After 15 years at the top, Booz Allen Hamilton chief executive Ralph Shrader recently announced his decision to retire at the end of 2014. Shrader’s tenure at Booz Allen was marked by some of the biggest changes in the company’s history, including the split into government and commercial businesses, and the shift from a public company to a private one, back to a public company. He also had to deal with former employee Edward Snowden’s revelations about government surveillance.
Horacio Rozanski, the man who will succeed him, has been along every step of the way. Born and raised in Argentina, Rozanski joined the company as a summer intern in the Buenos Aires office. Over two decades, he rose through the ranks at Booz Allen, before being named chief operating officer in 2011, and president in 2013.
Rozanski, 46, is a reserved man who becomes animated while outlining his vision for Booz Allen. In an hour-long interview, he shared why the company can no longer be considered just a consulting firm, his recipe for success despite Washington dysfunction, and the most important leadership lesson he learned from Shrader.
How did you start your journey at Booz Allen?
After the summer internship, I joined full-time in our Cleveland office, in what was then our commercial business. In fact, the CEO of Strategy&, Cesare Mainardi, and I shared a cubicle at one point . [Strategy& is the new name for Booz & Co., the commercial company that split from Booz Allen.]
Later, I had the opportunity to become the chief human resources officer for our commercial business, even though I didn’t have a human resources background. I was always really interested in people and people issues, and people knew that about me.
At one point, Ralph Shrader merged the two HR roles — the government and commercial ones. I thought that was my cue to exit, stage left, and go back to serving clients. But Ralph surprised me by inviting me to take on the role for the whole firm. It was, in a good way, an offer I couldn’t refuse. And what was supposed to be a two-year rotation became a career.
When did you meet Ralph Shrader? What was your first impression?
I met him at a new partner orientation in 1999. It was Ralph’s first time addressing the group as CEO.
Ralph is a very strong leader, and you could tell that from the first impression. You get a sense of his confidence, the fact that he is decisive. He has a point of view and he’s not afraid to express it. I thought that was great.
You’ve led Booz Allen’s Vision 2020 initiative, a strategy for the company’s future. How did that come about?
To understand Vision 2020, you have to go back to the original Vision 2000, which Ralph led. That was really a turning point for the firm. Before that, Booz Allen competed in little silos. The big kernel of understanding at the time, was that we were really sub-scale in those silos. But if we competed as an institution, we could punch above our weight. We could compete with the Boeings and the Lockheeds. Vision 2000 was more about creating a culture to allow us to compete differently.
We began Vision 2020 around two years ago, for a couple of reasons. First, our market had changed because of the challenges that the government, our primary client, was facing. Our industry was going to be restructured by those forces, so we wanted to get ahead of them.
Second, our business was different. Booz Allen had added capabilities around technology and engineering, and yet we still described and though of ourselves as a consulting firm. [Booz Allen acquired the defense engineering services division of Arinc in 2012].
In doing that, we sub-optimized some of our opportunities. We did all of these other things, but we were not harnessing it. That was the genesis of Vision 2020.
What does the strategy entail?
There are four basic pillars. First, we are no longer just a consulting firm. Consulting at the end of the day is about solving problems. But as you go into the future, you don’t just solve problems by telling people what the answer is. You do it by creating apps, prototypes and bringing in technology.
Second, we now think of ourselves as innovators. Think about the challenges the government faces: At the end of the day, people want to pay as little tax as possible and receive as many high quality services from the government as possible. But you cannot get there without a great deal of innovation in the way they go after things, like health care, energy, or defense.
Third, Booz Allen was monolithic in its thinking — we had one client, the federal government. We are now talking about a portfolio of clients that expands beyond that, commercially and globally.
Lastly, we should be building alliances and taking advantage of other people’s ideas to serve our clients. That’s why our partnerships with [D.C. entrepreneurship hub 1776, Amazon Web Services and Microsoft] fit into that notion. We want to bring our expertise to different areas, but we don’t want to start from scratch.
Is Booz Allen targeting global expansion? You’ve had a presence in the Middle East for a long time.
One of the things that I’ve seen us do many years ago was not a very good idea.
The world is a very big place and you can get excited about lots of little opportunities everywhere. Before you know it, you have spread yourself thin. That’s a recipe for failure.
The recipe for success is to commit to a region. Commit until you have enough of a presence so that you can hire the best people, have some of the best clients and invest locally in those communities.
Then you can take those people who helped you do that, who learned from that experience, to region number two. That’s our path of expansion.
So when will you expand, and where?
It’s subjective, we’ll know when we’re ready. Asia is a possible area but it will depend on when we’re ready and the geopolitical situation.
How do you see the budget environment playing out, and how will you shape the company to deal with it?
We’ve already been dealing with it. We began reducing our cost base when we realized our clients would have to do more with less. That meant pushing a lot more decision-making to the edges, to the people dealing with clients everyday.
The fact that budgets are tight is true, but they’re not equally tight everywhere. For example, the [Department of Veterans Affairs] needs more money to accomplish its mission, and the Army needs less. So we want to be sure that each client is getting what they need. We have become much more agile and flexible in our approach to everything, and that will only continue.
What do you do when you’re not at work?
Well, between Booz Allen and a young family, it doesn’t leave a lot of time for other things. [Rozanski has two daughters]. I like to play sports more than I like to watch sports. I grew up playing water polo competitively. I can’t play anymore, but I swim and I run. Mostly, I like to spend as much time with my family as possible.
What’s the one lesson you’ve learned working with Ralph Shrader?
The power of listening cannot be underestimated.
It is very easy, the more senior you become, to stop listening to your clients, your people. But that’s how organizations get in trouble. When you stop listening, as far as I’m concerned, it’s over.
Ralph is a great listener. When I started working with him, he said, “I want to meet with you once a month, for a couple of hours.”
I prepared an agenda for the meeting. But it was very clear that he just wanted to talk. He wanted to listen to me, and throw ideas and see how I would react.
We’ve had that two-hour meeting every month now for 10 years. I hope we’ll have them for 10 years more with him as chairman of the board.
Education: Bachelor of arts, University of Wisconsin at Eau Claire; MBA, University of Chicago.
Summer 1991: Interned at Booz Allen office in Buenos Aires.
1992: Joined Cleveland office, advising clients on marketing strategy.
1999: Elected vice president of the division.
2003: Named chief personnel officer.
2010: Named chief strategy and talent officer.
2011: Named chief operating officer.
2013: Promoted to president, in addition to COO.
July 2014: Company announces that Rozanski will take over as chief executive in 2015 and become a member of the board.