Terence was a consulting partner at 2 leading international management consulting firms including Bain. He has worked on engagements in the USA, UK, Brazil, Turkey, Russia, France, Mexico, South Africa, Dubai and Canada. He rose rapidly through the ranks and made partner in a very short time frame. He has graciously agreed to write a limited series of posts about his journey from Pepsi into management consulting and his life as a consultant. This is his story and first post.
In his first post, he discussed his move from Pepsi to Bain & Company. His second post discussed his early years at Bain & Company. His third post discussed his first client-facing engagement as an analyst at an airline client. His fourth post examined his role in developing the business case on an IT strategy project for an airline company. His fifth post examined turning around a struggling Eastern European airline in preparation for an IPO. His sixth post reviewed a project to create a new low-cost airline. His seventh post looked at Bain benchmarking techniques. His subsequent posts, approximately 15 additional chapters have been converted into a 287-page book which completes the arc of his career started in these articles.
Money, or should I say, lack of money was one major reason to join a management consulting firm like Bain. It was not the only reason. At 21 years of age, I was an assistant brand manager for Pepsi. The pay was not great as I had only been in the position for 1 year and I had no advanced degree. The work at Pepsi was interesting but not dynamic.
Money, or should I say, lack of money was one major reason to join management consulting.
I joined Pepsi for three reasons. First, I wanted a premium Fortune 500 name on my résumé. Second, I wanted exposure to Pepsi’s famed management training program. I had heard about their model of throwing young hires into the deep-end and seeing how they responded. Third, I was hoping to get an opportunity to travel to some exotic outpost or maybe relocate as an expatriate. The culture was great and the people were friendly. The company also treated me a little differently from all the other management trainees. I had a degree in physics from a top school on the west coast. Pepsi did not seem to attract many candidates with my profile.
I quickly distinguished myself with my analytical abilities. I believe the term “excel-jockey” was used a few times to describe my ability to manipulate numbers and extract data. At the time Pepsi had hired Nielsen AC to measure its stock availability in store. Each week and month, Nielsen AC sent through these complex sheets describing the out-of-stocks (OOS) in each major shopping centre and region. OOS mean a lot to Pepsi. For one, too high OOS means there is no product on the shelf. This means lower revenue. On the other hand, too low OOS could mean lower inventory turnover and larger commissions to the sales team who were partly rewarded on the OOS figures. Getting the correct number was critical.
I remember poring through the OOS numbers and thinking to myself, “this cannot be right. The numbers do not balance.” I took my concerns one level up. Nothing, the brand manager did not really seem interested in fixing the Nielsen numbers. In his view Nielsen could never be wrong. I took it one more level up and was told to fix it if I thought something was wrong. So I collected all the Nielsen excel sheets for the last 6 months and recalculated them all with my new formula. I then took my sheets to Nielsen to explain my new approach. Despite some obvious resentment that a skinny 21 year-old kid was showing up the famed statistical minds at Nielsen, they did agree my numbers were correct. Recalculating the sales commissions showed that Pepsi was paying close to $80M in excess commissions. There were some strong words between Pepsi and Nielsen, and I think Nielsen lost a fair amount of business.
I realized that over 50% of my take-home salary would go to my new apartment. That was not even for a nice place. I was living in a dingy little basement apartment – albeit in a rather premium neighborhood. That same month I also received my increase. It was just 7%. I figured out fairly quickly that everyone else in my group of management recruits were receiving the same salary and had obtained the same increase.
That pretty much made my career at Pepsi. I was now the golden child. My gymnastics with numbers did not stop there. I also worked out a better system to track the performance of Pepsi’s external sales support staff. This technique led to OOS dropping to less than 5% in the pilot account. My future looked good. Less than 9 months after joining I was asked to move to Pepsi’s head office and help lead an initiative to bring some of my “analytical spark” to a new and important unit that was trying to help with in-store promotions.
As I was settling into my new position, I was also looking for a new apartment. I realized that over 50% of my take-home salary would go to my new apartment. That was not even for a nice place. I was living in a dingy little basement apartment – albeit in a rather premium neighborhood. That same month I also received my increase. It was just 7%. I figured out fairly quickly that everyone else in my group of management recruits were receiving the same salary and had obtained the same increase.
A brand manager I had befriended realized I was unhappy and offered to take me to lunch to explain how salaries are set and why it is not the only measure of success and progress. Despite all the nice and important things he said in that lunch, all I remember was an aside comment he made about his wife working at the management consulting firm, BCG, and the huge salary she was making. The next day I decided to come into the office later than planned and spent a good few hours on the internet finding out about the world of management consulting.
At the time, just like now, there was not much information about the interview and recruitment process. There is always lots of information written by juniors and associates, but nothing written by the partners themselves who make the major decisions. What’s the point of listening to juniors? So I called up a few head-hunting firms whom I read had success placing candidates at McKinsey and Bain. After a few calls and messages, I found a firm who had indeed been successful and currently had a mandate to find new associates for McKinsey. Bingo. I sent my resume across.
At this time, my resume did not have much on it. It was pretty bland. I studied at a UK boarding school and I was the Head Prefect. I had won several awards at High School. I was a debate champion. I was president of my university physics team and president of the science society. I was also a member of a few organizations for smart people. I had played baseball at university and was also involved in track and field at high school. What I did have on my side was that I was very confident, a very polished speaker and dressed like a professional. I looked the part.
The head hunter was nice enough but very direct. He made it clear that the best shot I had would be to join a consulting firm at the entry-level. I needed to shoot for the business analyst position. I was a little disappointed until I heard the salary range. It was easily twice what I was earning. He also thought my resume was poorly formatted and I need to particularly show four things:
• Exceptional academic results.
• A broad range of interests.
• Demonstrated success in my interests.
• Someone who showed they could succeed as a professional.
Most days at the office were spent reading the paper and just waiting to go home. It was a real drag. The people were great and my new assignment was going well, but all things considered I had to go soon. I was not enjoying my time.
He wanted a one page resume and told me to go for the Ivy League style. He sent me a sample from a Harvard graduate. By this time, my heart was just not into Pepsi. Despite my successes and obvious value to the business, I still could not get over my paltry increase which seemed to be the standard for all employees. The company car was obviously a bonus, but that novelty soon wore off as well.
Paying 50% of my salary towards my apartment was also heavily impacting my life. The remainder 50% needed to be split between food, paying off my study loans and the meagre remainder went towards my nascent social life. Dating is expensive. Most days at the office were spent reading the paper and just waiting to go home. It was a real drag. The people were great and my new assignment was going well, but all things considered I had to go soon. I was not enjoying my time. The head-hunter had managed to secure me interviews at 3 major firms and one investment bank. They were all fantastic companies:
• Bain & Company
• Monitor Company
The Monitor interview was a disaster. For one, despite all the advice about being prepared for case questions and brain teasers, I was not fully prepared. I also felt that the Monitor partners running the interview were just not happy to be there. They were slightly condescending, made banal remarks and seemed quite proud of their firm. They were more interested in explaining how superior Monitor was to Mckinsey then interviewing me. The case was a disaster. The rest of the interview was a disaster. I needed no further response from the firm to know I was not going to be called back for another round. The head-hunter called me. His feedback was that the partners felt I was good but “not wired to think like a management consultant.”
The Morgan Stanley interview was something else altogether. Despite being all 22 years of age and holding an undergraduate degree, albeit with almost a full 100% average and from a great school, I was going to be interviewed by the Senior Managing Director running M&A and his two deputies. It did not get any better than this. The interview was on a really hot and muggy summer’s day. I drove out to Morgan Stanley’s head office. I was ushered into a massive boardroom and took a seat on the far end.
Shortly thereafter, the three gentlemen arrived. I was not intimidated in the least. They did not seem focused on testing my analytical skills. My resume seems to have provided sufficient comfort. It was a great discussion as they discussed their thoughts for the business, what they were looking for and why they needed someone super-smart and with burning ambition to serve as their own “brain” to support them in meetings, discussions and planning sessions. They seemed keen and pushed for me to see the HR director the next day.
The Morgan Stanley offer disappeared when the HT director vetoed the offer. In her words “he is not a person who will succeed or be happy in the background.” Damn.
Bain & Company’s office oozed opulence. It was intimidating and you could sense the mental energy in the place. At Bain, People were polite, well dressed and seemed to have bought their clothing from the same place. I remember sitting in the interview and trying to count the stitches on the sleeve of my interviewers white, French cuffed cotton shirt. My written exam went well and I was finished in about 30 minutes so I had a good 40 more minutes left over. My first case also went well since I spent more time preparing. My second more detailed case was also a success. It’s easy to read the outcome of the case by judging the interviewers demeanor and response to your answers. These guys were enjoying the interview.
On the drive back from the interview I received a call from the head-hunter saying that Bain was happy and wanted to move me to the next round of interviews. The next round was two 30 minute cases with separate partners. One was a medical market diagnostic case and the second was an insurance company growth case. I actually enjoyed the cases. The partners were engaging and we had a good conversation going.
I think the partners liked my open approach; they appreciated the fact that I communicated all my thinking with them. It is important to realize that cases do not always have the same answer. Therefore, in the event that you provide a different answer, the interviewers should understand how you arrived at your answer.
From my Monitor case experience, I had decided to sketch out my case response on the white board since I then had more space with which to work, it was easier for the partners to see my response and I could make edits easily. I used the following techniques in both cases:
• Step One – What is the Question I am Answering
• Step Two – What data do I have?
• Step Three – What constraints do I have?
• Step Four – What is my decision tree or hypotheses (this is the framework I would use)
• Step Five – Talk the partner through my thinking
This approach was very, very well received. I think the partners liked my open approach; they appreciated the fact that I communicated all my thinking with them. It is important to realize that cases do not always have the same answer. Therefore, in the event that you provide a different answer, the interviewers should understand how you arrived at your answer.
The thinking process to arrive at the answer is much more important than the real answer. Hence the need to ensure the interview understands how the answer was developed. The worst thing you can do is simply pop out an answer and are then unable to talk the interviewer through your approach.
I was called back for more interviews the next day and an offer was finally made on the fourth day. I was very surprised at the speed of things. Yet, based on the more than 200% increase in salary, how could I say no? I accepted. At the time, I did not realize that McKinsey was seen as the premium management consulting firm. If I had known, I may not have taken the Bain offer and waited for the McKinsey offer. However, the Bain experience was a truly polished affair. The place was humming with cerebral energy. Everything was professional and classy. They were thorough and prompt. No delays between interviews or after interviews. They seemed to know what they wanted. People remembered my name and while they were tough and very smart, I felt welcomed.
At the time, I did not realize that McKinsey was seen as the premium management consulting firm. If I had known, I may not have taken the Bain offer and waited for the McKinsey offer.
Today, I know better – the firms are on a par. This was a second reason for joining a management consulting firm. Everyone talks about them like only the best and brightest can get it. It’s almost as if you are stupid if you have not worked there. This elitist feeling does tug at ones ego. It was a badge that I was indeed smart.
Leaving Pepsi was not easy either. Despite my disinterest and laziness towards the job at hand, things were going very well and the powers that be were eyeing me for bigger things. Both of my senior managers were away on an African Safari. I therefore decided to fax my resignation letter. Bad idea. I think they were personally affronted that I would not try to call them. That said, they asked me to hold on and came back early to talk me out of my resignation. I was flown to Miami, where they were in transit, and taken down to a fantastic dinner on the marina. This was not too bad for my first trip to Miami.
They mentioned how much I had done for Pepsi and how impressed the company was with my performance. It was a long discussion about what my future could be. They showed me a huge home belonging to a Pepsi executive and said that in 15 to 20 years I could have something like that. Given their efforts to keep me, I felt pretty bad about my fax. I told them I would think about it but had already decided to go anyway. I think too much damage was done with the fax and my thoughts about leaving.
The first thing I did when I handed in my company sponsored car was to walk across the street to a BMW dealership and drive out with a convertible. I thought I had arrived.
Storyboard matters in studies because useful insights mean very little unless they can be woven into a compelling story. Critical insights which are not presented as a story, generally fail to get any traction at a client. In fact, that is one reason strategy studies collect dust on a client’s desk: they did not present a clear message.
When I was a corporate strategy partner, I pretty much drove teams a little crazy to constantly refine the story. I still do that. If you are following the US Retail Banking Study you would have seen us push for a crisp and compelling story. We do the same on the current power sector study. We just push and push for the best story out of the data. A great storyboard will get the client to act.
And that is what you want at the end of the day.
Where a storyboard fits in a strategy study
Boiled down to the basics, the strategy engagement structure can be explained as follows. First the key question team needs to answer in the engagement is determined. The key question has to be split into smaller questions in a logical format. This allows the team to develop a decision tree.
The decision tree has to meet two criteria. It has to be mutually exclusive and collectively exhaustive (MECE). There are two other criteria to be met and that is taught in our online strategy training program, though if you stick to the MECE rule that will be fine. Based on the decision tree, the hypotheses are developed.
The storyboard is the message engagement team delivers to the client, using the decision tree and hypotheses that has been developed, and it is based on the anticipated results of the study.
Next the team develops analyses to test each hypothesis. Based on the results of the analyses the hypotheses are proved or disproved and the storyboard is refined.
The diagram below shows a structure of a strategy study and a point at which the rough storyboard is developed. Although this diagram helps to understand how strategy engagements are conducted from the structural perspective, keep in mind that a strategy engagement is an iterative process and can be messy. In fact, it is usually messy.
Finally, the idea of using an objective function works in almost all types of strategy and operations engagements, but does not work in corporate strategy. In corporate strategy a very different approach is used because those engagements are different. That will be covered in a different article since corporate strategy studies are so rare.
What is a storyboard
To explain the management consulting storyboard concept, lets use an example from the animation industry. Before producing detailed animations and more, the animation team must first agree on the story.
The animation team gathers together in a room and takes blank pieces of A4 paper, they write out a short 10-word description of a scene on the top of the page and produce a rough 15-second pencil sketch to outline the animation which could go into this part of the movie.
In all, they can produce about 30 to 120 such A4 pages, stick them on a wall in sequence and everyone will be able to follow the story. This allows the animation team to debate the story and messaging without expensive animation work which would definitely change as the story changes.
To extend this analogy to a management consulting storyboard, the team needs to prepare a story of their message so that everyone in the team can understand their thinking and provide feedback. The management consulting storyboard is basically the headlines of the presentation which summarize the anticipated results from the work stream or from the entire strategy study.
Question from a reader about developing a storyboard
To dig deeper into the concept of developing a storyboard, I will answer a question we received from a reader, lets call him Henry.
Henry was avidly following the life blog on a study we did in the United States, where we were helping one of the largest Latin American banks to put together a strategy to enter the profitable, large and rapidly growing US financial services market. The study was focused around providing financing to low income entrepreneurs, either immigrants or US citizens.
We had been live blogging the study so everything we did you could follow it in real time and we spent a lot of time discussing what we were putting together. Fascinating work. It is definitely a new way to teach strategy consulting and tends to be very popular.
“Michael, what you are doing is very interesting but one thing I don’t understand is how is it that you are able to come up with a storyboard for the client only in the beginning of your 3rd week of a 8 to 10 week strategy study?
This kind of seems to me as if you are giving a client a solution that you already have versus relying on the analysis to tell you what the answer will be. And isn’t that the criticism that consultants get that they don’t really develop new ideas for clients but put out what they already know? It does not make any sense to me so I am not sure how it can be right. “
I can understand the reader’s confusion but he is wrong and I want to explain why he is wrong.
Piece of advice on how to communicate
First I want to point out one thing about this guy’s communication style. And, to be fair, many people have this style of communicating so it is worthwhile to address it here.
Henry is basically saying, “I don’t understand something. And because I don’t understand it, it must be wrong“. This is a really bad way to communicate.
It is extremely naïve or egotistical, or arrogant, you pick, to assume that if there is something you don’t understand then it must be wrong. For all you know, it may make perfect sense but you don’t have the necessary mindset or the necessary prerequisite knowledge to understand it.
If you don’t understand, it is better to say, “Look, I am sure it makes sense. I don’t actually get it so I will let you try it out and maybe I will get it later.” But don’t make it sound that if you don’t understand it then there is something wrong with the actual work.
It is just not appropriate. It sounds really bad to clients, superiors and colleagues when you do it. You sound like a 5 year old child.
How we could come up with a storyboard in such a short time
Besides that piece of advice on how to communicate, lets get into how we were able to write a storyboard in such a short time.
Note that anything that I will be able to teach you here will be at a high level. You can learn these concepts in depth as you go through our strategy training. How to develop a storyboard and other strategy capabilities is also taught in our book “Succeeding as a Management Consultant“.
Now lets address how we were able to come up with the storyboard so early.
Think about the logic here. We are not doing analysis just because we have to do it. We are doing analysis because we are trying to answer some questions.
If you just doing the analysis because this is the analysis you always do in a strategy study (e.g. market segmentation, cost effectiveness and revenue analysis), then yes, you have to wait for the analysis to be done to see what the analysis will tell you.
But this is not the way we do things at elite strategy firms. We do the analysis for a reason and that is the fundamental mind shift you have to make.
We start off with the objective function. What is the problem we are trying to solve for the client? We then break that objective function into the direct drivers of the problem. We then continue breaking down those drivers until we get what looks like a Christmas tree, that is actually a decision tree.
The objective function is the apex of the tree and the tree breaks out. We then prioritize the branches that are most important in the decision tree to help us figure out where to spend most of our time (refer to the exhibit below for an example).
For each of those prioritized branches we then say, “Ok, what is the hypothesis to explain why this is the issue impacting the objective function?”.
Once we have the hypotheses, we can then say, “Hey, if this is the hypotheses, what tests do we need to do to prove or disprove the hypotheses?”.
Those tests then become the analyses.
We do the analysis which directly help us answer the hypotheses, which directly helps us determine if each of the prioritized branches should in fact be prioritized and, therefore, what drives the objective function.
So even before we finish the analysis, because we know why we doing the analysis, we can say, “Ok, if the analysis turns out to be this, what is the message we will give to the client?”.
For each analysis you probably will have one or two, at most 3, possible outcomes. Rather than writing a storyboard for each outcome, we write a storyboard for what we think is the most likely outcome. And then, if the analyses turn out to be a little bit different than we expected, obviously the storyboard will be revised.
But more or less we don’t turn out to be wrong. We turn out to be right most of the time because of the logic we apply and because we are attacking the problem from so many angles that this allows us to cross reference and cross check things.
And that is the crucial point here. We don’t just do analysis for the sake of doing it. And, therefore, we don’t have to wait to see what the analysis is telling us. The analysis is being done to check certain hypotheses that we developed at the start of the study. And the hypotheses are not random. They are built off the decision tree, which is also not random because the decision tree is actually brainstorming the issues which are driving the objective function.
And this is the important difference in which elite firms do analysis. We don’t just decide, “Ok, this is the checklist of analysis we need to do, lets do it”.
We say, “Hey, hold on a second, why are we doing the analysis? What purpose does it serve?”. In our mind we are developing the storyboard which states if these are the issues and this is the way the issues turn out in the analysis, then this is the recommendation we give to the client.
We can write that storyboard in the first, second or third week. And once we complete the analysis, we can go back and check if the storyboard we wrote out, based on what we thought the analysis will turn out to be, makes sense.
And if it does not, we will revise the storyboard. But I can tell you right now, 80-90% of the storyboard usually turns out to be correct. The more and more you think about it, even 95% of it could turn out to be correct.
By the 3rd week of the study, the storyboard is more or less there. Yes, few things will change. The data will definitely change. For example, we may know that certain segment of the market is unprofitable, but likely will not know why it is unprofitable or by how much it is unprofitable. But we more or less will be able to figure out it is unprofitable.
So that explains how we are able to come up with the storyboard so early. Because we are not doing analysis for the sake of doing it but because we have a reason for doing it, and the reason allows us to structure the storyboard.
QUESTION(S) OF THE DAY: What challenges will you face in applying this technique in a corporate or tier-2 firm? Please let us know in the comments.
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