Folks, we need to talk about something important this afternoon. We would like to talk about the professional services firm Deloitte and its big, bloated, dumb, directionless business strategy. Honestly, this is a firm that has spent the last few years trying to be everything to every business that needs any imaginable service that can be billed by the hour, and in the process has become the largest professional services firm in the world and commoditized all of its expertise.
Size is not a strategy. But it is an awful way to run a business.
Let's start with Deloitte Digital. Why is this even a thing? Well, to hear Deloitte Digital tell it, a creative-slash-consulting agency is just another way for Deloitte to provide exceptional client service in everything they do:
You’ve heard it before: Digital has changed everything. We’re all more connected, more informed, more interactive. As a business, you have more opportunity—but also more risk. To be effective in this new world, you need a different kind of partner—one that tears down the traditional model of creative, tech, and business services-in-silo. Deloitte Digital is defining that new model.
Yes, yes. Tearing things down, re-defining, connectivity, opportunity blah blah blah. All that's missing is [TBD].
We are an agency and a consultancy. We combine leading digital and creative capabilities with the deep industry knowledge and experience our firm is known for. That means you can bring us your biggest challenges, knowing we’ll help you bring a new business vision to life and drive the bottom-line results you need.
Does anyone have any earthly idea what any of that means? Digital! Consultant! Digital consultant! This is a firm whose name is from a guy who performed the first independent audit of a railroad. I mean, how exactly does being a digital agency help Deloitte's value proposition? We're some bored people in business development sitting around talking about the previoius night's Mad Men episode when someone blurted out, "We should be Mad Men!" With that, they combined two meaningless words into an even more meaningless label for a service this bloated firm can provide.
Nobody else does what we do.
Actually, no. Lots of people do what you do. In fact, of the $39.1 billion in U.S. agency revenue in 2013, 35% of it was digital. But hey, it's all about tackling clients' biggest challenges, yeah? And since accounting firms are really great at solving challenges, what's to stop Deloitte from diving head first into an unrelated service line?
Client: "Hi, we need our tax return prepared."
Firm: "Great! We'll be right over to solve this challenge! That'll be $1.2 million, please. Do you mind if the art department comes along?"
From Deloitte's 2014 Global Report, we find the world domination plan includes just about every professional service a business might need, short of janitorial and perhaps catering.
Yeah, so why not add in all the other services businesses need? Like regular deliveries of Costco-sized single ply toilet paper and manufacture of carpeted cubicle partitions? If you're going to drift aimlessly offering every possible service imaginable, you might as well drift all the way.
Another prong of the Deloitte strategy spork is acquisitions that align with the firm's "strategic priorities," whatever those might be. The following market areas are particularly attractive to Deloitte:
- U.S. Federal Government (particularly the intelligence community), including consulting capabilities in strategy and operations, enterprise applications and technology integration
- Security and privacy, including identity and access management, architecture, applications implementation, etc.
- Financial advisory services
- Consultative businesses in life sciences, technology and banking
Note: We are typically not interested in businesses driven primarily by a software application sales model
So, again, a nice little grab bag there. In FY14, Deloitte made 20 acquisitions from technology consulting to middle-market investment banking. What does any of that even mean? Who cares, there must have been a rollback special in aisle 5 that aligned with Deloitte's "strategic priorities."
Wal-mart didn't become the Mom and Pop destroying machine it is today by offering a handful of really good products, it does well because it offers mediocre products of all kinds. Sure you'd be better off getting your produce from a farmer's market but who has time for that? Just grab your big screen TV, your feminine hygiene products, your tube socks, and your meat all in one place and be done with it.
This seems to be Deloitte's strategy. Is it working? Well, Deloitte did boast record revenue of $34.2 billion this year, a 5.7% increase over the previous fiscal year.
It seems that Deloitte (and the rest of the Big 4 for that matter) are consumed with growth, regardless of how that growth is a achieved or if they're truly creating value for their clients. Deloitte's is creating a perception that they can meet any challenge a client may have; they can do anything for anybody. And that, my friends is not smart business, either.
Ignition founder Tim Williams, who's one of the authorities on professional service firms not sucking, said earlier this year, “Standing for everything is exactly the same thing as standing for nothing. If you do everything for everybody that is not a strategy, that is the absence of a strategy.” In that speech, he went on to say that clients don't hire you because you are good at everything. They hire you because you do what they hired you to do really, really well.
In other words, try doing one or two things really well instead of everything just half-assed, Deloitte.
But at this point, it may be too late. I mean, does anyone even remember what Deloitte does really well? I mean, those PCAOB reports speak for themselves; they could use some practice in their chosen markets before buying up every janitorial service and caterer on the block.