Cultivating Capabilities to Innovate: Booz Allen & Hamilton

Submitted by:

Group 10
Sourav Roy MP16036
Ramakrishna mp17033
Naresh kumar MP17038
Brajesh Singh MP17011

Booz Allen knew they needed change according to the conversation Dickie and

Varasano had. They knew their challenge was not producing content as they are

constantly coming up with bright ideas and new concepts but installing processes

that select the most important new ideas and then roll them out though their partners

to a large set of clients. They needed process to test the ideas and communicate

them, and incentives for partners to use them. Dickie and Varasano realised that

even if they achieve their goal, they need to not isolate themselves in their comfort

zone but step out of it and make new plans.

In the Booz-Allen&Hamilton case, it is evident that the type of change that the

organization went through was the overhauling or re-creation change. Dickie

reflected that the firm was better at helping clients learn how to innovate than they

were at managing their own innovative processes and decided it was time for a

change when he stated that “the shoemaker could do with a new set of shoes”. The

organization went from a structure where there were few incentives to share

knowledge and innovations across partners to becoming a learning organization.

Before change, learning tended to occur at the individual and client team level

stimulated by particular engagements even though some informal networks existed,

there was no explicit mechanism for sharing new insights beyond individual offices

as knowledge was not readily accessible in the firm. This changed when Booz-Allen

took the first step of change in 1987 by implementing a strategic change that was

termed “learning to compete as an institution rather than as a confederation of

individuals” then the implementation of the Vision 2000 which launched three major

thrusts. The impact of change increases as one move from inconsequential

alterations and fine tuning to change that requires us to reorient and re-create the

organization. It is not surprising that re-creating an organization is more time

consuming and can be challenging to lead effectively as they have greater impact on

individuals who must reorient themselves like in the case of the Booz-Allen &

Hamilton where a new strategy was implemented to increase both transparency and

trust and give the partners a more powerful means of influencing the behavior of

their members. This new strategy meant partners in the firm had to re-create

themselves which they were not comfortable with as they did not welcome these

changes and led to them departing from the firm as they could not adapt from the

earlier ethic of independence they were familiar with to a cooperative model.

It is important to understand when one should begin changing and where it becomes

obvious there is need for change as described by sigmoid curve. The curve depicts

the different phases of an organization as increasing growth during early-stage

development, flattening in maturity period and decline overtime. Founded in 1914,

Booz. Allen & Hamilton incurred a successful increase in growth during initial

development phase blossoming into one of world’s largest consultancies. One

reason in the steady growth of Booz Allen was the strategy to implement any

services and concepts needed to help clients improve their performance. In order to
sustain in market and continue to grow the competitor’s tried to evolve their business

model around that of BA&H. After this point (point B), the profit margins get

squeezed thereby slowing down the growth rate because of competition. At point B

of sigmoid curve, reflects the stage at which change is introduced even when system

is growing. Booz Allen’s strategy of ‘learning to compete as an institution rather than

as a confederation of individuals could be represented by point in curve just prior to

prior which the organization was an affiliation of individual partners. The idea was not

much successful in organization as many unwelcomed this cooperative model over

independent model, but still the company followed its initial growth curve. Then in

1994, a new strategy called ‘Vision 2000 (V2K)’ was launched by BA&H being one of

reason to their significant growth. This could be termed as point B change as per

sigmoid curve because following the implementation of V2K the firm was growing at

25% annual rates and profitability per partner. The organization was able to sustain

the initial growth curve after point B, generating $10 million to $20 million per year

which was not common in market. The change should have been implemented

earlier to point B by Booz. Allen. As stated by Frank Varasano, ‘If they had

implemented KOL before beginning Toledo, they would have had 40% platform

instead of 20%. The reason being KOL gave access to knowledge of practices used

with previous clients of BA&H clients. It provided the leverage to learning the

practices that BA&H client teams used earlier which improved the clients serving

speed and avoided delays in deployments.

BA&H is a knowledge-based industry, and they have a long history and dominant

culture of innovation. In earlier days they used to provide integrated solutions to

partners while the new entrants in the market built their practices around particular
products. Even though the management realized they needed change in the current

system, they only concentrated in sharing knowledge and making them more visible.

They failed to build or adapt new processes to capture market. Other companies

developed ideas that BA&H had and built its reputation around it. Their sourcing and

re-engineering strategies were adopted by other companies and they spent large

fraction of resources on products and became experts by doing it repeatedly. The

top management tried to encourage employees in selling their products to clients,

they did not follow it. After KOL, the staffs spent time in searching previous client

team works and rarely searched for new ideas. Many partners showed innate

reluctance to apply ideas that needed refinement or change instead they followed a

culture of conservatism.

Going by Booz Allen values to build and sustain a preeminent, worldwide consulting

firm that serves significant clients on important issues of management and

technology, providing people with a matchless opportunity for personal, professional

growth and for contribution within the firm and in larger arena of family, clients and

community, they should not only implement change but also embrace new ideas and

use them freely in the organization as this will not only be beneficial to them now but

also new generations to come. They need to accept responsibility so as to pass on a

strengthened heritage to their successors.