Bain & Company: A people-oriented approach to driving impact
How a consulting firm used its greatest asset to differentiate from its competitors.
Management consulting is one of the more popular career paths chosen by many who graduate from HBS. Nevertheless, a common criticism often associated with the industry is that it has a penchant for creating elaborate reports with unrealistic solutions that generate little to no value for clients.
In 1973, Bain & Company was founded explicitly to address this issue, and the firm continues to live by its mantra of “results, not reports” to this day. Its operating model has evolved over time, but maintains its singular focus on hiring, developing and retaining teams of highly motivated professionals who are as committed to the success of their clients as they to their own. Now widely recognized as one the “Big 3” in the industry, Bain is a clear demonstration of how closely aligning the business and operating models is critical to the creation and maintenance of a successful company.
On the surface, Bain’s business model is not unlike its competitors in the industry. It relies on a partner group to build strong relationships with its clients, selling consulting projects staffed by small teams of highly qualified professionals recruited from leading undergraduate and graduate institutions. What makes its approach unique, however, is the firm’s central belief that meetings and presentations and meaningless unless they result in actionable change that results to a positive outcome for the client. As much time is therefore devoted on each project to implementation as to determining the “right answer.”
To initiate and cement change, Bain also relies on its junior employees to work hand-in-hand with middle-managers at the client. This collaborative approach builds trust and fosters an openness to changing often entrenched ways of getting things done. This is crucial to disseminating senior management directions throughout an organization to ensure adoption and sustainability once the project is complete, while also building client promoters at all levels of the company. While all of this may seem obvious to any casual observer, this approach was fundamentally different to the “report generation” orientation of the industry in 1970s.
To sustain its competitive advantage, Bain has created an operating model that is focused almost entirely on developing by far its most important asset; its employees. These principles extend from the rigor of the hiring and training process, to the emphasis on professional development and to the focused promotion and compensation structure.
During the recruiting and interviewing process, Bain looks for prospective employees who not only have the analytical foundations to crack the problem, but who also demonstrate an ability to work collaboratively in teams. This willingness to share insights and rely on others’ expertise is central to the premise of working collaboratively with clients. Whereas other firms may only pay lip service to fit, Bain places an outsized emphasis on the need to hire humble and empathic individuals who are aligned with the operating principles of the company. Throughout their careers, employees regularly attend intensive training sessions that serve to cement the “Bain approach” to client-facing work.
Given this business’s dependence on high-performing, collaborative teams, it is unsurprising that professional development and mentoring relationships play a central role in the operating model. At its foundation and unlike almost any other large consulting firm, Bain employs a local staffing model in which project teams are composed entirely of professionals from a single office. While this comes at the cost of maximizing employee utilization across the system, it fosters deeper mentor/colleague relationships that improve the professional skills of its employees and enshrines the core aspects of the Bain approach.
The emphasis on training and professional development would not have true clout unless it was supported by compensation and promotion policies that explicitly reward employees who embody the firm’s operating principles. Generating a positive outcome and adding value for the client comprises only 1/3 of the performance evaluation metrics, with fostering collaborative client relationships and proactively facilitating others’ professional development given equal weighting to “cracking the case.”
Over the last four decades, Bain & Company has grown into a powerhouse with over 5,000 employees across more than 50 global offices. It has built lasting client relationships with senior executives in much of the Global 2000, established through a collaborative, thought partnership approach that drives tangible impact. The company’s future success will very likely depend on how well it maintains the core components of its operating model, as it evolves to adapt to new business environments and challenges.
Sources
https://www.joinbain.com/your-bain-career/home-staffing-model/default.asp
https://www.joinbain.com/your-bain-career/global-training/default.asp
Roger, thanks for sharing the interesting article on consulting.
I think this industry is very interesting since it has not been disrupted (yet).
However, 1) lots of firms are getting much smarter – firms such as P&G, Nestle or Google have super bright employees and hence in the future consulting engagement in my opinion will be always fewer (at least if prices keep to be so high) since these firms often have the capability to do the work internally , 2) as you say above not always consulting bring real impacts. Hence, for as much consulting will be needed in cases where an external view is required or for things such as due diligence I guess it is going to be always more complicated for super high level generalist consulting firms to charge lots of money.
My questions are then:
1) What is then Bain approach towards scalable solutions? hence rather than selling a consulting team you sell them tools? I heard Mckinsey has developed a similar team? (I think is called Mckinsey & Solutions) – with Lower price but much more scalable?
2) What is Bain approach towards specialization? Is Bain thinking to highly specialize some consulting teams (e.g. specialized teams on product design, heavily specialize on hr practice and change management, or on other key similar topics)?
3) As far as you know has Bain made any recent acquisitions in these fields above? During the semester we studied firms such as Egon Zhender or IDEO and I think that integrating similar firms into Bain could allow Bain to continue having an edge? What do you think about that?
Thanks!
Thanks for the response Marco. While I definitely agree that there are companies out there who can attract that level of talent, many others can not. For instance, companies headquartered in smaller US cities often struggle to hire and retain the brightest employees. So at that level, I think a market for consulting will continue to exist.
In terms of scalable solutions, I think it’s a continuing arms race between all the major firms to ensure their IP and offerings are as up to date as possible. I personally don’t know of any imminent M&A plans at Bain, but there are always rumors circulating. Having said that, I personally a key success factor is that the solutions created are not cookie-cutter, and are tailored to the unique context of the business. Very rarely have i found that a solution that works in one company can be 100% ported to another and achieve the same results.
An interesting debate nonetheless,
Thanks
This is a great post Roger. I completely agree re: the disruptive model that Bain introduced in the 1970s when the industry practice / orientation was towards ‘academic’ reports for management that, however, lacked any real substance / implementation value. My big question for Bain is whether this model is as differentiated in today’s world. Several (dare I say all..) consulting firms today tout the practicality of their solutions and seek to work hand in hand with management and in fact (as Marco alluded) are moving towards a more specialized, as opposed to a generalist, model in order to be able to provide tangible value to clients. It will be interesting to see if Bain is able to maintain its competitive advantage or seeks to transition somehow given this shift.
Another interesting dimension is the significant number of Bain / other consulting firm alums that are now out in the corporate world. Given the prevalence and access to this talent, I wonder if it somewhat dilutes the value of consulting services?
Great post!
Thanks for responding Sharharyar. I definitely agree that many consulting firms now market their ability to implement and deliver impact. I think that Bain would maintain that their people were and remain their key differentiator. From my personal experiences, the clients who most strongly advocate for Bain almost universally speak to how the collaborative working relationship is what set it apart from their other experiences with consultants. While I recognize that this sounds incredibly “fluffy,” I firmly believe one should not underestimate its importance. It is a relationship business after all.
To your question, Bain definitely has industry and practice area partner groups that specialize, but remain committed to a more generalist model up until that senior level. There’s something to be said for bringing an outside perspective, even within a consulting firm!
Roger – your post makes me want to potentially consider consulting at Bain full-time in 2017. The story portrays Bain in a very positive light, and I would like to believe it is. In particular, I strongly relate to empathy and teamwork in the workplace. A few questions for you:
As a management consulting industry outsider, where can Bain stand to improve relative to its’ traditional competitors (Deloitte, BCG etc.).
Do you/Bain consider ad-hoc start-ups such as HourlyNerd to be competition? If so, what is Bain’s plan/response?
If you could change one thing at Bain, what would it be?
I just wanted to briefly comment on Marco’s point on the ability of other firms to hire the same caliber of talent as McK/Bain/BCG, hence lack of need to pay extremely high fees for MBB.
I think that besides Roger’s excellent point on difficulty to source talent outside of the biggest cities, there are two more points to keep in mind:
– There is a value in external advice, and people tend to value the advice that they pay for more than if they do not pay. I will never forget a conversation that I had, while still at Bain, with one of my senior clients. She said “honestly, we figured out the same solutions a while ago, but the COO won’t listen to u. We need you guys to send your analysis across so that we can finally implement it. That’s why we’re paying you”.
– It is valuable to be able to tap into expertise of other industries and other firms. In-house consulting team of a bank in Germany is unlikely to suggest solutions that were successfully implemented in a retailer in the UK, even though the same solution may work in both. A consulting team can.
Having said that, I do believe the consulting industry is currently being disrupted and in the value of sourcing talent to remote locations, external advice and cross-industry expertise is not enough to keep the industry in a great shape long-term. We can already see consulting firms hiring freelancers as an addition to their projects, more and more firms seeking ex-consultants to hire for their in-house teams, HourlyNerds of the world, and MBB trying to enter adjacent businesses (McK’s solutions, BCG Digital Ventures, …). Consolidation in the markets speaks for itself, too. Curious to see what happens with the industry in the next 20 years.
Great post and fascinating thread… I think the consulting model has survived many transformations, but its environment is changing really fast. It just seems that there should be a way to drive additional efficiency in the staffing model and in the IP that is captured by the consulting firms. Will Google and Facebook start hiring consultants? Do you think Bain is flexible enough to drive serious internal transformation???
Totally agreed that the industry will be affected by the current pace of change, but I’m not entirely sure how the staffing model will evolve going forward. Clearly, I have a personal bias towards the need for the human aspect to the success of the project given my personal experiences, but who knows what disruption somebody could come up with that could eliminate that. Whatever emerges, I’m confident that Bain can evolve and adapt, but there will clearly be major change management considerations given that the standard consulting approach has been fairly entrenched for so long.