Consultant, Heal Thyself

How do you build a great organization? It's the squishiest, most difficult question in business. There is no accounting system for culture, no P&L to prove leadership effectiveness, little in the way of hard data on hiring or retention or team performance. Yet the best companies, the businesses that last, understand the importance of getting the organization right.

Upstairs at 381 Park Avenue South in New York, above the nail salon and the deli, there's a quiet experiment unfolding in the realm of organization building. A bunch of smart consultants have established a new practice that operates at the intersection of strategy and organizational issues. They're also -- and this is the intriguing part -- creating their own organization, one that reflects everything they know about the field and provides a lab for untested ideas.

They are attempting from square one to construct an institution -- "a cathedral," as one of them is fond of putting it -- that will rival the enduring service firms of our era. And so, they are considering their organization, its structures, processes, and systems, less for how it works today than what it will look like and how it will perform a generation from now.

This experiment is worth paying attention to for two reasons. First, this six-year-old firm is doing exceedingly well, growing at 36% a year with a pipeline full of engagements with clients such as Aetna and Pfizer. It's getting hundreds of resumes a year from top colleges and B-schools.

And second -- well, we mentioned the smart consultants. They are, in fact, very, very smart. Katzenbach Partners LLC is the creation of Niko Canner, Marc A. Feigen, and Jon R. Katzenbach. The three met at McKinsey & Co., where Feigen and Canner helped start the McKinsey Change Center. Katzenbach was a sort of legend, a McKinsey director for decades who had come in second in a 1988 election for the firm's managing director and who had enough clout to stay on six years past the mandatory retirement age of 60.

The new firm was Feigen's idea. He saw, as he says, that "there's a messy interrelationship between strategic capability and people" in any organization. In other words, it's one thing to know what a business has to do and another to understand how to make that happen. Your company's need to get out of one market and into another, for example, may be clear-cut -- but that shift probably implies huge, difficult changes in whom you hire, how your employees work with one another, and what motivates them to succeed.

KPL has addressed that dilemma at Aetna, for example, which hired the firm to help devise a restructuring strategy that ultimately included spinning off its property and casualty operation -- and then to help restore confidence and rebuild values on the insurer's front lines. At BMC Software, KPL consultants worked on a plan to spark sales growth, then put together a training program to improve the performance of the company's first-line sales managers.

That idea of a consulting practice that joins strategy with organization isn't unique by any measure, at McKinsey or other top consultancies: "We all do that," sniffs Barry Jaruzelski, a lead partner at Booz Allen Hamilton. But it may be that no other firm has been constructed so explicitly to serve the nexus. Certainly, no other firm promotes the niche so fervently. And no other firm has Katz.

Jon Katzenbach doesn't run KPL alone; he shares that responsibility with Feigen, Canner, and three other partners. But the firm bears his name for a reason: He has been spinning out ideas on the theory and practice of organizations for years, in a string of books such as the classic The Wisdom of Teams (1993), Real Change Leaders (1995), and Peak Performance (2000). He says he's currently working on four or five new books to be coauthored with various KPL consultants. And he's still seeing clients full-time.

Katzenbach is the firm's big-name draw, the guy who, in spite of his gentle, avuncular bearing, has star power that attracts clients. The challenge: How to turn the phenomenon of Katz into a firm -- a lasting institution? The answers come in large part from the ideas in all those books, and from hundreds of engagements spent plumbing other organizations.