Acs

Automation Consulting Services
As they had been doing twice a year for the past six years, the three
founding partners of Automation Consulting Services (ACS) convened at Cliff Reeds
summer home in Cape Cod in August 2000 to spend a weekend assessing the status
of their consulting firm and planning its future. Not surprisingly, they each had come
away from their recent tour of ACS four affices with a long list of question,
concerns, and ideas for change.
Over the years, the semi-annual practice of visiting each office and holding
formal meetings with its partners ang principals had been an effective way for the
three founding partners to identify major problems and new opportunities. This
year, however, the three founders sensed the magnitude of the issues that needed
their direct attention had grown out of control. They worried that two days of
brainstorming would not be an adequate response to the current challenges ang
those projected for the next decade.
Company Background
Clifford Reed, jack Leland, ang Angela Goldberg had founded ACS in 1993 as
a technical consulting firm specializing in factory automation for industrial
manufacturing firms. ACS advised clients on the development of automation
strategy and long-term facilities planning and also provided guidance in the design
and implementation of specific automation projects.
From its home base in Boston, ACS had expanded into three additional
locations. Offices had been opened in Philadelphia and Detroit in 1995 and 1996,
respectively, and ACS had acquired a local partnership in San Jose, California in
1998. By 2000, ACS had a profesional staff of 83 consultants and revenues of nearly
$52 million. The ACS partnership had tentative plans to open an office in Europe in
the near future.
When Reed, Leland, and Goldberg had first formed their partnership in 1993,
demand for automation expertise was growing steadily and their market research
indicated that the trend would continue throught the 2000s. From the outset, the
founders had agreed that revenue growth would be a top priority. They had
considered rapid growth an imperative for three main reasons. First, most of their
clients and likely prospects were relatively large corporations, often with multiple
manufacturing sites; these firms preferred hiring technical consulting firms that
could provide the depth and breadth of expertise and geographical coverage to
meet all their automation needs. Second, the founders wanted to establish as many
client relationships as possible while the market was still young and fragmented in
an attempt to build client exit barriers. Third, without a high growth rate, the
partnership would not to be able to attract, motivate, and potentially rapid caree
development. As the summer 2000, ACS
management had surpassed its
aggressive growth goals by doubling revenues in each year of operation, and its
founders had no plans to let up the pressure for growth in the near future.
ACS phenomenal success was attributable, in part, to the mix of talent and
experience embodied in its founders. Cilff Reed was a 10-year veteran engineer
from a Big Threeauto manufacturer, where he had specialized in factory
automation. Jack Leland, also an engineer, was a graduate of MIT with eight years
of practical experience in manufacturing operations at a high-tech firm before
founding ACS. Angela Goldberg was a Harvard MBA, with ten years of experience
marketing computers and related equipment to industrial clients.
The three founders-who constituded the Executive Committee-were the only
partners with firm-wide responsibilities; all other partners focused only on their own
offices. Each of the four offices was headed by a managing partner who was
responsible for his or her offices revenues, recruiting efforts, staffing, and client
development. The offices varied substantially in size. Each office had 3 to 6 partners
as well as form 8 to 31 non-partner professionals.
(see Exhibit 1 for an
organizational chart).
In keeping with the Executive Committees emphasis on revenue growth,
each office was managed as a revenue center, with partnership as a whole treated
as the sole profit center. Each partners compensation consisted of a share of the
firms total profits in proportion to his share of total revenue generation. (The
founders an other managing partners received an additional bonus tied to firm-wide
and office-specific revenue growth, respectively.) Expenses were accumulated and
monitored on a consolidated firm-wide basis. In addition, each ACS office monitored
total hours billed and utilization as proxies for office profitability. Revenues,
utilization, and other performance measures for 1999 are reported, by office, in
Exhibit 2.
August 2000 : The Executive Committee Retreat
Cliff, Jack and Angela had not prepared a formal agenda in advance of theirtwo-day retreat. Instead, they began as they had in the past : by discussing their
thoughts and concerns, one office at a time, based on their recent tour as well as
their individual interactions with the consultants of each office. During this
discussion, they kept a running list priority problems and opportunities, which would
serve as the agenda for the second day of their retreat. The following sections
highlight the major issues raised on Saturday, August 19.

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Automation Consulting Services

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