P&Q: What kinds of projects have you been doing lately?
Chanmugam: Let me give you an example. We did a project for ABC Television. It’s public information. There is a question: Is television dead? Or, to the underlying question, Is television advertising a bad way to spend your advertising dollars? The recent trend has people saying the better way to spend your advertising dollars is to spend it on digital — on Google, on Facebook, etc. It can be more targeted. You can find exactly the right people. You’ll know whether people are engaging with your brand or your offer. There’s a crisis in the television industry — no one [supposedly] watches television.
ABC asked us to do a study about what is the value of television advertising. Of course, we have our reputation to uphold so we did a very detailed, fact-based study. Because the rest of Accenture happens to have access through our digital interactive businesses to $13 billion dollars in actual advertising spending data across all kinds of categories (Outdoor, television, digital, radio, etc.), we had an enormous database. We had access to actual purchase of product (like beer sales or laundry sales) and we combined Accenture Strategy, which understands advertising, consumer goods and other related topics, with some of our deep data scientists at Accenture Digital. So we basically crawled into a hole and worked intensely crunching the data. And we came back with a surprising result, which is that, yes, digital is powerful, but digital is more powerful when it has the halo of TV advertising. And if you take away TV advertising — if you took away your Budweiser ads during the Super Bowl — even if you’re doing tons of online and other stuff, the sales of Budweiser, for example, goes down. And it’s because people, even though they’re not watching every ad, it’s seeping into everyone’s mind and creating awareness at the top of the funnel — kind of like air cover for your digital ads.
So the answer is television advertising is critical to enhancing the power of your digital advertising. If you take away the television, your digital is less effective on its own…And this ABC study conducted by Accenture Strategy was presented in New York to all of the television studios who were showing off all of their new programs during the upfronts presentations. It created a little bit of buzz in the industry because it was a bit counterintuitive. And lots of people want to understand the methodology and apply it to their own advertising or platforms.
That’s just an example of a project that was about combining smart strategy with power of data that had never existed before to answer important questions. That’s just one example of that intersection of digital and strategy.
Another example is we’re working with a hospital system that wants to build a company that does telemedicine. They’re virtually linking hospitals with different specialties – for example, a hospital that specializes in heart surgery with a hospital that is expert at treating cancer, and so on. This will mean that patients and their primary care physicians will be able to have access to the best specialists, even if they are in a rural area. This is a revolutionary thing…We’re basically working with this hospital to build a telemedicine virtual health startup for chronically ill patients.
P&Q: How is strategy consulting going to look different in 20 years?
Chanmugam: I worked at McKinsey in the 1990s. It was a great firm. I did my own startup between the time I was at McKinsey and Accenture Strategy. When you look back on it, [strategy consulting] has been a relatively consistent business model based on the long-term business model that James McKinsey made. It hasn’t really changed much. I think we’re now starting to see a significant change. Question is, what is going to look like in 20 years? And we have a perspective on that.
It’s going to require scale, which means you need to be in every country, every industry, and every functional area of expertise. It’s going to require a lot of intellectual property in the form of data, assets, and tools and maybe even pre-baked products and solutions. It’s going to require a willingness to put your money alongside the client, Right now, the clients pay the fees and the consulting firm does the projects and if it works or not — that’s on the client. Soon, you’ll find the idea of sharing the risk and reward more prominent. For example, we’ll invest alongside you in the startup and we’ll take a percentage of the savings or a percentage of the revenue increase the more you sell or save through this new channel we help you develop. That’s going to require some scale and capital because the risk is being shared between the client and the firm.
It’s also the nature of projects. It used to be a couple of smart consultants — MBAs — who would do their analysis in their Excel spreadsheet and then show [the results] on their PowerPoint slides. Now, clients are saying, ‘We don’t want an Excel spreadsheet. We want you to crunch a terabyte of data with all my data from all my customers and everything I buy from all of these other data vendors. Or, ‘don’t give me PowerPoint slides. Show me an app that I can actually use with my customer service reps or the story or a hotel checkout area.’ They want something that actually works — and to show them how it actually works. That’s a very different thing. It’s starting to move into execution, more about prototyping and piloting. It’s moving away from the theory of how it will work to ‘How will it actually work?’
As I add all of those things up, I think the more forward thinking strategy consultants are going to be trying to skate where the puck is going to be. What kind of business are the clients going to be supporting? What are the products and offerings? What will the nature of the fee arrangement be in the future? What skills and what kind of people are we going to have to have to meet our clients’ needs?
There’s disruption emerging too, where I can just rent a strategy consultant by the hour. There is HourlyNerd and other similar crowd sourcing platforms that have the potential to disrupt our industry in the same way that Uber did the taxi industry. For example, ‘I want a strategy consultant who knows X, Y, and Z for five weeks at this price.’ So, I go and source these people directly.
So I think there is the potential for disruption. There is potential for some brand new ways of doing consulting.
P&Q: You have a Harvard MBA. How has your MBA informed you in how you do your job?
Chanmugam: Funny, I just went back for my 20th reunion (at Harvard Business School). As far as how it informs doing my job, for me, it was less the technical skills learned in business school. Obviously, you learn about debits and credits and discounted cash flow. That is, in my view, 10% of value. For me, it was the case study method that really makes you think on your feet and synthesize lots of data things very quickly into three simple points to make — backing them up with facts but not getting overwhelmed with the details and being able to articulate it in front of 80 people (some of whom are ready to jump down your throat). So building that confidence to do that has really helped me. That was sort of a change for me in my career.
The other part, I would say, is just the network of people and the interesting things that they’re doing and being able to stay in touch with them and learn about what it is they’re seeing and doing. It’s constant learning that you can’t get from the newspaper, articles or any other media. Why are you doing that? How are you doing that? ‘Oh wow, I didn’t know things were changing that way.’ It’s just a constant flow of ideas and even warnings (‘Oh, I thought that was a great business. Now, it’s terrible and let me tell you what’s going on with the regulation and the government.’).
So I guess it is a large pool of people from whom you can learn in real time about what’s really going on – and who are also inspiring. To me, that’s been the greatest value much later, 15-20 years later. It’s the inspiration, the ideas, and the sharing. Now, half the time when I go to do something, there’s somebody I’m connected to in that space who can help me or coach us.
People say the MBA is dead. I think there are some things that are very hard to replicate though an online learning environment that will preserve the value of going to business schools.