Magazine 04: Interview about KGM Strategy & BCG - a perfect fit

What sparked BCG’s interest in KGM Strategy?

Martina: BCG as a group has always been growing organically, nevertheless, we did have a wish list of potential acquisitions. We’ve seen a sharp increase in demand for several years, especially in the operations topic, our largest functional practice area worldwide, which also includes procurement. It’s too time-consuming to build up your own teams, and specialist consultancy services are much closer to the customer in these areas. It was like having our very own X Factor competition, but for procurement, and KGM Strategy was by far the best contestant.

How did the process work specifically?

Martina: all started when a delegation from BCG came to Düsseldorf to hold talks with Managing Directors from KGM Strategy. We clicked right away, but of course, that was just the beginning. I’ve lost count of the number of meetings we had after that; getting to know each other took well over a year. We also came up with potential extreme situations that could put a strain on the partnership.

Did that include a global pandemic?

Martina: Naturally, we couldn’t have seen the coronavirus crisis coming. But we did consider it highly likely that there would be an economic crisis within the first five years. We played through this scenario, which is why not much comes as a surprise anymore, even in these difficult times.

Were there any colleagues at BCG who were worried or had reservations about the acquisition?

Daniel: There is a great deal of trust in the people involved in our group. As well as that trust, it really helped that we were soon able to start taking on our first joint projects. This allowed the teams to get to know each other, and we were able to nip any concerns right from the beginning.

Were clients equally on board?

Daniel: Feedback on that front was also very good from the outset, from BCG’s and KGM Strategy’s clients alike. We at BCG have gained additional skills in procurement thanks to the acquisition, which our clients are naturally happy to benefit from. And KGM Strategy can now offer a complete package; it no longer has to turn down clients that need help in areas besides procurement consultancy.

In practical terms, how do teams from KGM Strategy and BCG work together for the same customer?

Daniel: Well, that depends on the project at hand. But let’s take the major transformation projects that we work on. BCG often deals with the overarching corporate structures that need to be brought together, while KGM Strategy liaises with the procurement departments. But we also often work together as a team on procurement projects, as our teams complement each other perfectly with their main areas of expertise. The fact that this collaboration works so well makes you realize that we are two parts of a whole.

But KGM Strategy still operates as a separate company?

Daniel: Yes, this was no hostile takeover, the acquisition took place in close consultation. One of the conditions was that KGM Strategy remains largely independent. So, we deliberately don’t get involved in its day to day operations.

Martina: Another reason why that’s important is that KGM Strategy operates differently to BCG in some areas. But we can deal with this different way of doing things very well.

So how do you manage to get everyone to work towards common goals?

Daniel: We’re in constant close communication with each other. We use regular meetings and conference calls to make sure that everyone pulls together. In my role as Global Topic Leader for Procurement, I’m responsible for coordinating the ongoing collaboration, so I’m in touch with someone from KGM Strategy every day. As you can see, the working relationship is very close indeed. We’re not afraid to contact each other, and we also communicate as equals.

Where do you think KGM Strategy will be in five years’ time?

Martina: The market leader in procurement consultancy in Europe. KGM Strategy needs to expand its global reach to achieve that, but judging by experience, I’m positive that it will happen.

How has this affected turnover after the first few years together?

Daniel: The entire thing has been a huge success story: KGM Strategy’s business has doubled since 2017. We expected growth, of course, but it happened so quickly that it surprised even us. We didn’t expect this kind of result for another five years at least. And we expect this to continue.

Martina: BCG is much stronger than before when it comes to procurement, thanks to KGM Strategy. That fits in with our strategy of continually expanding our areas of expertise in the long term, whether through our own efforts or by adding expert teams or specialist consultants such as KGM Strategy.

What makes you so optimistic that KGM Strategy will continue to grow just as successfully?

Daniel:Many of the problems currently affecting the global economy will lead to a further increase in the importance of procurement. Whether it’s the trend toward protectionism or the COVID-19 pandemic, companies are looking at how they can optimize their supply chains. The focus here is increasingly on making supply chains even more flexible, innovative, sustainable, and cost-effective. This calls for new approaches and methods, which we at KGM Strategy und BCG can provide.