Cover Story

Changes in thought

By Mike Cottrill

The Fernandez file

Ted A. Fernandez was facing extinction in the technology market.

There is no other way to look at the grim future he saw in the early part of the century as Answerthink Inc., a business and technology consulting company, was watching the technology implementation boom of the late ’90s collapse. Fernandez, chairman and CEO, knew that Answerthink couldn’t keep doing what it was doing and still be around 10 years down the road.

With other implementation businesses consolidating and getting bigger and a new group of entrants coming into the market at cut-rate prices, Answerthink was suddenly in a very competitive space.

“It was clear for us that we were in a highly competitive space, but we knew that it was only becoming more competitive when you looked globally,” he says. “Even though it was the technology implementation business that led to our original growth and initial public offering, there’s no doubt that the market conditions and our ability to highly differentiate ourselves had clearly weakened.”

With more than 700 employees, Fernandez knew that it wouldn’t be easy to make a fundamental change. Answerthink had never borrowed a dime after Fernandez’s original start-up costs for the company, and, even as the market slowed down, the balance sheet never looked too bleak. Still, in 2002, he looked into the future of the market and realized that things weren’t always going to be so great.

“It was a lot of internal soul-searching,” he says. “We were really looking at, where do we have sustainable differentiated value propositions? That was the main goal.”

The soul-searching had one purpose for Fernandez: Find out what was left of the business that could sustain the company. When a market starts to shift, you need to focus on the one thing you offer that no one else does, even if that portion of your business is small. If every other supermarket in the city is selling strip steak, but you have a small filet business, you can begin to promote that and stop trying to fight in a flooded industry. By studying what was the same about all of his competitors, Fernandez found out what made his company different. Answerthink’s filet became The Hackett Group — the company’s intellectual capital resource in best practice research — which had benchmarked resource data on more than 75 percent of the Fortune 100 companies, something that immediately separated it from the pack.

Taking that big difference-maker as his showpiece for change, Fernandez clearly and consistently told his people the plan for change, and then said that they could come along for the ride and keep the company alive, or they could walk away.

Lead with a difference-maker

Despite the fact that Answerthink had always been profitable, Fernandez quickly started to exit the technology implementation business, the company’s primary bread winner, and focus more and more on Hackett. Looking toward the future, Fernandez saw that Hackett, which was only a $4 million portion of Answerthink’s $177 million business in 2002, had a distinct difference-making capability in the market, and there was no time to waste waiting for previously successful markets to slow down.

So, while it caused a bit of a stir, Fernandez quickly slowed Answerthink’s primary businesses and started to leverage them through Hackett. Because Hackett had a bright future and the market was discounting the services coupled with Answerthink, Fernandez either wanted to get completely out of some businesses or tie them to Hackett. There was no time to keep trying to ride the train that brought him previous successes.

“It’s just an honest assessment of what you have, and for those businesses that I did not see a clear path, we exited quickly, and that led to cutting our revenues nearly in half at the time,” he says.

By sharply cutting revenue, Fernandez had to continuously put the new plan into words that his leaders could understand and tell them that there was no turning back. When you start pulling away from businesses that have always been profitable, there is going to be skepticism, so Fernandez had to put the plan out in a way that showed everyone the reality that he saw — the reality that said there was no future if changes weren’t made. While he told people those changes would be tough, he had to paint the picture of how important a difference-maker Hackett was while showing how flooded Answerthink’s previous markets had been. By always emphasizing what a great new toy the company had, he could more easily push it to the forefront.

“That process is continuing, but that vision has to be clear enough that you can touch it and execute it,” Fernandez says of driving a change. “They can visualize it and understand it well enough to know if they are on board and motivated by your thoughts. It is engaging your senior team, it’s doing it honestly, telling them, ‘This is where we can make a difference, and we can’t do that the old way,’ and then, as with any vision, you have to have high confidence and let people know that, honestly, there will be a lot of learning and starts and stops.”

Consistency builds buy-in

Fernandez has only one PowerPoint slide, and he’s been using it ever since the change began. The slide, which shows a gold cube at the top representing the value of the Hackett’s intellectual capital, is a reminder to all of his people of the point that Answerthink is building a new organization around that one element. The idea is to keep the core message consistent throughout adaptation to build buy-in.

“I have started so many meetings with that slide, telling people, ‘Here are the pieces that need to be put together,’” Fernandez says. “And I have adapted my story a bit as the circumstances have changed, but we have created the vision, we have tried to put it in a slide that we can use and show, and we’ve been using it for almost five years.

“You are always being challenged, so any adaptation, anything you do, people will say, ‘Ted is that a change in strategy?’ and I say, ‘No, well, here let me pull out the slide, I only have one slide, it’s the only one I’ve had for years,’ so it helps get everyone back to the original theme.”

That original theme is the core of what you have to put out to your people in a time of change, and Fernandez keeps that one element there as the first building block in communicating the changing of the organization.

“You need to make sure that people understand what that centers around, and we have been unyielding about that,” he says. “So it’s been very helpful to have a message and to have it have the consistency of the premise of one unchanging principle, and then the rest is education. ‘Let me show you how we are tweaking it and why this is how we’re changing, this is what you’re changing,’ but the guiding principle has not changed.”

And as much as that message can get a little boring, you have to stay excited about it because your staff needs to hear it.

“You have to explain it and know that it’s an ongoing process,” Fernandez says. “These are things that you have to be constantly doing because your place changes, new people are always coming in, so that constant pursuit is something that you either enjoy as a manager or a leader or you don’t.”

Dealing with resistance

Fernandez is pretty proud of his one-slide buy-in strategy, but he knows that not everyone at Answerthink feels the same way. So while he wanted to get everyone to follow the shift to Hackett, he knew some people just wouldn’t adapt to change.

“I’m going to say that the third-third-third rule really applies: There’s a third that are on board with you Day One, a third sitting there and saying, ‘Ted, we’re here with you, educate us and give us a chance,’ and a third that I’m sure we never captured,” Fernandez says.

What may surprise you in such a move is that it’s not always just the people who are from the area that is being changed that are skeptical. At Answerthink, naysayers came in small chunks from every different segment of the company.

“There are people from each side — some could have been somewhat committed to Hackett’s side, who may have said the combination of all of these services doesn’t quite make sense, or there may have been people on the technology side that say, ‘I want to be part of an organization where technology is king,’ — so you don’t get everyone with you,” Fernandez says. “There’s no doubt we had people who either didn’t want to be part of an entire transformation because it is almost like starting over, or there were some other people who may have not seen it, who maybe said, ‘Ted, I don’t think it’s a good idea.’”

Those that stay will have plenty of excitement for the new direction, so it’s best to let employees who can’t get on board go a different way and bring in new people who can keep up the energy. In doing so, you will keep the core that will work the hardest toward the new goal and also weed out people who could not execute the new vision. Fernandez doesn’t take too much time to worry about those that can’t come along for the journey — as long as he’s done his due diligence as a leader to show them the future of the company.

“The only thing you can do as a leader is to provide a path for everyone,” he says.

The path that Fernandez chose allowed his company to prosper where others failed.

“Of the 40 companies that were in our sector of that technology implementation frenzy of the late ’90s, only three exist today,” Fernandez says. “The rest were sold or are insolvent or are gone.”

Today, with almost two-thirds of Answerthink’s $180 million in revenue coming from Hackett, the transformation has turned the company into a very different business. For those that stayed along for the ride, Fernandez simply showed them how that evolution was going to happen.

“Demonstrate the power of the strategy, provide a path for everyone and be respectful in understanding that some people are undergoing bigger changes than others; other than that, there is really nothing else you can do. You really can’t. You just need to make sure that you are really doing that for everyone, and know that if you fall short in doing that for everyone, in providing that clear path, don’t expect as strong an outcome as for those you know you clearly did provide a path for.”

HOW TO REACH: Answerthink Inc., (305) 375-8005 or www.answerthink.com