The client problem, today, is fundamentally different. The clients are not saying, “I know this process and I know the organization, I know the technology, help me do it better faster cheaper”. They’re saying “I’m not sure what the process is. I’m not sure about the right organizational model. And I’m not sure about the right technical architecture. Help me through that process of discovery and ideation and innovation, and bring that to me”. So it’s really a different market we’re recognizing – not only do clients need to run better, but they need to run different.
— Malcolm Frank, Cognizant, August 2013
This guy needs little introduction to the tech and business services industry. As I have often said of Cognizant’s strat head, Malcolm Frank, “This guy would make a phenomenal analyst”. However, am sure he makes a far bigger paycheck, helping steer the direction of the largest tech services growth story of the past decade: Cognizant.
We’re delighted Malcolm found some time to talk to us all about how he and his firm got to where they are – and what we can expect in the future. So without further ado…
Phil Fersht, CEO HfS Research: Good morning Malcolm. Thank you very much for taking the time out to talk with us and our readers today. Now you’ve been one of the key brains behind the impressive hyper-growth of Cognizant over the last few years. It would be great to get a bit of an understanding of your background and how fell into the tech services industry…
Malcolm Frank, EVP Strategy & Marketing, Cognizant: First of all thank for having us on this. I guess I’ve been at Cognizant now 8 years and it’s been a terrific run. When I joined the company we were about 12,000 associates, and now we’re about 160,000, so it’s been a terrific run over those 8 years and it’s been fun to be a part of it. I’ve been part of the industry for about 23-24 years now. And when you say ‘fell into it’, that’s exactly what I did. After college I used to trade commodities on Wall Street. But had a friend who was working for a startup IT services from Boston which was called Cambridge Technology Partners. I joined them at about 50 people and was fortunate enough to be part of that company. And we were about 6000 people and had a very successful IPO in the 90’s. And then I started two companies that evolved before joining Cognizant 8 years’ ago. So it’s been a fun.
Phil: Malcolm, can you talk to us a bit about the Cognizant experience going from one to six billion in the last three to four years? I mean how have you managed such an impressive period of growth. Is there any other secret sauce you can share with us now?
Malcolm: Yeah I don’t know if there’s necessarily a secret sauce. But for me it’s always about alignment – and it’s alignment outside in, and then inside out. And we care passionately about making sure that there’s only that true alignment. And what I mean is outside in recognizing what is the client need and what is the context of what clients are looking for, and then specifically what they are looking for, and ‘are we best tuned to deliver that’. And we are constantly paranoid, we’re constantly honest with ourselves. And we’re constantly challenging ourselves to say “Just because there was a formula that may have worked in 2007, it may not be the right formula for 2008 or 2009″. And so it’s a constant process of ensuring that we have that from the client view.
The same is true inside any company, to ensure that we can take all of our capabilities, and put them together in the right way to address that client need and to continually evolve as fast as the market is evolving. And one of the things that I was deeply impressed with, when I was getting to know Cognizant, you know some 10-12 years ago, when I was actually on the advisory board, is the culture of the firm – and a central piece of that is the sense of entrepreneurialism. And that is something that we’ve tried very hard to protect. And I think it still exists today, even though the firm is 160,000 employees. And the reason is so important, as you know Phil, that these markets are changing so quickly and we need to change with the market. So it’s one of those where that evolution is one that we just make sure is a fundamental capability of the firm.
And I know it’s tough. Sometimes that feels, in our industry, counterproductive. Meaning, you want to build a practice around certain problems that have methods and processes and people and so forth, that are really if you are hard-rooted to that problem. But you have to have a sense of malleability to change with the marketplace. And so, if there’s something that we’ve tried to really protect, I think that’s it. Because when you look at all of our competitors, we all see what’s going on in the marketplace. We all can sense and recognize the changes that are going on. But I think the firms that can respond to those appropriately, are the firms that are rewarded in the market place.
Phil: And you think having this more entrepreneurial culture in the business is what makes you quicker to respond and work with the clients, is that right?
Malcolm: I think that’s at the foundation of it, but it’s more than just culture and intent. You have to have a structure that allows you to do something about it. And I think, you know, several years ago we moved to what we call, in our vernacular a “Three Horizon Business Model Architecture”. So Horizon One will be a more traditional services portfolio. Horizon Two are newer services that are getting to scale. Then Horizon Three are true newco’s where we’re taking new approaches for new technologies in the market place. And it’s this architecture that helps us break through the innovators dilemma, since our industry is as hard as any other industry. And so it’s a) Having a culture, but then b) Having a business architecture, where we can navigate through this change.
Phil: And when you look back just five years ago where a lot of this hyper growth story started, what do you think is different today? And how has the company adapted to take advantage of that?
Malcolm: Yeah, I start with the clients. The client need is very different relative to what I see as the ‘big break’ around Bear Stearns time. And during this time we had these two hurricane force winds hit the clients. One is that they started going through structural business change. So banking, investment banking, healthcare, insurance, retail et al., all of these industries are going through significant structural business change. At the same time we have this technical shift around the SMAC stack. Consumer technology is really coming into the enterprise in a meaningful way. So the client problem changed. If you look at the offshore outsourcing business surface 2006, 2007. Remember this was the time of the ‘world is flat’ and all the rest, and it really was about taking an existing client capability and running a ‘better faster cheaper’ on a global platform.
The client problem, today, is fundamentally different. The clients are not saying, “I know this process and I know the organization, I know the technology, help me do it better faster cheaper”. They’re saying “I’m not sure what the process is. I’m not sure about the right organizational model. And I’m not sure about the right technical architecture. Help me through that process of discovery and ideation and innovation, and bring to that me”. So it’s really a different market we’re recognizing – not only do clients need to run better, but they need to run different.
Stay Tuned for Part 2, where we discuss the future role for the CIO, get deeper into the SMAC stack, and look out 10 years into the future…