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Memo To Gemini: Read This Book


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MEMO TO GEMINI: READ THIS BOOK

In two frenetic weeks this spring, Gemini Consulting Co-Chairman James N. Kelly whipped through eight U.S. cities promoting his new book, Transforming the Organization. The consultant addressed dozens of attentive audiences on his specialty: How to run a company more effectively.

Before taking Kelly and his co-author, Gemini Senior Vice-President Francis Gouillart, up on their counsel, though, readers might be wise to examine Gemini itself. According to high-ranking insiders, recent internal company projections say 1995 global revenues for the Morristown (N.J.) firm could fall by as much as $100 million in 1995, from last year's $551 million. After earning roughly $40 million before bonuses and taxes in 1994, the sources say, Gemini could lose upwards of $25 million this year.

CLEAR OUT. Now, there are growing signs of management turmoil at Gemini. In mid-May, amid rising tensions between Gemini and Sogeti, its Paris-based parent, David Teiger, Gemini's popular former CEO and chairman and the driving force behind the firm's remarkable earlier success, was given less than a week to clear out his office, say many insiders. Meanwhile, with scores of Gemini's U.S.-based professionals sitting idle, Kelly laid off 8% of Gemini's 1,700 consultants soon after returning from his book tour.

Kelly dismisses the turmoil as a "minor blip in the journey of our institution." Gemini Chief Operating Officer William Wallace insists that 1995 revenues will be "flat" rather than down. (He refuses to discuss earnings.) But interviews with more than a dozen former and current Gemini consultants paint a picture of an unhappy young company that has made many of the basic managerial mistakes its consultants are paid to help corporate leaders avoid: It expanded too quickly and too much in the mid-1990s and badly misjudged its core market.

Originally formed by Sogeti from two companies four years ago, Gemini is now the world's fifth-largest consultant, with consulting revenues topping those of better-known rivals such as Boston Consulting Group and Bain & Co., according to Gartner Group, a Stamford (Conn.) research outfit.

At first, Gemini could do no wrong. Winning clients such as Union Carbide, Monsanto, and DuPont in the early 1990s earned it a reputation as a world-class reengineering firm. As global revenues grew 88% from 1991 to 1994, its consulting staff nearly doubled.

Over the past year or so, however, Gemini has run into serious problems attracting new American clients. U.S. revenues were off slightly, to $260 million in 1994--and many insiders say they're expected to fall sharply this year. Wallace denies that, and largely blames the market for Gemini's slowdown: "The U.S. became overcrowded with consultants, potential clients began to deal with change issues in-house, and pricing became very aggressive."

But Gemini is virtually alone in this view. "There's been absolutely no slowdown in the reengineering, business-transformation, change-management, or whatever-you-want- to-call-it market," says James Champy, chairman of consultant CSC Index. Gartner Group predicts that the reengineering market will more than double, to $8.7 billion, by 1999.

The real problem: Insiders and former consultants say that Gemini hasn't differentiated itself from its competitors. Although it has successfully helped clients cut costs, the firm has struggled to move beyond that niche. Explains one former staffer: "You can't lose weight forever." Current and former officials say that under Chief Executive Daniel J. Valentino, Gemini has failed to convince potential clients that it can implement growth strategies.

Certainly, Valentino has tried. Gemini has repositioned itself not just as a cost-oriented reengineering firm but as a "business transformation" expert. But the shift hasn't caught on. Notes a current Gemini officer: "You don't hear a lot of clients say, `Whew, I need to be transformed."'

Valentino and Wallace heatedly deny those charges. Gemini is "actually winning in the marketplace, since it can hit firms with both cost-cutting and growth," says Wallace. But potential clients aren't convinced. One major oil refiner that recently entertained proposals for a $1 million-plus consulting project termed Gemini's bid, "rigid, expensive, and unoriginal."

Teiger's hasty departure--he passed the CEO's title to Valentino in 1992--has done little to help morale. Sogeti Vice-Chairman Michel Jalabert denies that Teiger--who remains chairman emeritus--was forced out. Meanwhile, current and former partners say IBM executive Robert M. Howe, who created Big Blue's consulting business, is among those Valentino wants to hire to bring new ideas to Gemini. What irony: a consulting firm--helpful outsider to companies in trouble--that must find an outsider to get it back on track.

Practice What You Preach...

Gemini's "Four Rs" of Business Transformation, as outlined in Transforming the Organization

WHAT GEMINI SAYS

"Reframing opens the corporate mind and infuses it with new visions and a new resolve."

"Restructuring is a girding of the corporate loins, getting the company to achieve a competitive level of performance."

"Revitalization is about igniting growth by linking the corporate body to the environment."

"Renewal deals with the people side of the transformation, and with the spirit of the company. It is about investing individuals with new skills and new purposes, thus allowing the company to regenerate itself."

WHAT GEMINI DID

Gemini's failure to develop a viable strategy to attract new clients is causing earnings and revenues to fall.

Despite booming demand for reengineering advice, Gemini's billings tailed off, and competitors grabbed large contracts.

Gemini's strategists failed to convince potential clients that the firm could help boost their revenues.

As morale sank because of declining revenues--and fears that bonuses would fall--management was unable to stop defections. As problems deepened, Gemini abruptly cut 8% of its consulting staff.By Willy Stern in New York, with Gail Edmondson in Paris


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