Cognizant buys stake in Danish consulting firm ReD Associates

02 May 2016 5 min. read
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ReD Associates, a Copenhagen and New York based consulting firm that specialises in customer behaviour, has sold off a 49% stake of its business to Cognizant. As part of the deal, ReD Associates, which will continue to operate independently, has tied an exclusive strategic partnership with Cognizant Digital Works, the firm’s Digital business unit.

Founded in 2005 by four co-founders, in Copenhagen, ReD Associates is a boutique management consultancy that focuses on business strategy, sales & marketing, organisational behaviour and innovation*. Over the past eleven years the firms has grown its footprint to a team of around 70 consultants, operating from its home base in Denmark as well as from a hub in New York. ReD Associates serves clients across a range of industries and geographies, including the likes of Adidas, Ford, Lego, Lufthansa, Novo Nordisk, Intel and Samsung.

Despite its relatively small size, compared to the big guns in the consulting industry, ReD Associates has built a strong track record in the field. ReD, for instance, helped Adidas draw a strategy to capitalise on the exploding fitness and sports-lifestyle market, provided research to Samsung which stood at the basis of the firm’s best-selling televisions, and helped Pernod Ricard figure out how to sell more vodka in a world where fewer people are drinking in bars. More recently, the firm supported energy conglomerate Edison with defining its market entry strategy into the corporate energy management segment, and after the firm’s Board of Directors approved the plan earlier this year, Edison in March formally launched its own energy consultancy arm.

The advisory firm differentiates itself through an approach that combines philosophy, sociology and anthropology with strategy and analytics, in recent years increasingly accompanied by design and digital, to examine market dynamics. “The philosophy behind our approach to research and meaningful insights is the science around understanding how things are experienced," comments Christian Madsbjerg, co-founder of ReD Associates. In line with the vision, ReD Associates positions itself in the space between strategy houses, design/branding firms, innovation consultancies and market researchers.

Last week Madsbjerg unveiled that the firm’s partners have sold a minority stake of the business, 49%, to US giant Cognizant, with over 220,000 employees one of the globe’s largest business, technology and outsourcing companies. The rise of digital and a convergence of new technologies is reshaping industries and most aspects of everyday life, and in a bid to capitalise on the potential and meet growing client demands, Madsbjerg says ReD Associates was keen on a technology partner. The deal sees the two firms merge their offerings – the blending of ReD Associates’ management consultancy propositions with Cognizant’s technology footprint will, according to Madsbjerg, create “an entirely new model for how digital strategy is conceived and – most importantly – executed.” Mikkel B. Rasmussen, also co-founder of ReD Associates and together with Madsbjerg co-author of the book ‘The Moment of Clarity’**, adds: “By joining forces, we will be able to develop, design, prototype, and deliver compelling digital transformation for clients.” 

As part of the exclusive relationship – terms of the investment have not been disclosed – strategy experts, behavioral economists, anthropologists, sociologists, and ethnographers from ReD Associates will work with digital experts, designers, technologists, and data scientists from Cognizant to come to end to end offerings for clients. The partnership will formally be integrated into Cognizant Digital Works, Cognizant’s arm that brings together its suite of digital offerings to help clients design, build, and run digital business solutions. Cognizant Digital Works operates on the back of four key pillars, with ReD Associates given the task to enhance its ‘Digital Strategy’ line. ReD Associates will provide clients with insight and strategy based on the social sciences, and Cognizant will facilitate technical development and implementation at scale.

The transaction will have no impact on clients and engagements, says Madsbjerg. The firm will retain its management team (ReD Associates has nine partners), clients, and projects, and operate independently. Gajen Kandiah, Executive Vice President at Cognizant Digital Works, says: “Our partnership with ReD Associates is a natural extension of our current joint work with select clients. Together, ReD Associates and Cognizant Digital Works provide a unique value proposition to customers who are considering digital solutions.”

According to analyst firm Source, the Danish consulting market is worth around €650 million, while the US, the globe’s largest advisory landscape, is worth more than $50 billion. In both markets, similar to developments across the globe, digital is earmarked as one of the main, if not the main, drivers of growth. 

* ReD Associates was formally named R&D Associates, but after Korean executives at Samsung, an early client, didn’t know what to do with the ampersand, the founders decided to rebrand the firm as ReD Associates.

** The book ‘The Moment of Clarity: Using the Human Sciences to Solve Your Toughest Business Problems’ explores the power of the human sciences and the impact it can have on decision making and business outcomes. ‘The Moment of Clarity’ was launched in 2014 and is published by Harvard Business Review Press.