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Dude, where‘s my car? | On Accenture/Hertz and failing business models

As I am starting my freelance career I think a lot about what value I can bring to my clients. And wh
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Dude, where‘s my car? | On Accenture/Hertz and failing business models
By Martin Wiesemborski • Issue #2 • View online
As I am starting my freelance career I think a lot about what value I can bring to my clients. And what I can and should charge for this value that I’m creating (difficult topic).
Turns out, if you’re Accenture, one of the biggest management consultancies in the world, you can easily charge up to 30 Mio. dollars for a “platform relaunch”. Just make sure you don’t mess up and get sued.

Hertz vs. Accenture
At the end of last week, news that car rental company Hertz was suing global consultancy Accenture over a failed project went viral. The story is ridiculous on many levels and you should read the full The Register article as well as this breakdown by Dave Guarino, but here are some highlights:
  • Hertz set out to find a partner for this project because they thought they didn’t have the necessary competencies and resources in-house (funny backstory: they fired most of their own team for cost-saving reasons).
  • They went with Accenture after a one-day pitch presentation.
  • Hertz outsourced even the product owner role to Accenture and demanded a full-feature launch instead of a more agile and lean approach.
  • Accenture only designed and developed desktop and mobile screens - no tablet resolution, no responsive design. What you would think has been a standard in platform development for years, would have cost several hundred thousand dollars extra (full disclosure: the project started in 2015/16).
  • The frontend code was so bad, that it had to be scrapped entirely and Hertz says it even posed security risks, although I’m not sure how frontend code is to be blamed for this.
  • After delaying the launch several times, Accenture demanded an additional 10 Million dollars to the already heavy 30 Mio. project budget for all of the fixes.
There are many more fascinating details in the report, and on a way smaller scale I’ve seen many of these issues happening in projects where I was involved as well. In the end, it always comes down to one question: Who is to blame?
And while you can make many arguments against Accenture, Hertz is not without blame either.
Dave Guarino
If I were Hertz—or trying to learn from their experience—I'd take away a few lessons:

1. Build (don't buy) digital capabilities if you can
2. If not, at least build a product ownership capability
3. Insist on phased delivery: really-deployed websites used by real end users

Nobody ever got fired for buying IBM
In case you were wondering why Hertz hired Accenture in the first place: Well, for one, the saying “Nobody ever got fired for buying IBM” is probably true for Accenture and any other of the Big Fives. It’s a safe bet. But that’s not all.
“After Accenture put on an impressive, one-day presentation for the Hertz team, that included a demonstration of the transformed Hertz digital experience…"
Since when does Accenture win pitches with design and fancy prototypes? To answer this question we need to take a look at recent history. Shopping history to be precise.
Let’s go shopping
"Accenture buying things", artist's interpretation
"Accenture buying things", artist's interpretation
With the beginning of the 2010s, we saw global ad holdings like WPP, Omnicom, Publicis, Interpublic, and Dentsu going shopping for digital (design) agencies to add digital competency to their stack. They felt pressured by major digital agencies likes R/GA or HUGE, who began entering the field of traditional advertising after crushing the digital market.
Not long after they were joined by the big management consultancies such as Accenture, Deloitte, McKinsey, and KPMG who were forced to quickly improve their digital capabilities themselves to fully satisfy their clients’ consultancy needs on the topic of digital transformation.
One of the major acquisitions was made by Accenture when they bought fjord in 2013. Even IDEO joined the kyu collective, operated by the Hakuhodo DY Holdings.
Accenture’s shopping spree.
“Accenture, continuing its Borg-like procession through design space, acquired as many agencies in 2017 as it did from 2011 to 2016. The Monkeys, Maud, Clearhead, Wire Stone, Matter, Rothco”
Quote from Jules Ehrhardt’s industry-defining must-read State of the Digital Nation 2020 (really, I cannot recommend this article as well as his State of the Digital Nation 2016 enough)
Most recently, Accenture shifted focus and is now buying up creative talent in the form of DROGA5 as well as KolleRebbe to name a few.
So now you know where Accenture’s creative power comes from.
Money-maker digital transformation
Consultancies used to lack creativity as well as the ability to develop digital products. However, they had the money and they had the clients - so they decided to add talent.
It’s obvious really. Every industry needs help with “digital transformation”. As a consultancy, you would be stupid not to grab your share of the cake. After all, management consultancies excel at developing new business models. It’s what they are doing all the time.
Throwing money at the problem (aka digital transformation)
Throwing money at the problem (aka digital transformation)
Does it work? Or: Why is it failing?
It’s hard to tell if all the effort (and money) pays off. Consultants don’t like to talk about numbers in public. But cases like Accenture/Hertz paint a picture. As do all the people leaving the once-famous agencies, which became only a shadow of themselves after the guys in suits took over.
So, why is it failing? I think the core problem is rooted in the business model: Consultancies, as do many agencies, still rely on a paid-per-time business model. It’s in their interest that everything takes as much time as possible because time literally is money. They are interested in working many months if not years on a project; selling extensive research in advance without bringing in any real results.
They need to sell time as inefficiently as possible; leading to failures such as Hertz. However, that’s quite the opposite of how you’re supposed to work on digital products, where you develop MVPs and work in sprints to quickly get to real-world results and only continue working based on these learnings.
Design Sprints - From ideation to real user tests within 5 days, not months
Design Sprints - From ideation to real user tests within 5 days, not months
Some of the best product companies like Snap, Instagram or Google are so successful because they understand that you need to validate ideas in an instant - not a 1-year timeline with expensive user research groups.
Don’t get me wrong: consultancies and agencies are only partly to blame. It takes two to make this approach work and if the client is not able to work in such a way, well.. then the project is off to a bad start anyway.
Trust issues
With so many projects ending horribly, it’s only natural for CMOs to lose their trust in agencies as well as consultancies. This is manifested by a massive in-house agency/talent movement as well as budget cuts (whopping 50% in the case of P&G). You just spent so much money and time on a half-baked product that - when you finally launch it - is already due for an overhaul.
Of course, you’re not excited to jump onto the next project with the same constellation.
Your client after you finished a project
Your client after you finished a project
You after you finished a project
You after you finished a project
How do you gain trust again?
Is the solution to add Design Sprints, Lean Startup and Customer-Centricity to your pitch deck? Nice buzzwords, but no - this alone will probably not be enough. Because, although many clients demand e.g. agile development, they are not set up to work that way themselves.
Also, the core problem lies at a deeper level.
Agencies and consultancies need to rethink their business model. And they need to find ways to prove to their client that they’re genuinely interested in the quality of a project. Not for the sake of a fancy award but because the client’s success becomes their success.
One interesting approach is to lower project fees and instead take a share of the gained profit (or based on any other KPI). The more successful a product becomes, the more money you get. Make it your interest, not only your clients’, to create the best product possible.
And stop selling creativity as you would sell physical products. You can’t measure a breakthrough product idea in billable hours.
Shots fired (this week's issue has been kindly sponsored by The Office)
Shots fired (this week's issue has been kindly sponsored by The Office)
Where does this leave ad agencies?
As for creative agencies - what is their role going to be? Well, what are they really good at? They are good at having ideas, being creative. And they are experts when it comes to creating and shaping brands.
Creating brand experiences, not standalone projects - that’s their USP, that’s where an agency can create real value. Because a brand experience should be ubiquitous. It’s the source for everything else. It reaches every single touchpoint a customer has with the brand.
SEA, digital product development, performance marketing, this fun influencer campaign and don’t get me started with programmatic - does an agency need have to have all this capabilities in-house? Definitely not. I would argue it is even better to have experts execute each creative/medium - after all, they are the experts.
As an agency, focus on what you’re good at. Create a strong brand that it is instantly recognizable from the POS to catalogs to digital services - by defining a tone of voice, a mission statement, a unique visual identity, heck, even motion design principles.
Also, start thinking in business models, not TV spots.
[Insert Motivational GIF Here]
[Insert Motivational GIF Here]
👉🏻 Quick update
As I mentioned last time, I’m still trying to figure out what this newsletter is supposed to be. This week, I tried to focus solely on one topic and explore it in depth - based on a recent event. Did you like it? Or do prefer the broader, a-mix-of-everything newsletter?
Anyways, thanks for reading and have a great weekend.
🤘🏻 Next stop: Rockstar
Next week, the big Online Marketing Rockstars Festival is taking place in Hamburg and I will be there. So hit me up if you’re around.
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Martin Wiesemborski

I'm a freelance UX strategist. Think of this newsletter as everything that is on my mind (hence the name): New and emerging tech and design trends, tools and ideas that I stumble upon and think are worth talking about.

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