% should be allocated to
strategic orientation/training, benefits, consulting development, hiring of key
talent/retention.
Long Term Issues:
1. Responsibility rests with accountable executive office GMs/head managers for
setting and communicating aggressive goals but the GMs had not seemed to

understand their own actual responsibility and ownership of a communication plan

and clear delivery of these goals for their office- such as to articulate the
need to achieve stretch revenue targets.
2. Branding/Name recognition: requires international expansion/achieve greater
penetration in existing client market with customer base.
3. Goal aggressiveness: had been lacking in strategic consulting areas that could
provide growth for S&F, i.e. EDG (Electronic Data Group) focus on growth through
retraining consultants, moving them to this division, and applying a cultural
re-shift for this division as a catalyst to provide fresh talent in EDG.
4. Scale of client relationships and working harder: requires a change in current
management methodology to strengthen training and focal areas in e-Discovery
consulting group (EDG) in order to achieve focus in e-discovery. e-Discovery
earns higher than other segments and higher potential in billing rates for the
firm (achieved 27% in 2008 billables). The reduction of headcount in EDG has
hurt the e-Discovery segment.
5. R&R at the Top- Roles & Responsibilities, due to lack of office centralization,
role overlap, role conflict and unclear reporting lines, these are existential

organizational issues. GMs appear to need to clarify and communicate these to

S&F employees because they currently lead to delegation confusion.

III.

Causes of the Problem

S&F as discussed earlier face three major issues and concerns:
1. lack of uniformity is a major issue at the top level by the EMC (the governing
executive authority of the firm) which includes co-Presidents Stroz & Friedberg
who share IT, Operations and Finance with Lynch (CFO) with no clear delineation
of controls between either of them. The EMC members are sharing roles and
sharing resources for running Operations/IT, Finance and Management with no
centralized authority or process for centralized communication. Their lack of
distributed leadership and delegation of authority to these Field Office
practices that roll out to each of the GM/Office heads does not help. This
further points to a rooted organizational structural issue that leads to role
overlaps that impacts their corp. culture, where they are overseeing and
monitoring at each decision for each office, and not providing much empowerment

for major decision making to GMs. This does not mean changing the org structure
to meet revenue goals will work.
2. process standardization and process definition that can be used and delegated by
EMC and spread out to GMs staffed all throughout all offices from the SFO Office
to Boston/NY Offices. A major theory governing this is that there is a profound
misunderstanding about the link between structure and performance. An armys
success depends at least as much on the quality of the decisions its officers
and soldiers make and execute on the ground as it does on actual fighting power.
A corporations structure, similarly, will produce better performance if and
only if it improves the organizations ability to make and execute key decisions
better and faster than competitors. 1 The way to look at what drives performance
relies on the ability to make decisions and strong audit of what measures
performance or KPIs (Key Process Indicators) which are important metrics that
can account for measurement of growth - each office needs to be measured by the
same qualifiers regardless of the headcount, i.e. Customer Satisfaction,

Blenko, Mankins and Rogers. The Decision-Driven Organization. June, 2010.

Increase/Decrease in Billable hours, Consultant skill sets, Increase/Decrease in

Efficiency rating, Utilization Rate/Consultant.
3. org structure is lacking and chaotic and stems from a lack of overall leadership
and ability to trust GMs to execute procedures organized at the top level. This
is only part in the equation of the problem that creates the complexity of the
decision making ladder. each consulting company is divided into three kinds of
roles and these are called, according to D. Maister:
finders, minders and grinders. This refers to the three main activities that
make up consulting work. Finders (usually the most senior level) are responsible for
bringing in the business, scoping and designing the projects, and engaging in the
high-level client relations necessary during the work. The main responsibility of
minders is to manage the projects and the team of people working on it. Grinders (the
lowest level) perform the analytical tasks.2

S&F needs an effective balance of all 3 for each type of consulting effort in a
matrixed organization or split divisions with each having a single President-
eliminate the churn by increasing transparency and efficient decision making by leads
and GMs. With Stroz/Freidberg co-sharing decisions over multiple parts of IT,
Finance and Operational decisions along with a lack of marketing for all of the
divisions does not scale.
Maister, David. The Anatomy of a Consulting Firm. 2004.

IV.

Decision Criteria / Alternative Solutions

Criteria 1: Implement new structure to change organization in increments of 3
months. Provide Decision tiering from EMC -> GMs -> Directors -> Team
Consulting Leads
Criteria 2: Introduce KPIs common to all Offices to perform at each local level
Criteria 3: Prepare Audits on impact of decision making empowerment at each org
level vs. firm operational/profitability efficiency at end of each 3-month
interval
Criteria 4: Prepare Timely Reports at end of each quarter to display operational
results of changes on culture, adaptability to shift to penetrate new markets
and make inroads to new client accounts/penetrate existing markets, and increase
billable revenue on existing clients
Criteria 5: Measure S&F firm efficiency / innovation against competitors, i.e.
PwC, Ernst & Young and Deloitte in light of performance against the same target
market segments of EDG and Digital Forensics
Two Possible Alternative Solutions:
Split division (Split-Brain)Org Structure: e-Discovery/Forensics Consulting
Division led by Friedberg with Finance/Marketing/Sales and IT Operations
having a separate P&L, and Consulting Division for all other Primary
activities with Finance, Marketing, IT, Sales & Operations having its own
P&L. GMs will control P&L activities at local level and will have
delegated authority.
Flattening out hierarchy to share resources. EMC to preside over
Management/M&A Issues and only to review important Division firm-wide
issues. Each GM is responsible for its own decision making office in terms
of Finance, Marketing, IT, Sales & Operations and submit reports for
periodic (quarterly/every 3-month review) to the EMC.

V.

Recommended Solution, Implementation & Justification

To focus on the organization structure and process standardization issues: The

EMC will need to first implement a communication strategy for the firm. According to
Jeff Minch, a noted CEO, Coach and author:
People assimilate information in different ways. Give folks time to understand the
before and after implications. Make this a spaced repetition communication program.
1.
2.
3.
4.
5.
6.

Tell them what youre going to tell them.

Tell them.
Tell them what you told them.
Take questions
Ask folks to tell you what they heard.
Rinse and repeat.3
By making the first step to tightly manage communication, instituting a

reorganization of consulting divisions, i.e. spinning off the e-Discovery and digital
forensics as separate businesses, changing ownerships of marketing, sale, finance,
IT/operations and adding the right GM mix to synchronize all divisions- this would be
constant change that staff will need to soak in with constant, reinforced
communication and regular meetings. Adding delegated GM/Executive leaders reporting
to the EMC for critical decisions that include Finance, IT, Operations, Marketing,
Sales issues would assist in speeding up efficiency and allow for local authority to

Minch, Jeffrey L. Managing Organizational Growth. 2014.

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participate faster in incremental decision making. S&F will need to implement

decision tiering. Implementation of decision tiering between members of the EMC and
the GMs will increase higher amount of overall innovation and efficiency to allow
attainment of the established CFOs 2010 STRATplan.
To address the lack of uniformity issue: Stroz, Friedberg and Lynch could also
build the growth and development plan in Consulting Revenue (other half of $36m) and
add a strategic and ramped up trained team of qualified consultants and team their
groups up with one GM lead - however differently allowing a GM/office head to assume
full-decision making authority to scale over local Finance, IT, Operations and Sales
after attending management training. While it is considerably taking a risk for
accountability, it would be a good split Executive - delegated management model for
the rest of the company (distributed offices) to follow from NY to SFO and this needs
to be proposed by the EMC and communicated clearly through policy.
- Handled by the EMC Tier:
Big, one-off financial decisions that individually have a significant impact on
all division of the firm. If S&F launches a revamped e-Discovery / e-Forensics
division at the wrong time, in the wrong place, or with the wrong technology, it
will have to live with the consequences for many decades.
- Handled by the GM Tier:

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 Small, routine decisions that cumulatively have a significant impact. For

example, continuing success can be attributed partly to a host of consulting
operational decisions, including those related to providing value at the end
through engagement management audits, suggestions to clients for add-on
services, and targeted e-mail notices about new S&F offerings, specific to the
newly launched EDG brand.
S&F Contingency Plan:
Realignment into 2 separate organizations which are GM-based and listed to
respond to changes in demand of consulting work. This new S&F firm org
structure will allow the GM to have accountability for all decisions that
directly impact its businesses customers, such as service levels, positioning,
and consulting services bundling, as well as KPIs necessary for measurement of
proper alignment of revenue goals, resources and performance:
EDG business - own a separate P&L with internal organization, driven by
portfolio of services in this area.
Digital Forensics business- own a separate P&L with internal organization,
driven by its own portfolio of services.

VI.

External Sources

1. Blenko, Mankins and Rogers. The Decision-Driven Organization. Retrieved Sept.
16th, 2014 from http://hbr.org/2010/06/the-decision-driven-organization/ar/1
2. Maister, David. The Anatomy of a Consulting Firm. Retrieved Sept. 16th, 2014
from http://davidmaister.com/articles/the-anatomy-of-a-consulting-firm/
3. Minch, Jeffrey L. Managing Organizational Growth. Retrieved Sept. 16th, 2014
from http://www.vcfo.com/blog/managing-organizational-growth

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