The Corporate Executive Board Company
The Corporate Executive Board Company
2000 Pennsylvania Ave NW, Suite 6000
Washington, D.C. 20006
Telephone: (202) 777-5000
Fax: (202) 777-5100
Web site: http://www.executiveboard.com
Sales: $460.6 million (2006)
Stock Exchanges: NASDAQ
Ticker Symbol: EXBD
NAIC: 541611 Administrative Management and General Management Consulting Services
The Corporate Executive Board Company (CEB) is a Washington, D.C.-based provider of best practices research and analysis to over 3,700 corporate subscribers, including more than 80 percent of the Fortune 500. The company prides itself on helping clients avoid reinventing the wheel. Rather than paying high-priced consultants to develop custom solutions, CEB gathers information from its subscribers to help executives learn how peers at other firms have handled similar problems, as well as providing forums where executives can share their experiences. For example, in the aftermath of the Enron meltdown, corporate treasurers gathered via teleconference in a members-only meeting hosted by CEB to discuss the repercussions of the scandal. The firm’s accounting practices report was also made available to subscribers to help them avoid the mistakes made by Enron. CEB also provides customized research briefs, and makes program content databases as well as decision support tools available online. Practice areas include Financial Services, Human Resources, Strategy/ Research & Development, Sales and Marketing, Information Technology, Corporate Finance, Legal and Administration, Operations and Procurement, and Middle Market to serve midsize companies. CEB is a public company listed on the NASDAQ.
The Corporate Executive Board Company was founded in 1979 in Washington, D.C., by David G. Bradley, who grew up in the city. While earning a B.A. in political science from Swarthmore University he indulged an avid interest in politics by obtaining a college internship at the White House during Richard Nixon’s first administration in the late 1960s and early 1970s.Bradley would also take a position with the notorious Committee to Re-Elect the President, or CREEP, a key player in the Watergate scandal that forced Nixon’s resignation from office. Bradley had his own political aspirations, determined to become a U.S. senator by the age of 30. Because a successful business career was just a stepping-stone in his plan, in which he would build a business and sell it to become rich enough to devote his life to politics, Bradley earned an M.B.A. from the Harvard School of Business, which he supplemented with a law degree from Georgetown University.
Bradley was 26 when he established what he called the Research Council of Washington in 1979. His idea was to make himself available to conduct research for companies, no matter what the subject or industry. His first office was his mother’s Watergate apartment, where he set up four folding card tables and four Princess telephones. It did not take long for Bradley to realize that the purpose of the Research Council was not narrow enough. After four years of struggle he was barely breaking even, and his dream of being a 30-year-old senator flitted away. He was not ready to give up on his aspirations, however. He knew he had to retool the Research Council, despite beginning to enjoy some success as a generalist. While he had already conducted research for about 40 percent of the Fortune 500 companies, pursuing such subjects as the scope of the European fountain pen market and jet engine sales, the firm still lacked expertise in any particular area that would allow it to charge higher rates.
In 1983 Bradley decided to begin specializing in particular areas by establishing a dedicated financial services research unit. To reinforce the firm’s evolution he changed the name of the business to The Advisory Board Company. The new unit, one of the cornerstone practices of what would one day become The Corporate Executive Board, was an immediate success, and within four years The Advisory Board’s clients included every major North American retail bank and a number of large European banks.
Continuing to pursue the idea of specialization, Bradley established a healthcare research division to serve hospitals and healthcare systems. Next, in 1993, The Advisory Board established a corporate division, targeting the senior executives of the world’s largest corporations. The unit’s first program, the Corporate Leadership Council, served the heads of Human Resource offices, and laid the foundation for CEB’s Human Resources Practice. It too was wildly successful: In just 18 months almost half of the Fortune 500 became clients.
After years of perseverance Bradley was finally achieving the kind of success and wealth he had expected in his 20s. It came at a steep price, though. The business no longer served his political ambitions; rather, he served its needs. He once told the Columbia Journalism Review, “My best friend threatened, if he outlives me, to have ‘a man of fine research’ chiseled onto my tombstone.” Most of the time, however, he was too busy to even take stock of his life. That would change one day in the early 1990s during a 13-hour flight to Vietnam on a business trip. He had just turned 40 years old, and he took the time to consider where he was in his life. “I looked older,” he told the Columbia Journalism Review, “I was living in D.C., which had no elected senators. I wasn’t a Republican anymore. I was never going to be a senator.” Also on this trip Bradley’s interest in politics was reignited after buying a magazine. It then occurred to him that he could become involved in politics through another avenue: the media. “If I couldn’t take the course,” he recalled, “then at least I could audit it.”
Bradley began shifting his interest from running The Advisory Board to entering the field of journalism. To help run the business, in 1995 he hired James J. McGonigle as general manager of the Corporate Division. McGonigle held an undergraduate degree from Princeton University and graduated from Harvard Law School. Instead of practicing law, however, he had gone to work for one of the leading consulting firms, McKinsey & Company, in 1990. Working within the Financial Institutions Group, he became a bank-turnaround specialist, but after five years he grew weary of many aspects of his job and was open to a new opportunity. In a 2003 interview on CNNfn, McGonigle’s description of how he recruited for CEB (promising prospective clients, “I’ll let you keep the parts of your job that you love, the intellectual capital, the team-based environment, the smart clients, but I’ll take out of the equation the part that you don’t love, the travel every week, the meter is running feeling with your clients,”), offered an insight into his own state of mind when Bradley persuaded him to join The Advisory Board.
While McGonigle took charge of The Advisory Board, Bradley looked to buy a magazine. After giving up on the pricy New Republic, his favorite magazine, Bradley acquired the National Journal in 1997. In order to fund the purchase and build up a war chest to make further media acquisitions, he began to separate out the assets of The Advisory Board in order to package them into spinoff companies that could be taken public and allow him to cash in.
The Corporate Executive Board provides best practices research, decision support tools, and executive education to a membership of the world’s leading corporations and not-for-profit institutions. Our mission is to increase the effectiveness of executives and their enterprises by discovering and teaching to this membership the best new thinking and strategies from across industry and around the world.
The Corporate Executive Board was the first spinoff in 1997. It was a three practice unit with ten different research emphases, serving 1,300 clients. Revenues were also growing at a steady clip, increasing from $17.5 million in 1995 to $38.7 million in 1997, when the business also turned profitable, netting more than $1 million. In that year the Sales and Marketing Practice was established. The upward trend continued in 1998, with sales topping $53 million and net income increasing threefold to $3.3 million, and two new practices were launched: Information Technology and Corporate Finance.
In 1999 Bradley acquired the prestigious Atlantic Monthly. To help pay for this asset and expand his media operations, he took CEB public in February of that year, raising $155.6 million, of which Bradley pocketed $142 million. The Advisory Board, in the meantime, went its separate way, building up a best-practices consulting service to the healthcare industry. Bradley would take it public as well in 2001, raising more funds as he pursued his new life as an influential publisher.
In its first full year as a public company, in 1999 CEB added the Legal and Administration practice. McGonigle believed the firm had barely scratched its potential, estimating that its market potential under current conditions was $1.4 billion. In order to fulfill that promise CEB adopted a three-pronged strategy: add new clients, cross-sell additional research programs to current clients, and create new programs to bring in new clients and create more cross-selling opportunities. Success in this approach was evident in 1999 when the number of subscriptions per client increased to 1.9 from 1.7 the previous year. The result was a 33 percent increase in revenues to $70.8 million and net income that soared to more than $13.2 million.
CEB continued to pad its research offerings in 2000, adding the Operations & Procurement practice and three new research programs. To implement them and serve 250 new client institutions, the company hired more than 150 new people. All told, in 2000 CEB delivered 80 new best practices studies and more than 13,000 fast-cycle projects. For the year, CEB posted revenues of $95.5 million and net income of nearly $15 million. The company also set its sights higher, estimating that its potential, given its expansion in terms of clients and programs, was $3 billion.
Although the economy began to falter in 2001, CEB continued to enjoy steady growth. The firm introduced three successful new research programs—Employee Retention Roundtable, Recruiting Roundtable, and Operations Management Roundtable—as well as other new services. A major reason why the firm was able to improve revenues 34 percent to $128.1 million and net income to $21.6 million was its relationships with major corporations, which provided insights into what areas they wanted to pursue in order to become more productive. CEB forged even closer ties to its clients in the aftermath of the terrorist attacks of September 11, 2001, by creating a Disaster Management and Emergency Response Resource Center on its program web sites that housed all of the firm’s research on such areas as high-risk travel, best practices for leaders in times of crisis, emergency shareholder communications, and bereavement counseling strategies. In addition, for the next few months CEB conducted a large number of teleconferences that allowed members to exchange ideas on how to respond to the attacks as well as the worsening economy.
- David G. Bradley forms Research Council of Washington.
- Research Council changes name to The Advisory Board Company.
- Advisory Board forms corporate division.
- James J. McGonigle is named general manager.
- Corporate Executive Board is formed as Advisory Board subsidiary.
- Corporate Executive Board is spun off in stock offering.
- McGonigle steps down as CEO.
Four research programs were introduced in 2002: the Learning and Development Roundtable, Market Research Executive Board, IT Infrastructure Executive Council, and the Benefits Roundtable. The firm’s cross-selling efforts continued to improve, as the number of subscriptions per client increased to 2.72, resulting in another record year. Sales grew 26.7 percent to $162.4 million and net income totaled $29.6 million. The trend continued in 2003, when CEB topped $210 million in revenues and net income improved to $35.7 million, and four more research programs were added: the HR Measurement Lab, the Audit Director Roundtable, Real Estate Executive Board, and Applications Executive Council. Five new research programs were unveiled the following year: Controllers’ Leadership Roundtable, Communications Executive Council, Tax Director Roundtable, Customer Contact Council, and Compliance and Ethics Leadership Council. As a result, revenues continued to climb, reaching $280.7 million in 2004, while net income increased more than 50 percent to $53.7 million.
In addition to serving large global corporations, CEB looked to expand its pool of potential clients by adding services that appealed to companies generating between $100 million and $750 million a year. By adding this massive pool of possible customers, the firm increased its potential market to $5 billion. In 2005 CEB added six new research programs, one of which was specifically developed for the heads of human resources at 10,000 midsized companies in North America and Europe. The firm also grew externally during the year, acquiring the assets of the Executive Performance Group to support the launch of the Shared Services Roundtable. The year also brought a change in the top ranks at CEB. In July McGonigle turned over the chief executive officer responsibilities to Thomas L. Monahan, who had been serving as general manager of the firm’s largest operating division. McGonigle stayed on as executive chairman. Starting in 2007 he would become nonexecutive chair.
Monahan assumed day-to-day control of a firm that continued to expand at a healthy clip. Revenues improved to $362.2 million in 2005 and $460.6 million in 2006, when net income reached $79.2 million. Six new research programs were added in both years, positioning CEB for continued growth in the years to come.
The Corporate Executive Board Company (UK) Ltd.; Corporate Executive Board India Private Ltd.
Booz Allen Hamilton Inc.; The Boston Consulting Group Inc.; McKinsey & Company.
Adams, Lorraine, Warren Strobel, and Kate O’Brien, “The Magazine of Restoration Washington,” Columbia Journalism Review, September/October 2002, p. 28.
Alva, Marilyn, “Suddenly, Consultant in Even Higher Demand,” Investor’s Business Daily, March 11, 2002, p. A12.
“The Corporate Executive Board CEO—Jay McGonigle, CNNfn,” CEO Wire, August 22, 2003.
Kuczynski, Alex, “At Atlantic Monthly, a Tense Staff Sizes Up the New Owner,” New York Times, September 29, 1999, p. C1.
Much, Marilyn, “Consultant Keeps Brave Face in Down Cycle,” Investor’s Business Daily, March 29, 2001, p. A08.
St. Pierre, Nicole, “CEB: A Collector—and Seller—of Knowledge,” Business Week, June 11, 2001.
Sherman, Scott, “Going Long, Going Deep,” Columbia Journalism Review, November/December 2002, p. 48.