Lorien Consulting is a relative newcomer, but it has recently reorganised and relaunched in preparation for aggressive growth. Sarah Perrin talks to the firm's managing director, George Kalorkoti, about his strategy.
On 1 December, Lorien Consulting, the reformed group of management, IT and customer loyalty consultants within Lorien plc, was formally launched. The roots of Lorien are in contract staff provision, but the acquisition of PE International in 1996 marked a major evolutionary stage for the business, and Lorien is now committed to consulting – so much so that even before the launch, George Kalorkoti, the firm’s managing director was thinking far ahead. “We want to grow our consultancy very aggressively,” he said. “We have spent the year getting our strategic act together as a consultancy and we have what we believe is going to be a strong brand in consultancy.” Kalorkoti, who joined Lorien in November 1998 to run the Information Solutions division, which contained the company’s IT consultants, won’t be drawn on the question of whether further acquisitions of consulting firms will fuel this growth. But PE has been fully absorbed into the Lorien framework. “We have stopped using PE business cards,” says Kalorkoti. “The staff turnover rate is pleasantly low. I don’t lose people I don’t want to lose. What made PE good is what we have tried to retain.” The new look Lorien Consulting has brought together three previously disparate constituents – the management, IT and customer loyalty consultants, which were run separately. Separate managerial hierarchies for the different consultancies have been replaced by a unified structure containing a single resources director, a single sales director, and so on. “One of the reasons we have done what we have is that we have taken our own medicine,” says Kalorkoti. “We used our customer loyalty measurement to assess what our customers want from us.” The process also established the factors that clients valued in Lorien’s consultants. “The top factor that comes out is the attitude of our people, which is rated highly,” says Kalorkoti, who feels that the way Lorien builds relationships with clients is one of its major selling points. “We develop relationships that last for years and years,” he says. “Customers were saying, ‘The attitude of the people is terrific. Now what we would really like you to do is help us solve the sorts of problems that your customer loyalty service helps us identify.’ We had the ability to do that, but in different parts of the organisation. That’s why we have combined all these parts of the business. What clients want is a solution to their problem. Whether it is to do with IT or change management or whatever the latest buzzword is, they have a problem and they want a solution.” The combination process was completed in the spring of 1999. Kalorkoti is pleased with the result. “Probably the single biggest success of the past 12 months has been getting the three parts of the business to integrate,” he says. “Getting somebody who is a real techie at heart, talking to a management consultant and exchanging ideas is something which gives me a lot of pleasure. Good IT consultants actually want to know what management consultants are up to. And management consultants want to know what all these acronyms that the IT people use really mean.” Formal and informal methods have been applied to achieve the integration. “Formally, we have a mentoring system that really goes across the discipline boundaries; informally, at one stage, I reorganised the office,” says Kalorkoti. The development of the team over time had resulted in all the management consultants being seated at one end of Lorien’s open plan office in Chertsey, with all the IT consultants at the other. Kalorkoti had the office reorganised to mix people up, successfully encouraging cross-discipline communication. Another issue which attracted Kalorkoti’s attention was the firm’s approach to software agreements. “Our focus is very much on independent management advice,” he says. “We specifically don’t want to get into relationships where we are resellers. We are very much an advisory-based organisation. We were a VAR for one of the ERP vendors (Baan) but that was something I terminated recently.” The reason for this, Kalorkoti explains, is that he doesn’t want to give the slightest hint of an impression that his consultants’ advice might not be impartial. “We don’t have an axe to grind,” he stresses. “That’s very powerful (in the marketplace). We beat two of the Big Five recently in an electronic commerce strategy project entirely because we don’t have an axe to grind. A lot of the big boys are going into things like becoming trusted third parties, but you can’t be a trusted third party and give independent advice at the same time.” Kalorkoti and his team have also had a fresh look at the consulting areas on which they want to focus. “As part of our strategy, we have gone back to basics,” says Kalorkoti. “We have asked ourselves what it is that we need to deliver to customers. E-commerce we think is an essential service. Our differentiator there is that we offer pure consultancy. We also see EMU consulting as quite important, so we are building up a practice in that. Customer relationship management is also important, especially the more qualitative elements. Customer loyalty measurement is the exciting bit to do.” Household names such as British Aerospace, Jaguar and 3M all use Lorien’s customer loyalty expertise. “We train an organisation’s managers to go and talk to their clients using a structured questionnaire that we develop together,” Kalorkoti explains. “We then get the results of those interviews and we analyse them using some proprietary software we have developed. Out of that comes an assessment of loyalty.” Kalorkoti illustrates the distinction between customer satisfaction and loyalty with the example of an individual driving a brand X car who has just won the lottery. He points out that although the lottery winner might be entirely satisfied with his current car, he is still unlikely to spend his lottery winnings on brand X. “You can have high customer satisfaction, but no loyalty,” says Kalorkoti. “A lot of corporates measure satisfaction extremely well and can tell you how satisfied or dissatisfied their customers are. They can’t tell you how many satisfied and dissatisfied customers are loyal.” Once an organisation has assessed the loyalty of it customers, the really interesting work starts as it looks at ways to increase it. “The follow-on advisory work helps them get the right processes, procedures and systems in place,” says Kalorkoti. “There is a natural continuity. Clients are not really interested in a service, they are interested in a solution. The problem is, how do I make my customers more loyal? Not, how do I measure loyalty, per se?” So far, the restructured consulting team appears to be doing well. “In October, we had the second best sales month since the start of the financial year,” says Kalorkoti. “By far our biggest corporate challenge now is our market performance. Our share price hasn’t exactly sparkled, although if you put that in the context of the small cap sector we are by no means the worst performer. One of the challenges for us is that we are valued as a contracting business because that’s where we came from and it’s still a major part of the business.” The performance of Lorien’s share price was something Kalorkoti had his eye on when he was considering whether to join the firm. “I was happily working somewhere else and got approached,” he says. “I came and talked to the people in Lorien and spent about four to six months in discussions, watching the share price go down and wondering whether this was the right company. I decided it was, because of a combination of factors – the people here, the ability, and I could see how much more potential there was to be realised.” In the end, his decision to join was absolutely the right one, Kalorkoti affirms without hesitation. “I should have done it earlier,” he says. Although no environment is ever politics-free, the internal politics in Lorien is “light-hearted and easy to resolve”, Kalorkoti says. “We have an executive board which meets fortnightly and we take turns to chair it, which is quite unusual. We work very cooperatively. We don’t tend to get bogged down. Lorien is very entrepreneurial. It has short chains of command. We can make decisions very quickly.” Kalorkoti’s personal success is particularly impressive given that he came to the UK from Cyprus at the age of 13. “I couldn’t speak a word of English,” he says. “It was a frightening experience. Character forming, I think you could call it. I went to a comprehensive in Kennington. I remember at one stage we were asked what we wanted to do. I said I wanted to do maths at Cambridge. They laughed.” Kalorkoti was the one who laughed last, however, when he gained a place to study at Cambridge, completing two years of maths before opting for management studies in his final year. Although Kalorkoti has worked in environments other than consultancy, he relishes the thrills of his current work, and the ten years he spent with Price Waterhouse and Touche Ross in the 1980s. “Consulting excites me because of the range of clients you have and the way you can deal with chief executives or managing directors,” he says. “The amount of stimulus you get from dealing at that level is huge. Even as a junior consultant you very quickly start to deal with senior people, purely on your merit.” One of Lorien Consulting’s most recent contract wins is a two-year agreement with the internal consultancy team at the Child Support Agency, whereby Lorien will back up the skills of the internal team where necessary. Kalorkoti sees the deal as the shape of things to come. “This encapsulates the way we see ourselves working,” he says. “We have a partnership with the internal consultancy. Most internal consultancies see external consultants as the absolute devil, but we have said that we have complementary skills. The smart way of working is to make use of the best skills within each organisation. We would like to see more of this. Internal consultants need not be frightened of external consultants.” The profession as a whole needs to challenge adverse perceptions of management consultants, Kalorkoti believes. He refers to the apocryphal story of two consultants meeting at the client’s door and trying to work out whether the other is from the client or the consultancy. “It’s about making sure none of the old jokes about consultancy can possibly apply,” he says. With Kalorkoti on the case, there seems little danger of that at Lorien. Sarah Perrin is freelance journalist. GEORGE KALORKOTI managing director, Lorien Consulting Degrees: BA (Honours) and MA, Maths and Management Studies St. John’s College, Cambridge. MSc, Computing and Statistics Nottingham University. Career 1974 Computing post, prior to starting MSc 1976 Range of roles in industry, including project management 1980s Management consultancy with two Big Six consulting firms 1990 Business strategy and IT director for firm of chartered surveyors 1993 Divisional director of BIS, subsequently taken over by ACT 1996 Global business development director, financial services, GE Information Services Nov 1998 Managing director, Lorien Information Solutions March 1999 Managing director, Lorien Management & Information Solutions Sept 1999 Managing director, Lorien Consulting.