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Chapter Two: Learning MECE and 80/20 at Bain

Bain & Company is an interesting company. “Bainies”, as they refer to themselves, take enormous pride in their culture and the “true north” value system which lies at the core of their cultural values. On my first day at the office, sitting through an induction led by a team of partners, the following three points were driven home:

• Bain believes in developing solutions which work. The Monday-morning-principle was the belief that any Bain recommendation must lead to an action that could be implemented by the client on Monday morning.

• Bain also believes in 80/20 rule. But the rule is different from the famous Pareto principle. Bain’s 80/20 rule refers to the fact that it is better to have 80% of the best answer, provided this could be implemented by the client to get success. Chasing the best theoretical answer with limited room for operational success was not an option.

• Clients come first. Period. Bain ties this to their “true north” value system of only doing what lies true to their value system, and by default, the client.

We went through a long induction period lasting one complete week. A whole host of topics were covered in this intense mini Bain MBA week:

• History of Bain

• Bain Approach to Management Consulting

• Bain Value System

• Bain Path to Partnership

• Bain Knowledge Systems

• Research Skills

• Presentation Skills

• Writing Skills

• Speaking Skills

• Dressing Skills

• Engagement Etiquette

• Office Etiquette

• Etiquette for Engaging Clients

• Maintaining Client Confidentiality

The thing that immediately hits you at Bain is the intellect and wide-ranging skills of the people in the room. In my group of 12 new hires there were a NASA rocket scientist, a Rhodes-Scholar economist who served on the Clinton campaign, several Harvard, Wharton and Stanford MBAs, a former musician and now MBA from the University of Chicago (now the Booth School of Business), a poet and Fulbright scholar…and then me, a physicist. Therefore, it is an intimidating place. That kind of pedigree exists throughout the rest of the organization.

It is better to have 80% of the best answer, provided this could be implemented by the client to get success. Chasing the best theoretical answer with limited room for operational success was not an option.

Bain is unique among management consulting firms for several reasons:

• Bain is the only one of the truly prestigious firms to be run by a woman, Oriet Gadiesh. Orit is a chairman of the firm. You should read her interesting Harvard Business School Case Study for her complete story, but basically her tough survival attitude is part of the Bain culture.

• Bain almost went bankrupt. This embarrassed the firm immensely but also made them more conservative and forced them to put in place measures to make sure this never happens again. Therefore, Bain seems to be very analytical when examining its own actions.

• Bill Bain walked out of the Boston Consulting Group along with a handful of key people to set up Bain & Company across the town from his rival. The firm tends to avoid discussing this part of its history. However, it does shape who they are. It’s almost as if they try so much harder to bury their past.

With so many big egos around the room, everyone is trying to outdo the other and be seen as serious competition. The positioning and verbal spars do come across clearly. The Bain partners and existing employees try to create a more collegial atmosphere. However, with such high salaries and reputations on the line, everyone is trying to one-up the other person even if this is done subtly.

Bain almost went bankrupt. This embarrassed the firm immensely but also made them more conservative and forced them to put in place measures to make sure this never happens again. Therefore, Bain seems to be very analytical when examining its own actions.

The business analysts/consultants (different firms use different names for the entry-level position) were separated from the more senior associate level recruits. The six of us went through a more detailed orientation about the Bain approach to research.

Typically, even the consultants are staffed onto engagements. However, Bain was going through a period of rapid growth and the research support systems worldwide were struggling to keep up. A decision had been made that three of the consultants would be assigned to an internal role primarily to support the partners on client-development studies.

I was one of the three. We would be a type of internal research unit supporting partners in this office only. Another Bain partner and three managers would be assigned to the unit full-time to ensure it could operate to the highest Bain standards.

I remember looking forlornly at the other consultants as they went out onto client-site. It was seen as a badge of honor to be on a live engagement working with clients. Despite what the firm told us, we felt being kept back in the internal unit was a decision taken as we were not ready and needed to be trained in this safe environment. Of course, it was not true, but that’s the way we felt.

On our first day in the unit, we (three consultants from the unit) went out for lunch. One of the consultants was quite upset because she felt her career would be held back and she was not developing by working in the office. Over steak and grilled vegetables we decided that if we were going to be the internal team, then we would be the best internal team ever. We would make the Bain partners see the enormous value we were generating.

It went without saying that we all three were wishing we would be the first to be assigned out of the unit and onto a project.

A couple of massive client engagements put a crimp in our plans. Rather than having a generous leadership group with a full-time partner and three managers, we were soon down to a part-time partner and one full-time manager. In hind-sight that turned out to be an amazing blessing. The senior partners in the office started spending more time with us, we were given more senior roles to carry out and since we needed more support, we were sent on much more formal training to exotic destinations like London.

Spending time with the senior partners was especially important. For our colleagues on engagements, their performance was fed through several lines of communication before it reached the partners. We were working directly with the partners. Our success or failure was squarely in our hands.

One month into our time in the unit, a major opportunity arrived to demonstrate the unit’s value. Bain had been trying for some time to break into a major biscuit (not the real category) company. For the sake of writing, we shall call this company Nabisco (although it was not Nabisco). Bain had tried a few times but nothing ever really happened. McKinsey had somehow always managed to arrive at the right time to snatch away the work.

Nabisco was going through a CEO transition and the new CEO wanted to relook at the portfolio of brands in the business. Since the new CEO did not have a preferred consulting partner nor did he know the industry, he invited a Bain partner to discuss ideas for improvement. With the change of the guard, change in the client’s board and due to conflicting diaries, the first of these meetings was set for 10 weeks into the future. That gave us plenty of time to put together something formidable to support the partner.

Working with the partner we mapped out a strategy for the discussions. We did not know enough about the sector and client. Therefore, we developed a two-pronged approach.

• First, we could not do the research to tell them what was not working and needed to be improved. We did not have access to the data and that would need to be the engagement itself. Therefore, we decided to do a study to show him how he should go through analyzing his company.

• Second, we decided to show him the consumer perspective in-store.

Working with the partner was a fantastic experience. He drummed into me and showed me the value of an approach that I still use to this day and have carried with me even when I left Bain for another consulting firm:

• Be clear about the question you are answering.

• Ask yourself if answering this question would allow you to reach your objectives. The wrong question is more damaging than the wrong answer.

• Break down this core question into smaller sub-questions.

• The questions must be mutually-exclusive and collectively-exhaustive. Getting the handle of this was painful. However, being MECE is the single most important skill in management consulting.

• Design the analyses to answer the sub-questions.

• Collect the data for the analyses.

• Run the analyses.

• Go back to the start and test for logic, test for completeness and test for common-sense.

This is the management consulting way. In every single engagement and across thousands of issues, I have successfully used this approach. It is the root of consulting success. Of course, learning how to do this was a painful and difficult process.

It is very difficult to understand what a storyboard is when it is explained to you. I do not know about other people, but I personally have always struggled to generate a perfect storyboard. It took me many iterations to get it just right. The same goes with preparing perfect slides. So many people do not know how to prepare slides and are comfortable with this. At Bain, you need to learn their templates and learn how to deploy it well.

We split the work up. Given the partners experience, he would work on the storyboard and slides for the framework to analyse the company and I would handle the in store experience analyses. Completing the in store study posed a big problem. What was the central question I was answering? How would I do this? Eventually, after much iterations I settled on showing the disconnect between what Nabisco was trying to achieve in store, as explained on their website, annual report and in numerous analyst calls, and the actual customer experience.

So off I went and designed my storyboard and decision tree. Once that was signed off, after 5 iterations, I then designed the tests and started the data collection. Management consulting is a lot like the show CSI:

• Typically, people are trying to hide something from you. No one comes out and says, “Hey Mr Consultant, thanks for coming over. At the moment I am the problem since I have weak self-confidence and need to see constant recognition for my ego. Therefore, I structure all decisions to come through me. I know this creates many bottlenecks, is causing delays and losing us money, but it makes me feel so good. So please fix this problem and everything will work well.” We have to investigate and find the truth when nothing is what it seems.

• It is a little messy to find the information and document everything. Lots and lots of new consultants get hooked into the glamour image of management consulting. Glamour is the outcome of doing all the messy work. It is tough and sometimes painful to find the data you seek. Nothing is given to you and there are no nice looking case study appendices with perfectly formatted data. We need to sift through an organization to find the information and create the pretty slides which we hand to clients.

• The burden of proof is on us. That’s right. We need to prove our recommendation and findings are correct. If we fail, the client does not trust our recommendation and we lose credibility. Clients never care that their data sources may be incorrect. If we choose to use the data, we own the problem.

The theme I choose is a Day-in-the-life of a Nabisco Brand. Using a set of photos and time series analyses we tracked the packages all the way from the distribution warehouse, supermarkets and stores, their warehouses, onto the shelf, shelf replenishment and to the consumer.

Doing this was tough since many stores do not like shutterbug consultants snapping away near their loading docks and display units. Customers also do not like this. This was also way before the iPhone and digital cameras. I am sure it would be much easier to do this now. We also solicited some consultants to send us photos of the biscuits when it was opened up at home. Was the box easy to open? Were the biscuits broken? Could the box be stored without damaging the remaining biscuits? What did children do with the toys inside?

We timed deliveries, timed the OOS (my Pepsi experience came in useful here) and were able to show the client how damaged the boxes were, how peak shopping time traffic was missed since the stock was not replenished and many other useful insights.

The biggest benefit was spending one complete year working and learning from the firm’s most talented partners. That was priceless. I had built relationships with them. By the end of the year I knew how each partner operated and could tailor my communication and work to meet their expectations.

The pack we put together went far. Further than I thought it would. The client loved it and eventually awarded Bain the portfolio analyses work. The deck itself became something of a best-in-class internal study guideline on how to combine field work with desk-top research to produce powerful and insightful presentations.

My time in the unit was interesting and very beneficial. I actually liked knowing where I would be the next day unlike my colleagues who were sometimes given one day notice for their travels. I also liked to have one office which I could call my own, where I could develop a routine. The office had a great cafeteria and the food was excellent. While I travelled out to collect data, I could predict with a high degree of accuracy when I would finish my work. I now had more money and the time to develop a social life. Late nights were very rare since we had ample time to plan.

The biggest benefit was spending one complete year working and learning from the firm’s most talented partners. That was priceless. I had built relationships with them. By the end of the year I knew how each partner operated and could tailor my communication and work to meet their expectations. It was especially gratifying when partners tried to get me onto their projects after the Nabisco study. Spending all this time with the guardians of the firm also allowed me to see how they operated in front of clients, nurtured the firm’s values, managed client expectations and developed multi-million dollar engagements from the kernel of an idea.

Once things settled for Bain worldwide, the need to keep the internal unit disappeared. However, given its success the global firm decided to set up a dedicated research team in that office. I think that was a great feather in my cap and it was good for the rest of the team. I was willing to take any credit I could.

Many aspiring consultants feel they have to get out to clients to move ahead. That’s partly true. Yet there are many, many benefits to first joining the internal research units. That worked very well for me and I would say gave me a major advantage over other consultants.

I did one other similar study for a retail bank before I was hauled off onto my first engagement, analyzing an airline. I was the first person out of the research unit. Things seemed to be looking up for me. I should have known better.

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