If you were asked to identify the quintessential Washington company, one that exemplifies the competitive strengths of the region's economy, the choice, hands down, would be Booz Allen Hamilton.
These days, Booz's consultants are helping the government of Greece manage the transportation challenges of running the Athens Olympics, advising the Department of Homeland Security on how to integrate dozens of far-flung and feuding agencies, designing the system that coordinates the transport and care of soldiers wounded in Iraq, running war games for big corporations to help them plan for terrorist attacks and helping to engineer a difficult turnaround of General Motors operations in Europe. The government of Saudi Arabia is said to turn to Booz for help in managing everything, and Booz does more of who-knows-what for the super-secret National Security Agency than any other contractor.
In short, Booz is on a roll. It is the truly global consulting firm, with offices on six continents and feet planted firmly in both the government and corporate spheres. With revenue exceeding $2.5 billion, business is so good that it expects to hire 3,500 people this year. That will push local employment above 10,000, half with some sort of security clearance and 40 percent with advanced degrees. And after years of operating in the shadows, it is stepping out as the new corporate sponsor of what used to be the Kemper Open.
Booz has managed to achieve this growth without resorting to overpriced and distracting acquisitions, or bidding on low-margin computer integration contracts, or succumbing to the siren song of Wall Street. A strong culture and private partnership structure allow it to emphasize integrity and quality over short-term profitability and mindless growth. It continues to be rated one of the best places to work, pours a ton of money into employee training and education, and has one of the most active programs of corporate philanthropy in the region.
There was nothing inevitable about this success.
Ed Booz, a University of Chicago economist and psychologist, can be said to have founded the management consulting business in 1914 when he began selling statistical analysis and independent advice to a number of leading corporations. On the eve of World War II, Navy Secretary Frank Knox turned to Booz for help in cranking up the U.S. shipbuilding program. By 1960, Time declared it the world's largest and most prestigious management firm.
But after going public in the late 1960s, Booz began a long slide that continued even after taking itself private again in a heavily leveraged buyback. In the corporate world, McKinsey & Co., Boston Consulting Group and Bain gained the reputation for cutting-edge strategic advice, with Booz better known for its role as Mr. Fix-It. And while it continued to win significant work from the Navy and intelligence agencies, it was bypassed in size and prestige by the computer integration shops sprouting up around the Beltway.
But as the corporate and government worlds changed in the past 20 years, Booz's supposed weaknesses have become a source of strength.
Here in Washington, officials came to realize they needed to rethink their operations even before redesigning and constructing the computer systems necessary to serve them. That has played right into Booz's experience. At the same time, the availability of more off-the-shelf software meant that Booz could compete for more technology-related business without having to employ legions of programmers. The steady growth of government intelligence spending has also worked in Booz's favor.
As a result, by 1985, Booz's government business was growing so smartly that a public-sector partner was selected as chief executive for the first time, while corporate headquarters moved to Bethesda and then McLean, where it remained.
According to Washington Technology magazine, Booz ranks 10th among the government's prime contractors. Its ties to government clients are so close that among the victims of the Sept. 11, 2001, attack on the Pentagon, three were Booz employees. It has moved aggressively in recent years to cement those relationships through high-profile hires that include former directors of the CIA, the NSA and the National Reconnaissance Office, the former deputy director of the Marshall Space Flight Center, and the Pentagon's comptroller.
Meanwhile, in the private sector, corporations have recently grown weary of paying millions of dollars for brilliant strategic reports that, in the end, couldn't be implemented. Some have decided to take a second look at Booz, with its deeper experience in operations and change management, and partners willing to roll up their sleeves and see projects through to completion. And while it still doesn't get the flashy strategy assignments and can't point to many alumni who have become big-name chief executives, its work regularly wins high ratings from customers and it is able to hold its own in recruiting graduates from many of the top business schools.
No company is perfect, of course. Booz, no doubt, has had its share of botched assignments, cost overruns and lousy advice, although few have come to light. Its much-touted diversity program has yet to show many results in the list of directors and partners, who remain overwhelmingly white and male. And while it may provide quality service, it is hardly the low-price spread.
In checking around for this article, however, I got the clear impression Booz is a nicely profitable company that is valued by its customers and collaborators, respected and even feared by competitors, and remembered warmly by former employees.
On this 90th anniversary of the firm's founding, I'm sure Ed Booz would be pleased.
Steven Pearlstein can be reached at email@example.com.