The Overview
Bain is a consultancy firm that was established in 1973 by a group of defectors from the Boston Consulting Group. Under the leadership of Bill Bain, the group’s main objective was to come up with a strategy-consulting firm that would not only give office counseling to their clients and diagnosis of business problems and a well written reports on what they needed to do and then let them go but also wanted to practically take part in the implementation of their own recommendations, and to be judged by the results. This notion was revolutionary by then, and it presently remains as the key principle in the business. Despite being faced with a financial crisis in the beginning, Bain’s Chairperson Orit Gadiesh managed to engineer an effective turn- around strategy against all odds. Contrary to the expectations of many, she was able to develop and implement a plan to raise Bain out of its blues despite her gender. In the case study Bain was quoted saying that to her, gender was not a problem but it was indeed a problem to others.
A holder of an MBA from the Harvard school of business was able to prove her prowess by raising Bain from a near insolvency to a resounding success
The company results is indeed an affirmation for this and shows Bain’s as one of the best performing consultancy firms in the consultancy and management industry as the case review. This success can be highly attributed to its wonderful working culture. The Bain’s management has also won the loyalty of their employees who proudly refers to themselves as “Baines”. The workers are compensated based with the company’s performance (partly) and they are for this arrangement.
Factors that led to Bain’s financial crisis
Bain’s bankruptcy roots from its founders, according to the case. As Gadiesh reveals the founders of Bain had, in the mid 1980s sold out in a deal that left the firm with large amounts of debts. As we deduce from the case, Bain could not service these creditors a situation that led to its financial crises. Within a few years Gadiesh says that the soaring debts had brought Bain to a close bankruptcy. In addition the founder’s inflexibility and holding back to the Bain’s culture could have contributed to the firm’s crises. Poor management by the founders had caused Bain’s awkward situation.
At first I had anticipated that the organization would face a numerous nerve breaking of barriers at the height of the crises and in its attempt to rescue itself from it. One, the problem that comes with bankruptcy is in no way easy to deal with. In the first instance, it means that the organization’s operations will suffer largely from financing deficiency. Such operations will therefore be at least affected. Indeed bankruptcy could cause the business activities to a total standstill. Worse still, the law governing bankruptcy is a nightmare for organization. Being declared bankrupt or rather insolvent could have dire consequences. Creditors of such a company as well as other stakeholders can file for its insolvency in an attempt to salvage their stake. This will result to the company being put under receivership and ultimate liquidation, which will mean the end of the company. It is indeed a challenge for Bain to avoid such predicaments. Also, at this situation, the organization sales and revenues are expected to decline. Similarly, the overall profitability of the company will be greatly affected. Bain has accumulated a huge amount of debts and offsetting such debts with the financial crisis right at its nose is such a challenge. Creditors may not be as understanding and supportive as it is indeed required at this critical moment. Winning the patient and understanding of creditors is big huddle for Bain. Bain’s founders who cause the bankruptcy could also be a barrier to the rescue plan of the firm. They hold so much in Bain and value its culture. It is expected that they might not support the implementation of the restructuring plan as intended by Gadiesh’s team.
Barriers and challenges faced by Bain and how Ms. Gadiesh plan overcame them
There was a problem in the management of Bain and this was a big barrier. To overcome this barrier such management need to be changed. Offset this barrier, Ms. Gadiesh was appointed to be the chairperson of Bain in 1993. This marked a new era for Bain. Her first action in an attempt to solve the firm’s crises, she was handed the responsibility of negotiating with the founder so as to acquire their consent for reforms to continue. Although she succeeded in this assignment, the company’s morale had been largely affected. Some employees had also been retrenched while some had shifted to other firms. However, getting the consent of the founders was one big step towards success. In fact Ms. Gadiesh was able to take Bain through the crises in a way that many had not anticipated more so being a woman that she was. In 1993, she became the chairperson of Bain, thus becoming the first female to be in charge of such a large consultancy firm.
The truth north ideology and Bain’s turn around
This ideology was greatly based on the Gadiesh idea of aiming right. Aiming right was an idea that was partly inspired by her husband who is described in the study as a keen sailor who single handedly rounded the Cape Horn. This ideology has since been embedded in the organization’s culture. The aim right ideology is not just an ideology but actually set the way thing is done in Bain. Looking more closely, the Bain’s logo is a compass with the pointer some few degrees from the vertical north.
The unique culture that Gadiesh has inculcated in Bain has direct and positive effect and contribution as a strategy to achieve her objective of transforming Bain. It creates the identity of the organizations, reminds its members about their commitment to the organization and brings in a feeling of belongingness. It is in this ideology that we can attribute to the current consultant’s working in the firm positive attitude and pride. Bain is known to stick by its principles, a position set and supported by its chairman, Ms.Gadiesh. Indeed it has been very beneficial to Bain. However, it is noted as a major cause of inflexibility and resistance to vital change within the organization. For example, the company was to set up a specialist IT unit (afterwards) since Baines are generalists. And it has acquired a low profile in the dynamic public-sector consulting business, mostly because it’s inflexible fee structure. This is reflection of the statement ‘Head true north too blindly and you might eventually hit an iceberg’. This culture was of great use in Bain’s turn around. This rigidity brought about by the cultural principles was a major hindrance to full achievements.
The founder’s legacy and its significance in the current Bain
Although he masterminded a buyout plan that almost led to bankruptcy of a firm that is now one leading consultancy firm in the industry, Bill Bain’s legacy cannot fade easily in the mind of many. There is need to acknowledge that Bill was the pioneer of the strategy of selling result-oriented advice to clients, an idea that is now widely adopted and practiced in the consulting industry and one that made Bain one of the key innovators in the consulting profession. He is the father of the idea that consultancies should not measure themselves by the thickness of their reports, or even the elegance of their writing, but rather by whether or not the report was effectively implemented, according to Bain director Mitt Romney, who was recruited to Bain from BCG in the late 1970s by the firm’s founder himself. This idea is being practiced by Bain to date and greatly attributed to the firm’s success in consultancy. Gadiesh, after having salvaged the organization from the verge of bankruptcy has no intention of letting go this principle. In fact enhancing the strategy is the way out for a firm that is recovering from bankruptcy. Bill Bain’s greatest legacy therefore is the consulting culture that he created which has turned out to be highly determined original culture, one to which any number of e-consultancy start-ups today are beholden.
Bill Bain’s culture and present Bain’s success
As the firm expanded, Bain advocated for and instituted large offices where employees could both work and recreate and more importantly which offered a platform for inculcating values to the consultants. With this kind of a policy Bain’s consultants were behind cultured to be single- mindedly clients service oriented. This was a very attractive culture to both the insider consultants and the young MBA graduates, who to date form majority and the most reliable work force for the firm.
Those who know bill cannot forget what he did in January 1991 when, along with seven other of the firm’s founding partners, agreed to return about $100 million to the firm in cash and forgiven debt, plus all outstanding shares of Bain stock, as a means of stifling an escalating financial crisis that had been triggered in part by the founders’ hefty buyout price. This action put Bain back on track and prepared the firm to embrace new leadership now credited for a decade steady growth according to the case study. Today, Bain intends to use a similar strategy as it opens an innovative and seemingly more elaborate chapter in its history. This case shows the culture of the firm being carried forward and proving most helpful. Tom Tierney, who was Bain’s first managing director, says that it was remarkable to carry over from the founder’s organization in to a broad base consultancy in 1990s without loosing the values, mission and organizational culture that drove Bain in the 1980s. The culture of clients’ service is greatly demonstrated by Bain first chairperson Gadiesh, a chair that is said to be non executive spends nearly 70% of her time on client oriented service a move meant to rally the firm’s MBA all stars by stressing the firms core value of serving clients with a single mind. When she was appointed to the chairmanship in 1993, Gadiesh did not only in a smart way help bail Bain out of the financial crises but also helped build a strong attitude allover the firm’s environment. She is smart, original, and likes keeping no secrets apart from her own age according to the case. At the height of the financial crises when she was appointed to the chair person of Bain, she fully took charge of a taskforce to identify alternative financial options to bail the firm out of the financial crises. The leadership platform and new challenges actually transforms her consultancy professionalism.
Having helped the firm bounce back to live, Gadiesh and his dedicated team are embarking on an expansion plan. However the expansion is bound to create new challenges that comes with diversity. Other challenges which the organization can anticipate in the near future are the imminent succession when Gadiesh terms expires according to the firms bylaws. The later states that one will serve for a maximum three terms and she is serving her final term according to the case. To many in the firm, they don’t want to imagine the future without her. The firm bylaws also states that the chairman’s position will only be filled by an insider consultant but deters the managing director from taking the position and this takes the challenge to a higher level.
The change of management with effect from 1st January 2000 is to spark anew era for the firm. With the appointment on John Donahoe to the managing director position, the firm management goes to a higher level and is expected to mark a period of rapid innovations in Bain according to the case. This brings a new challenge as it is likely to conflict with the firm’s culture and values.
Lessons learnt from Bain’s turnaround case
First, it could be learnt that gender is not a hindrance to success. Irrespective of Miss Gadiesh being a woman, she successfully masterminded a turnaround plan. Her gender did not affect her ability. Centrally to this fact, many organizations do not have female representatives in top management. This is a clear depiction of how women are undervalued in matters of management. Gadiesh disapproved of this fallacy by performing beyond the expectation of many. She says that to her, gender is not a problem but it is a problem to others. Another lesson one can learn from the Baines case is that the past is an important recipe for building the present and even the future. This supports the statements that “one cannot know where he or she is going unless he knows where he or she is coming from” the review of Bain’s past right from its founding fathers proves very useful to its present success and even sheds more light to the firms future. The case also teaches us about the need of organizational Culture, values and principles. These values have assisted Bain a great deal in both the recovery from liquidity and also the afterward growth plan. The case also teaches about customer service and its paramount importance. In fact, it brings out good and committed client servicing as the key to business success especially in consulting.
Reference
Reviewed case Bain – Turnaround of a near-death consulting company