Rapid impact podcast series, episode 2

Voiceover Introduction:

Welcome to the KPMG Elevate podcast series: Rapid Impact, Putting your business on the fast track

to performance innovation. In this second episode, you will have the opportunity to hear from David Roszmann, Principle in KPMG’s Advisory Practice, who serves as the performance transformation services leader and works directly with clients in the role of Strategy and Operations Consultant.

Along with podcast host, DeLisa White, an Influencer Executive Visibility Lead for KPMG and the Elevate solution, they discuss topics such as:

The Elevate methodology and some of the benefits companies have experienced with it

The KPMG approach to partnership with the leadership of an enterprise company

How the KPMG Intelligence Platform fits into the kind of engagement

Let’s listen in.

DeLisa White:

Welcome back to the Rapid Impact Podcast. Chief operating officers focused on achieving sustainable performance improvement across the enterprise, take a holistic view of the business and can target reactive as well as proactive approaches to improve return on capital, revenue growth, and EBITDA.

DeLisa White:

Taking the first steps to assess performance improvement, tracking and governance can shift a company's trajectory and significantly. We are here with David Roszmann, affectionately known in these parts as Roz. He is a principal in KPMG's advisory practices and serves as a Performance Transformation Services Leader. As a strategy and operations consultant, Roz works directly with client senior leadership and C-level executives to develop strategic growth plans and operational transformations. Thank you so much for being here, Roz.

David Roszmann:

Hi, glad to be here today. That Roz thing is a bit silly. It comes from, I was a fighter pilot way back when, and my last job was working in the Pentagon. My lifelong love affair for making companies perform better and organizations do better than they are today, really started there. So it's an absolute pleasure to be here.

DeLisa White:

Oh, well, thank you so much, Roz. That's such a fascinating background you have, and I think a really unique lens to approach all of these issues. I want to jump right in to talk about the Elevate methodology, and can you tell us some of the benefits companies have experienced with it?

David Roszmann:

Yeah, absolutely. A lot of the ways that we think about Elevate actually come from my own experience of being a chief operating officer at a billion dollar plus consumer company. I had worked at a large consulting company that did what we call transformations, and found them to be a very top down strategy driven approach.

David Roszmann:

At one point in time, I had done one of these projects and the group CEO asked me to run one of his divisions and I had to do my own plan, if you will, or execute the plan that I had drafted. When I got in the seat though, I just recognized that the strategy and the transformation plan that I had developed for myself was insufficient. We just didn't have enough understanding of the business. It's a very granular level to make the necessary changes and improvements that actually would improve our financial trajectory.

David Roszmann:

So a lot of the Elevate methodology is really based off of a very, very bottoms up analytical view of the world. We have the ability now with technology to extract all of the information that sits in your ERP systems and other IT systems, and look at them in ways with powerful analytical tools that we just never had the ability to in the past.

David Roszmann:

And so, Elevate really leverages that bottles up data and technology driven view to come up with a much more specific and granular perspective on where opportunities are and how to go after them. The other thing that Elevate really brings to us is the ability to bring real topic experts who are very, very deep in their fields into specific areas of the business as needed.

David Roszmann:

If you think about the way a lot of these large transformative projects are often run, a large group of junior and generalist consultants are brought on and they attack your company and team with spreadsheets and methodologies. And what we have done is created, of course, you need some methodologies to get everybody to work, but really it's a way for us to bring the best expertise in specific focus areas across your company.

David Roszmann:

So when you combine it with this great network of experts that we have, it's a really powerful combination. We are no longer running around guessing where to look, how to look and what to fix. We are being very specific in the places that we believe you are off leading practice.

David Roszmann:

And we bring the right experts to you to be able to not only tell you that you're off leading practice, but to show you what good looks like and how to get there, because ultimately doing one of these programs is not a theoretical exercise. It's a very real exercise. You can't have a blue sky perspective on this. You have to have a very much a rubber meets the road, get things done attitude, and Elevate really tries to do that with those two elements.

DeLisa White:

That's an enormous endeavor, and it's got to be really challenging for leadership to approach that level of change. How would you describe the KPMG approach to partnering with the leadership of an enterprise company?

David Roszmann:

That's a really excellent point you're bringing up, Teresa. If you think about a company that needs to really change its performance trajectory, that's a tough decision for a lot of executives and teams. At the end of the day, they feel responsible for keeping the company on a good financial trajectory and sometimes through circumstances that are beyond their control, changing market conditions, disruption that happens that no one had foreseen like COVID-19. There is a need to take a step back and really rethink things.

David Roszmann:

And so, the first thing that we do when we work with these executive teams is really spend a lot of time with them, and help them to understand that this is a necessary part of the evolution of all businesses. There's very often for these senior leaders who are high performers, this desire to always be perfect and admitting that they need help is the first hurdle that we overcome.

David Roszmann:

And the way we do that is to bring to them ideas that are leading practice, that others are doing. And sometimes it's so easy to lose the forest for the trees when you're running a company and you're in the thick of it.

David Roszmann:

So one of the things that we do very, very early on is bring leading practices, and those can come in a lot of different flavors. Sometimes it's benchmarks, sometimes it's refer reference says that we have to other clients, sometimes it's case studies on industries that are adjacent to them, or it can be also trends that are happening in the market. But we find that getting the senior team to admit that there's a need for a change and that that need is urgent, is the most important step.

David Roszmann:

The second thing we do is right from the get go, we put in place our change management effort. And I think that term gets used very frequently and often not well. Change management is really, if you're thinking about it, you've got a company that works one way on the day you start any transformation and it's going to work in a radically different way at the end of it.

David Roszmann:

And everyone superficially understands that change will happen, but they really don't understand that change is one of the things that we as humans just don't like doing. We really, really enjoy our comfy sofas, and that happens both in the workplace and at home, that happens at every level.

David Roszmann:

Senior executives get comfortable with the status quo, because that's what they've done for 20 or 30 years. Middle level management gets comfortable with the status quo, because it allows them to excel in their own careers because they understand the metrics by which they're getting evaluated on and they understand how the game works. And our most junior professionals like consistency, because this is when they're developing a relationship with a company.

David Roszmann:

So coming in and saying that everything that we've been doing is good but we need to do better is in the first instance, an incredible culture shock to people because no one wants to admit that they're not doing as well as they could. But a lot of our change effort really starts as we were saying in that first instance with executives, but we think it is much more than something that gets done in a communication plan at the end of a project.

David Roszmann:

The third thing I think we do is we have tried to hire and bring lots of experts like myself who have actual line experience. I think there's a fundamental difference between a consultant who's been a lifelong consultant and has dealt with problems sort of the periphery versus those who've been there, who've done that, who've actually had to deliver the results for which they're both responsible for the people underneath them and the financial outcome of that business unit.

David Roszmann:

And so, our ability to bring leaders who can both be empathetic but can also be real world examples of where they have done things really helps out a lot. And then, I think the last thing that is probably the most critical is the transparency with which we run these programs. It is very easy to abdicate as a leader in these companies that undergo a big change to abdicate that responsibility to reports and to more junior professionals that can get their work done.

David Roszmann:

At the end of the day, the leadership skills that are required in changing a company are similar to, but different than the leadership skills required to run it on a day by day basis. And some of our efforts around transparency, the weekly and monthly report that we do with them, the one-on-ones that we have with them to get them engaged in how things are going and not sometimes pushing their teams in ways that aren't management, but feel a little bit like it to the team because we're a change engine.

David Roszmann:

The fact that we actually spend so much time making sure that they understand how the transformation is going, much like other professionals would give them all that visibility and understanding of how their day to day businesses run. So those four things are really things we do. But I would say that getting the senior team aligned and bought in from day zero is really the task here, and it's not an easy one.

DeLisa White:

I can certainly see that. And we'll talk, and a couple questions about how you go to through that process with people and when it's worked and when it's been challenging. But before we get to that, can you tell us a little bit about how the KPMG intelligence platform fits into this kind of engagement?

David Roszmann:

Yeah. One of the things we recognized when we had this thesis that we needed a much more bottoms up view on this, when I think about consulting in transformations 10 years ago, it was often a collection of tools and benchmarks and approaches and techniques, and things that had been learned along a consultant's lifespan.

David Roszmann:

And so, often a project was the result of that specific team's ability to bring their expertise to the table. And what we recognized is today's environment is both inherently complex and changing, meaning that bringing the best to a client requires us to have the best at our fingertips. And so, we've created an intelligent platform that allows us to have what we would think of as leading class at our consultants fingertips.

David Roszmann:

That can be everything from looking at data and doing analytics in very specific ways. It can be based off benchmarks that we bring to the table to be able to do comparison, it can be leading practices around how processes should be done or organizations should be organized, or that sort of stuff.

David Roszmann:

So the KPMG intelligence platform is really a way for us to make sure that the consultants on the ground and the engagement at hand really have at their fingertips, a vast array of different tools, techniques, and other things at their fingertips available whenever they need it versus just relying on what's on the hard drive and what experiences they've had specifically.

DeLisa White:

Speaking of specificity, is there a specific client engagement that stands out to you that you could share about the surprises and or successes that they experienced?

David Roszmann:

Yeah. Geez, lots of them. But God, if I had to pick a specific one, I'll do one that was recent. I had a client, large international food company, and part of the company that they were in was in a segment that they didn't have a lot of expertise in, and the company wasn't doing very well, it was lackluster compared to the other business units.

David Roszmann:

They ended up buying a much smaller competitor and their financial performance was wildly different. They were experiencing double digit growth, and that sort of stuff. In a typical M&A arrangement, the acquirer often dictates the way things should be done going forward. In other words, conquer; the victors write the history books sort of thing.

David Roszmann:

And in this instance, they asked us to do a bottoms up assessment of the acquired company so they could really understand why is it they do better? Why is it they acquire more customers? Why is it that their sales are more profitable? Why is it they have better relationships? Why is it that they're really becoming renowned as a smaller, but more interesting player versus larger player.

David Roszmann:

We used the Elevate methodology to really get to a very, very deep understanding of how they were doing. And we did things like create profitability charts by every customer, by every skew. We mapped out their sales processes and compared them to the acquiring company. We looked at their technology footprint and saw that the way that they used it. We looked at their cost base and where they were creating scale and places, and that sort of stuff. We did a comprehensive review.

David Roszmann:

Our findings out of that really informed what I would call a reverse integration. In other words, they were so impressed by the way that this company performed because they got to understand it in great detail based off of the work we did versus looking at a very high level company financial, and go, "Great, I'm glad we bought it. Now, let's take it over."

David Roszmann:

Because we were able to bring them such deep understanding of how the acquired company was working, they were able to make some big changes. It's been about a year and a half since that acquisition happened. And what's nice about it is, and what I'm quite proud of actually for the team that worked on the ground there is everyone was hoping that that new combined company would reach at best, the growth rates and for profitability of the acquired company.

David Roszmann:

It turns out, they've actually gotten a ton of synergies out of it. Their growth is actually in excess of what the two growth rates were prior to them combining. So in other words, one plus one is equaled more than two for them, and it has become one of the most profitable growing units within the business and a shining star of how to think about bringing the best and thinking of performance to a team that really thought that they knew what they were doing, but clearly weren't doing as well as they could.

DeLisa White:

Have you ever been on an engagement that you felt the executive team just didn't have the buy-in you would hope for, for your recommendations?

David Roszmann:

When I come up with a recommendation, our team comes up with a recommendation, we believe that really is going to be something that changes the company. Where I get a lot of pride is when I can look back on the performance of a company after I'd been there and know that I'd made a difference. I go back and look at stock prices of companies in the two years or three years after I've worked with them. I try to see if I've helped change their trajectory.

David Roszmann:

And so, what's fulfilling for me is knowing that the work that we've done actually lands and matters. But to your point, every once in a while, I'm not as good at my job as I could be, I guess, and I can't quite convince the executive team. About two or three years ago, there was a spinoff of a fortune 100 company. They were about five billion dollars. They made a lot of consumer electronic parts and did some distribution, and stuff.

David Roszmann:

And basically, what happened is after they IPOed, their stock just wasn't performing as well as it could, and the first quarter earnings weren't where they needed to be. And so, we got called in by a board member that we knew to do a quick Elevate diagnostic on this company. We came up with a number of recommendations, very, very tactical, just silly examples. They had a corporate relations team that was kind of at the same size and scale of what you would have at a company 10 times its size. And we were like, "Look, there's just a tremendous amount of effort being thrown into publicly relations, which ultimately isn't translating into more sales or more dollars for your shareholders."

David Roszmann:

And we had a laundry list of different recommendations. And I can remember the final readout, because it was a tough readout. When you are helping... to help a company that really feels like its in dire straits and activists, investors are knocking on your door and creditors are wondering if they've made a bad investment, and all that sort of stuff. Anyways, it was a tough readout. I could tell that the team had heard, but didn't want to listen if you will. And they ended up not taking our recommendations.

David Roszmann:

And I guess, this is a bit of a cautionary tale and I've always felt bad about this. That CEO and CFO were gone from their roles within six months. And I think the moral to the story is that, I think it's really easy for executives to see these types of engagements and to understand or taste the medicine, but not want to take it. I think particularly when you get on a very critical assessment of yourself and your own team, it's really easy to blame the doctor that comes in and says, "You need to make these changes or else bad things could happen, both for you professionally and the company trajectory, and certainly your shareholders."

David Roszmann:

This type of work exists, not because consultants are out there making up problems, this type of work exists because these problems are true and they happen. And it is very difficult for executives to recognize that running a company day to day is just very different than running it when major disruptions that happen and you need to change. So there are cautionary tales out there.

David Roszmann:

And I think the common knowledge is something like 70% of these transformative efforts fail. And I would say that the number one reason they do always comes back to the guy at the top or the gal at the top, didn't get the rest of the team on board. And I often think it's my job to help him or her get there.

DeLisa White:

Make the case. And it's always hard to see these things when you're in it, which is one of the reasons why there are people like you doing what you're doing so you can have a clear sight of that. So thank you for all of that tremendous insight. We really appreciate the time that you've spent with us today. As we close out, is there anything else you'd want to share with our listeners?

David Roszmann:

Yeah. I think the biggest thing I would share is just to recognize that inviting a critical lens on your performance, whether that's through an outside consultant like ourselves or internally, is probably I think one of the best things that you can do as a leader of a business.

David Roszmann:

I remember my own trajectory as I went through my leadership career running the company that I did. Very early on in my career, I wanted to be the star pupil in the group. I wanted to make sure that my group CEO understood that we were killing it. And I increasingly recognized that my role as a senior leader was not to highlight the wins.

David Roszmann:

I mean, I think those things are important and certainly for the junior team, it is, but to really try and get ahead of problems and look at things proactively and make sure that you don't get into a more dire situation, like I just talked about with that CEO and CFO, and gotten fired over. And so my biggest, I guess, recommendation or suggestion to executives is, it's never a bad time to be critical of how much better you could do.

DeLisa White:

Well, I think that's my pull quote for today. I'm going to write that one down. Thank you so much, Roz, for your time. Really appreciate you being with us today. And hopefully, we'll get to talk to you sometime in the future more and get more insights later. Thank you so much.

David Roszmann:

Absolutely. Thank you, everyone.

Voiceover Conclusion:

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