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MOVERS & SHAKERS By Marcia Stepanek November 17, 1999


Terry Ozan: Getting E&Y to Swim with the Razorfish
The new CEO of Ernst & Young Consulting Worldwide is launching a $100 million marketing drive to help change his Big Five firm into a hipper e-business consultancy

Back in 1972, early in his career at Ernst & Young consulting, Terry Ozan began making a name for himself as a pioneer of what would later be known as reengineering -- the fundamental restructuring and downsizing of companies to gain speed, efficiency, and productivity. His so-called clean-slate method of helping companies to redo processes and operations for competitive advantage helped transform Ernst & Ernst, as it was known then, into a profitable market leader. "This was pre-head-chopping days," before the term reengineering came into vogue, Ozan recalls.

Now, some 30 years later, as consulting revenues from so-called enterprise resource planning and Y2K dry up, the 53-year-old Ozan is at it again. Except that now, Ozan -- the new chief executive officer of Ernst & Young Consulting Worldwide -- thinks the company that's most in need of restructuring is his own. Ozan's vision: to transform E&Y from a traditional, Big Five consulting firm into a leaner, hipper e-business consultancy wholly focused on helping companies get wired for the Internet Age.

 

"Our whole purpose in life now is to break the traditional consulting model" and help turn "companies new and old into 'dot companies'"
 

It won't be easy: New consulting upstarts with catchy Net names such as Razorfish, Scient, and Zefer have been nabbing much of the new dot.com business and providing new competition for old-timers like E&Y. But Ozan says E&Y's new e-business initiative can provide the scale and global connections that many new startups cannot. Further, he says, E&Y casts a wider net across Corporate America. "Our whole purpose in life now is to break the traditional consulting model and start to help to transform companies new and old into 'dot companies' -- businesses that successfully combine the best of the online and brick-and-mortar worlds."

Ozan is putting big money behind the big talk. He has just launched a $100 million marketing effort to promote the new "dot companies" initiative. In addition, E&Y will now take stakes in Net startups in exchange for consulting work and will, in the next few months, acquire an array of technology companies to help broaden its expertise. E&Y also will change itself internally, breaking into dozens of entrepreneurial teams organized around emerging Net-business fields such as e-tailing and health-care delivery. That way, says Ozan, E&Y can help with "what big, mature companies need and what smaller startups can't deliver": the combination of speed with "worldwide scale and consistency."

 EXCITED AND SCARED EXECS. Ozan has always been on the lookout for the next big challenge. After graduating from Cornell University in the late 1960s and spending a couple of years at Bell Labs, where he worked as a telephone systems engineer on the early call-waiting projects, he longed for something faster-paced. "I bore easily," Ozan says. "Once I've figured out a problem, I don't want to work with the problem anymore. I want to go out and figure out something new."

At Ernst & Ernst, he got what he wished for. One of his first assignments in 1972 was to help Sherwin-Williams boost quality and productivity and cut costs, Ozan recalls. He analyzed the company's manufacturing distribution system, created a simulation of it -- as if starting from scratch -- and then came up with a plan on how to modify the old system. "That was reengineering, only we didn't know that word back then," he says. "Nobody had done anything quite like that before."

Now, Ozan is fascinated by the Net and its opportunity to enable one-to-one relationships between customers and businesses, employees and employers, and suppliers and corporate purchasers. It's easy for startups to grapple with the changes, he says. It's much harder for traditional companies to handle. "Talk to anybody at a traditional firm right now, and they're either very excited, or scared, and most of the time they are both," Ozan says.

 

"He was always ahead of everyone in his thinking. What he lacks in flash he compensates for in intellect," says E&Y's Wartluft
 

Change is coming fast. Six months ago, when mature companies were planning their strategies, they would spend 80% of their money to protect their core businesses, 10% to switch over to new processes, and 10% to create brand-new initiatives. Now? Ozan recommends that they spend 40% to transform the old and 50% to create new businesses. That's a hard lesson for mature companies -- and a tough challenge. For some it will mean cutting out the dealer network and selling directly to the customer. But it has to be done. "This is a fundamental way business changes to gain competitive advantage," says Ozan.

To those who know Ozan, his appointment comes as no surprise. While Ozan lacks the flash of AT&T Chairman C. Michael Armstrong and the bombast of Sun Microsystems CEO Scott McNealy, his behind-the-scenes style of leadership has worked well. "He was always ahead of everyone in his thinking. What he lacks in flash he compensates for in intellect," says Dale Wartluft, senior vice-chairman of E&Y's consulting services for the Americas. "He's not an out-in-front or taking-on-the-world type of guy, but he makes people think it's their idea and so buy-in comes easily and fully."

He also has a great sense of humor. During a company conference recently, Ozan stood on stage, unveiling his new vision for E&Y. He then introduced a video to further describe his new mission, and as the video began, Ozan walked off stage to the men's room -- but with his lapel microphone still turned on. According to executives who attended the meeting, the E&Y audience broke into laughter when, all of a sudden, midway through the video, they heard the flushing of a toilet. Minutes later, Ozan reappeared on stage. Upon realizing what had happened, he reddened slightly, but quipped: "This was an intentional effort to test the distance capabilities of lapel mikes." Everyone roared. With any luck, Ozan's new plan for E&Y will work just as well as his lapel pin.

Stepanek writes about Technology Strategies for Business Week.


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Terry Ozan: CEO of Ernst & Young Consulting Worldwide
Terry Ozan: CEO of Ernst & Young Consulting Worldwide


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