How Bill Bain Transformed Consulting: Lessons for Ad Agencies

Bill transformed the management consulting business by insisting that the firm generate positive results for its clients working in structured relationships that made this possible rather than quotcarry out consulting studies for executives with consulting budgetsquot amp160Early in Bain39s history he established a high and difficult standard for Bain39s partners quotWe will work with a new client only after we have had a private threehour meeting with the Chief Executive Officer to better understand his her ambitions and concerns and where we can discuss Bain39s particular capabilities The CEO must agree to let us work on the most important problems one after another in a relationship that has no end provided that positive results are achieved amp160We will agree not to work for the client39s competitors and the CEO must agree not to work with oursquotThis policy seemed crazy and impossible at the time creating headaches for those of us who developed new clients amp160I was a Bain partner and director from 19791990 working principally in Europe amp160It limited the number of clients that Bain worked with but in the first decadeandahalf of the company39s existence Bain grew at a 40 annual clip and became one of the most soughtafter consulting firms by young graduatesThe focus on results carried through to Bain39s intensive training programs for MBA and university graduates amp160quotBainiesquot learned how to analyze business problems and figure out quothow good a client could bequot if certain steps were taken amp160Bain carried out analyses to establish the starting point for improved performance and then worked in task forces and in other ways to help its clients implement performanceimproving plansProminent Bain alumni who cut their teeth in this regime include Mitt Romney Meg Whitman eBay and HP Ken Chenault American Express Scott Cook Intuit Fred Reichheld quotThe Loyalty Effectquot and Net Promoter System and too many others to list hereBain ampamp Company is a very different firm today and the client criteria imposed by Bill Bain were softened after his departure but the firm39s quotresultsorientedquot DNA never changed and it remains a powerhouse for companies who need improved resultsAs described in the Performance Improvement section of Bain39s website quoton average Bain clients realize annual returns of 17 times Bain39s feesquot amp160The fees are considerable amp160On the strength of improved results Bain and other consulting firms have been able to maintain premium pricing levels for their services routinely charging out their people at 5x salaries and continuing to offer the best graduates of business schools and universities a package of eyepopping salaries and bonusesThis stands in sharp contrast to advertising agencies who are not growing and whose salaries and client relationships have deteriorated over the past several decades amp160quotWe39re creative and win awardsquot is not as economically persuasive to clients as quotwe deliver resultsquot amp160Ad agencies do not negotiate the nature of their relationships or have much influence over the work they do amp160Ad agencies are focused on shortterm needs for income and this sees them working in suboptimal relationships and carrying out marginal but excessive Scopes of Work that fall short of delivering improved resultsThe new competitive battle between consultants and ad agencies will be a onesided rout unless agency CEOs realize that the only route to longterm success and profitability is in delivering improved results amp160This requires a change in mission an upgrading of skills and a better understanding of how to solve the growth problems of their clients39 stagnant brands amp160In short agencies need to dedicate themselves to fixing their clients39 performance problems modeling their mission on the successful blueprint of the consulting firmsThe focus on achieving results has served the consulting industry very well amp160This is Bill Bain39s enduring legacy achieved in less than two decades after Bain ampamp Company39s foundingamp160and continuing today with admirable successCartoon credit Bruce Eric Kaplan The New Yorker The Cartoon Bank With permissionClick the social buttons above or below to share this story with your friends and colleaguesThe opinions and points of view expressed in this content are exclusively the views of the author andor subjects and do not necessarily represent the views of MediaVillagecomMyersBizNet Inc management or associated writers

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How Bill Bain Transformed Consulting: Lessons for Ad Agencies

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Michael Farmer

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How Bill Bain Transformed Consulting: Lessons for Ad Agencies

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