The founders of 71 & Change aim to shake up the staid professional services business model.
When you are a migratory bird traveling long distances it can get tiring flying alone. Birds have learned that flying in an aerodynamic ‘V’ formation allows them to go further than if they go it alone. Each bird takes a turn flying in the lead and then drops further down the ‘V’ to prevent fatigue. Experts have worked out birds can go 71% further by flying this way.
It is this amazing show of teamwork and collaboration in the animal kingdom that has inspired founders of a new professional services venture to call their company 71 & Change. The new firm, which launches today (the launch date of 7/1 is part of the efficiency motif), is a spin-off of business consultant PeopleFirm.
Two former members of PeopleFirm – Kim Bailey and Beth Montag-Schmaltz – will head up the new venture, which will have offices in Portland and Seattle. Eight employees from PeopleFirm will transfer to the new company.
71 & Change will focus on a strand of business consulting known as change management. This is management consulting speak for advising companies on how to change the behavior of employees in the workplace. For example, it could involve helping employees to adopt to a new IT system, a new process, a new job, or a new responsibility. Initially the firm will target large clients. But it is also going after middle-market businesses, as well as the nonprofit sector.
What distinguishes the company from other business consulting firms is its shift away from the typical hierarchal structure of a professional services firm with a single partner and founder and everyone underneath. All employees at 71 & Change are owners and founders of the company. It is this flat structure that recognizes the firm’s best assets are its employees, says Bailey.
“A cultural aspect we are trying to promote is that in the professional services space you are really only as good as your people. That is the bottom line. We need to recognize and honor that and build a culture and organization around that,” he says.
The days of the partner model in the professional services sector are numbered unless you are a large global firm like Accenture, Bailey adds. “It is archaic and quite frankly it doesn’t work in a localized professional services organization. We are trying to change that model.”
To encourage the philosophy that everyone is an owner in the company, employees will be offered stock incentive plans. Paid sabbaticals are also on offer. Schmaltz says one of the employees had tears in his eyes when he was given a business card with the title of owner and founder. “It was so moving for him,” she says.
Both Schmaltz and Bailey have experience of working for larger hierarchal consulting businesses and have gradually moved into more niche areas of the sector. They met while working on a project together at Andersen Business Consulting before its parent, Arthur Andersen, shut down as a result of an auditing scandal in connection with the collapse of energy trading firm Enron.
Both worked at Hitachi Consulting after the break up of Arthur Andersen. In 2008, Schmaltz co-founded PeopleFirm, a spin-off of Hitachi Consulting that focuses on four service lines related to people management. Bailey joined PeopleFirm a month later.
71 & Change will have a niche focus on change management consulting. Its specialized focus reflects the direction that many professional services companies are now taking. “You are seeing a lot of folks coming out of those large firms and creating smaller professional services – some of which have smaller footprints on a localized scale,” says Bailey.
“Portland is a mid-market town — over the past ten years businesses are not willing to spend a huge amount of money on high-priced out-of-state consultants. Nike is a great example. While they use a handful of national firms, they really want to focus on localized talent.”
A big part of the company’s niche is its technology platform that “doesn’t fit into the typical consulting model,” says Schmaltz. The technology allows companies to see visually how changes to their businesses are affecting employees.
For example, it creates ‘heat maps’ that show potential problems where employees are at risk of burn out and decreased morale. “We are applying hard science and analytics to drive the conversation in such a way that executives start to pay attention,” she says.
The founders plan to stay focused on the Pacific Northwest market. Most of the employees joining the new venture are 12-15-year veterans of the sector. The firm will start out with nine people, but plans to grow to around 150 employees in five years, says Schmaltz.
She stresses 71 & Change will be a local firm rather than go national. “That goes back to the community focus — we want to stay tight in the Seattle and Portland community. We will do work with clients all over the country. But our people and work we do will be in the communities we serve.”