Bain & Company is a global management consulting firm headquartered in Boston, Massachusetts, with offices in 27 countries. Bain is considered one of the most prestigious management consulting firms in the world[1], and for eight consecutive years has been named the "Best Firm to Work For" by Consulting Magazine[


Boston-based Bain & Company is one of the world's leading corporate consulting companies, the pioneer in the concept that consultants should help implement strategies not just make recommendations. The Bain approach is often called relationship consulting, especially known for forging strong bonds with chief executive officers. For most of its history, the company has opted to take on a single client in a particular industry as a way of more fully aligning itself with the client's goals. More recently, Bain has begun accepting equity as part of its payment in order to again tie its own success to achieving tangible results for its clients. The partnership operates 27 offices around the world, employing some 2,800 people. Although Bain is primarily known for its work with Fortune 500 clients, it also consults with startups through its bainlab operation. More recently the firm has joined forces with several other companies to form BainNet in order to provide technology-based strategies. In addition, Bain has established a non-profit company, The Bridge Group, to assist other non-profits.

William Bain Turns to Consulting in 1960s

The founder of Bain & Company, William W. Bain, Jr., was born in Johnson City, Tennessee, the son of a food wholesaler. After earning a history degree in 1959 from Vanderbilt University, he went on to graduate school but soon took a position at a steel-fabricating company, where he not only helped to work up engineering studies but also made sales calls. Bain then returned to Vanderbilt to become director of development, raising funds from alumni at a salary of $19,000 a year. When Vanderbilt began to think about establishing a business school, he asked for advice from alumnus Bruce Henderson, founder of the Boston Consulting Group, BCG. Henderson was so impressed with Bain, despite his lack of basic business knowledge, that he offered him a job with BCG and only a few weeks later, in 1967, Bain relocated to Massachusetts. He quickly rose through the ranks of BCG, becoming known for his hard work, attention to detail, and physically fit appearance. Within two years, he commanded a six-figure salary and rose to the position of vice-president, overseeing one of four BCG divisions, which began to generate a significant share of the firm's revenues. There was talk in the air that Bain was Henderson's likely heir apparent. His mentor, however, was not as ready to retire as Bain was eager to succeed him. In 1972, Bain unsuccessfully attempted to pressure Henderson into stepping down. Moreover, Bain was increasingly frustrated with the BCG's project-oriented approach, which emphasized issuing reports over achieving results. His idea was to assemble a thorough overview of a company and its competition then develop and implement a strategy to improve profitability of the entire business.

In 1973, Bain informed Henderson that he and colleague Patrick Graham were leaving to launch their own business, a software company. This announcement came the day before Henderson was scheduled to fly to Spain for a meeting. While dining that first night in Madrid, according to a 1987 Fortune profile, he was tracked down "with an urgent call from his secretary. It seems the 'software company' was setting out to solicit BCG clients, although this is a point Bain disputes. Henderson caught the next flight back and frantically began rousting his consultants out of bed to get his firm's clients before Bain did. Recalls Henderson: 'It was war.' By the time the guns stopped firing, several week later, Bain and Graham had made off with seven of BCG's consultants and two of its biggest clients, Black & Decker and Texas Instruments."

At first, Bain & Company set up shop in Bill Bain's Beacon Hill apartment, sharing a single telephone line, but soon established new offices in Boston as the business quickly proved successful in its novel approach to consulting: working directly with CEO's, taking on just one client in a particular industry, and getting deeply immersed in a company in order to develop and implement its strategies. It also developed a mystique, becoming known as "the KGB of consulting," its partners opting not to carry business cards and referring to clients by code names. Because Bain worked intensively with a small roster of clients, partners felt no need to market their services (almost taking pride in the fact), relying instead on referrals from the boardrooms of the corporate world. In some cases, the firm landed new clients by offering several weeks of work at no cost until proving the worth of their services. Offering top salaries, the company recruited top business school graduates, generally from Harvard or Stanford, who shared similar traits to Bill Bain: trim and fastidious about their appearance, bright and calculating, and utterly devoted to destroying the competition of their clients. These young associates became known as "Bainies," a reference to the Moonie cult and a comment on their zealousness and loyalty to Bill Bain.

Early 1990s See Discontent With Partnership Deed

In 1979, Bain opened a London office to serve European customers as the firm grew at a rapid pace, with revenues increasing at a rate of 40 to 50 percent a year. By the early 1980s, however, cracks began to appear. Although a partnership, the company was very much controlled by Bill Bain. According to The New York Times, one former partner called the partnership deed "not a bill of rights, but the rights of Bill." According to Fortune, "the partners were partners by courtesy only. They did not have rights to a specific percentage of the firm's earnings; rather, Bain parceled out profits at the end of the year as he saw fit. Partners could not easily argue with the split because most of them were never told what the firm earned. The partnership agreement did, however, contain a noncompete clause." In the early 1980s, the company began to suffer significant turnover in personnel. The often abrasive and invasive style of some Bain consultants also resulted in what one associate called "transplant-reject syndrome" and led to the loss of some clients, such as Texas Instruments, Black & Decker, and Monsanto. Nevertheless, Bain continued to grow and between 1980 and 1986 tripled its staff to meet the demanded for its services.

Despite criticism, Bain achieved some notable successes in the early 1980s. When National Steel hired Bain in 1981, it was the highest-cost steel producer, but by 1984, after applying Bain's recommendations that it simultaneously downsize and modernize, it became the lowest-cost producer, the first in the industry to adopt new continuous-casting technologies. Another success was Chrysler Corporation, which hired Bain in 1983 after a free, four-month study of an electrical wiring system. The firm went on to help Chrysler cut the price of the Omni/Horizon by $1,400 by packaging options in a way that reduced manufacturing configurations while retaining 99 percent of the options that customers wanted. Although these successes were tangible, some questioned how much value Bain, or any consulting firm, actually provided its customers. All too often, according to conventional wisdom, consultants were brought in to write up a CEO's plan and be available to take the blame should it fail. To help aid its case that Bain added true value, the firm in 1983 created the "Bain Index" to measure the improved performance of clients' stocks against the Dow Jones industrial average. The goal of the firm was to increase values for its clients at a rate ten times its fees.

Rather than just rely on fees to provide growth, Bain began to look for direct investment in companies, which ultimately led to the acceptance of equity as part of its compensation, not only to more closely align its interest with the clients but also to reap the rewards of its successful strategies. In 1983, the firm acquired Salt Lake City-based Key Air Lines Inc., a local commuter carrier, and assigned several staff members to manage it. In 1984, it created Bain Capital, a limited partnership headed by W. Mitt Romney, son of politician George Romney, which invested in start-up companies and buyouts that could be readily improved. According to The New York Times, Bain Capital "has managed to steer clear of conflicts of interest by having Bain & Company retain veto power over investments. But it is not entirely a neutral operation." Nonetheless, Bain maintained that Bain Capital was not a sister company or a division but rather a completely separate company that simply shared a similar approach to producing results. The firm was, however, housed in the same building as Bain & Company and its employees shared the same cafeteria.

Bain Capital provided an investment opportunity for Bain partners who were becoming increasing disenchanted with the partnership agreement. In 1985, to help redress their longstanding grievances, Bain was incorporated, and over the course of the next two years Bill Bain and seven senior executives sold off 30 percent of their equity to two Employee Stock Ownership Plans (ESOP) for $200 million, the payout funded by debt that, because of the high valuation of the deals, saddled the firm with burdensome annual interest payments to the tune of $25 million. The price had been based on Bain's ability to maintain its strong growth, but the company soon endured a number of setbacks that prevented it from realizing those expectations. In 1987, the firm endured a public relations nightmare when it became entangled in a scandal involving one of its clients, Guinness plc, which had been one of Bain's notable success stories. The relationship began in 1981, at a time when Guinness shares were trading at penny stock levels after a decade of diversification efforts that took the company far from its core business. After selling off some 150 companies, Guinness' head, Ernest Saunders, then took Bain's advice and looked to move into the hard liquor market by acquiring two scot whiskey producers: Arthur Bell & Sons and Distillers Inc. By the end of fiscal 1986, Guinness and Bain were flying high, with the client posting profits of nearly $400 million, a six-fold increase since contracting Bain, while at the same time the company's stock reached a high of $5.75 per share. In December 1986, however, Britain's Department of Trade and Industry began to investigate the $3.8 billion stock acquisition of Distillers, masterminded by a "war cabinet" that included a Bain associate named Olivier Roux, who had been "lent" to Saunders and became one of his top aides. At issue were acts taken by Guinness to illegally inflate the price of its stock to fend off a competing offer from Argyll Group, including the charge that Guinness bought its own stock during the offering period and indemnified other companies against loss if they purchased stock on behalf of Guinness. In the end, Saunders went to jail for his part in the scheme, and although Bain escaped unscathed legally, the revelation of the company's conduct in the affair led several top clients to drop the firm or to at least cut back on their contracts. Hurt further by a sluggish economy, in addition to its high debt service, Bain was forced to cut its staff by 10 percent in 1988. According to Forbes, there was now considerable friction between Bain professionals: "Infighting became intense and the split between the graybeards and the young Turks grew as the younger partners worried their bonuses would get squeezed." To help revitalize the company's fortunes and make up for the defection of key rainmakers, Bain hired Peter Dawkins, a former U.S. Army general and Heisman Trophy winner for his college football exploits. Dawkins may have had impressive contacts in the corporate world, but he lacked experience in consulting and proved ill suited as the head of North American operations. Even more turmoil developed within the ranks of Bain, and many talented people opted to leave the company. In the fall of 1990, Bill Bain attempted to sell the company but found no buyer. Another 200 consultants were terminated, resulting in even more discontent from the younger partners. To bring peace to the situation, Mitt Romney was brought in to replace Bill Bain as the head the company. Moreover, the founding partners returned about $100 million to the firm by dissolving Bain Holdings, an investment fund that was partially funded by the ESOP. A recapitalization plan was also instituted by which the founding partners turned back the 70 percent stake in the company they held, so that the firm's 75 younger partners now owned 60 percent of the business and the ESOP the remaining 40 percent. Other than some stock in the ESOP, Bill Bain no longer owned any of the company that continued to bear his name.

New Leadership in 1993

Although Bain had ironed out its internal difficulties, it now faced the daunting task of convincing potential clients to contract its services when it had so clearly mismanaged its own affairs. A major step in the revitalization of Bain's fortunes came in 1993 when one of the younger partners, Orit Gadiesh, was named the new chairman, becoming the first female head of a major consulting firm. She had been a key player in preventing senior partners from abandoning the firm. Born in Israel, she earned a degree in psychology from Hebrew University, then spent two years in the Israeli army, serving in military intelligence, before earning a degree from the Harvard Business School, where she graduated in the top 5 percent of her class despite the handicap of simultaneously mastering English. When Romney left to pursue politics, Gadiesh continued the revitalization of Bain that he had initiated. Financially, the company regained lost ground, and it loosened its guidelines so that it could work for more than one company in a particular industry, thereby making the firm less dependent on a limited roster of clients. Bain also began to expand the number of offices it maintained around the world. Finally, in the summer of 2000, Bain opened an office in New York City in an effort to accommodate talented people who wanted to work for the firm but preferred to live in New York.

To meet a changing business environment and to keep pace with rival consulting firms that were tending towards specialization, Bain began to adjust the services it offered in the late 1990s and early years of the new century. It looked to the Internet in 1999, establishing bainlab to serve as an incubator to help entrepreneurs with Internet-based business plans. Later, bainlab began to work with venture capital firms to help them improve the value of the Internet and technology companies in their portfolios. One of bainlab's first initiatives was Ideaforest.com, an online seller of arts and crafts products and kits. Also in 2000, Bain launched BainNet in conjunction with several high-tech companies to help clients implement technology-driven strategies. In that same year, Bain founded The Bridge Group to aid non-profit corporations, as well as to provide a place where Bain associates could take time out, up to six months, to do volunteer work. As the economy began to struggle in the early years of the new century, Bain, like other management consultant firms, attempted to change its approach, offering such specific services as managing supply chains and engendering the loyalty effect in customers. Nevertheless, Bain remained dedicated to the generalist approach to strategy consulting.

Principal Divisions: Bainlab; BainNet.

Principal Competitors: Booz Allen Hamilton Inc.; The Boston Consulting Group; McKinsey & Company; BearingPoint Inc.
 
Bain & Company is a global management consulting firm headquartered in Boston, Massachusetts, with offices in 27 countries. Bain is considered one of the most prestigious management consulting firms in the world[1], and for eight consecutive years has been named the "Best Firm to Work For" by Consulting Magazine[


Boston-based Bain & Company is one of the world's leading corporate consulting companies, the pioneer in the concept that consultants should help implement strategies not just make recommendations. The Bain approach is often called relationship consulting, especially known for forging strong bonds with chief executive officers. For most of its history, the company has opted to take on a single client in a particular industry as a way of more fully aligning itself with the client's goals. More recently, Bain has begun accepting equity as part of its payment in order to again tie its own success to achieving tangible results for its clients. The partnership operates 27 offices around the world, employing some 2,800 people. Although Bain is primarily known for its work with Fortune 500 clients, it also consults with startups through its bainlab operation. More recently the firm has joined forces with several other companies to form BainNet in order to provide technology-based strategies. In addition, Bain has established a non-profit company, The Bridge Group, to assist other non-profits.

William Bain Turns to Consulting in 1960s

The founder of Bain & Company, William W. Bain, Jr., was born in Johnson City, Tennessee, the son of a food wholesaler. After earning a history degree in 1959 from Vanderbilt University, he went on to graduate school but soon took a position at a steel-fabricating company, where he not only helped to work up engineering studies but also made sales calls. Bain then returned to Vanderbilt to become director of development, raising funds from alumni at a salary of $19,000 a year. When Vanderbilt began to think about establishing a business school, he asked for advice from alumnus Bruce Henderson, founder of the Boston Consulting Group, BCG. Henderson was so impressed with Bain, despite his lack of basic business knowledge, that he offered him a job with BCG and only a few weeks later, in 1967, Bain relocated to Massachusetts. He quickly rose through the ranks of BCG, becoming known for his hard work, attention to detail, and physically fit appearance. Within two years, he commanded a six-figure salary and rose to the position of vice-president, overseeing one of four BCG divisions, which began to generate a significant share of the firm's revenues. There was talk in the air that Bain was Henderson's likely heir apparent. His mentor, however, was not as ready to retire as Bain was eager to succeed him. In 1972, Bain unsuccessfully attempted to pressure Henderson into stepping down. Moreover, Bain was increasingly frustrated with the BCG's project-oriented approach, which emphasized issuing reports over achieving results. His idea was to assemble a thorough overview of a company and its competition then develop and implement a strategy to improve profitability of the entire business.

In 1973, Bain informed Henderson that he and colleague Patrick Graham were leaving to launch their own business, a software company. This announcement came the day before Henderson was scheduled to fly to Spain for a meeting. While dining that first night in Madrid, according to a 1987 Fortune profile, he was tracked down "with an urgent call from his secretary. It seems the 'software company' was setting out to solicit BCG clients, although this is a point Bain disputes. Henderson caught the next flight back and frantically began rousting his consultants out of bed to get his firm's clients before Bain did. Recalls Henderson: 'It was war.' By the time the guns stopped firing, several week later, Bain and Graham had made off with seven of BCG's consultants and two of its biggest clients, Black & Decker and Texas Instruments."

At first, Bain & Company set up shop in Bill Bain's Beacon Hill apartment, sharing a single telephone line, but soon established new offices in Boston as the business quickly proved successful in its novel approach to consulting: working directly with CEO's, taking on just one client in a particular industry, and getting deeply immersed in a company in order to develop and implement its strategies. It also developed a mystique, becoming known as "the KGB of consulting," its partners opting not to carry business cards and referring to clients by code names. Because Bain worked intensively with a small roster of clients, partners felt no need to market their services (almost taking pride in the fact), relying instead on referrals from the boardrooms of the corporate world. In some cases, the firm landed new clients by offering several weeks of work at no cost until proving the worth of their services. Offering top salaries, the company recruited top business school graduates, generally from Harvard or Stanford, who shared similar traits to Bill Bain: trim and fastidious about their appearance, bright and calculating, and utterly devoted to destroying the competition of their clients. These young associates became known as "Bainies," a reference to the Moonie cult and a comment on their zealousness and loyalty to Bill Bain.

Early 1990s See Discontent With Partnership Deed

In 1979, Bain opened a London office to serve European customers as the firm grew at a rapid pace, with revenues increasing at a rate of 40 to 50 percent a year. By the early 1980s, however, cracks began to appear. Although a partnership, the company was very much controlled by Bill Bain. According to The New York Times, one former partner called the partnership deed "not a bill of rights, but the rights of Bill." According to Fortune, "the partners were partners by courtesy only. They did not have rights to a specific percentage of the firm's earnings; rather, Bain parceled out profits at the end of the year as he saw fit. Partners could not easily argue with the split because most of them were never told what the firm earned. The partnership agreement did, however, contain a noncompete clause." In the early 1980s, the company began to suffer significant turnover in personnel. The often abrasive and invasive style of some Bain consultants also resulted in what one associate called "transplant-reject syndrome" and led to the loss of some clients, such as Texas Instruments, Black & Decker, and Monsanto. Nevertheless, Bain continued to grow and between 1980 and 1986 tripled its staff to meet the demanded for its services.

Despite criticism, Bain achieved some notable successes in the early 1980s. When National Steel hired Bain in 1981, it was the highest-cost steel producer, but by 1984, after applying Bain's recommendations that it simultaneously downsize and modernize, it became the lowest-cost producer, the first in the industry to adopt new continuous-casting technologies. Another success was Chrysler Corporation, which hired Bain in 1983 after a free, four-month study of an electrical wiring system. The firm went on to help Chrysler cut the price of the Omni/Horizon by $1,400 by packaging options in a way that reduced manufacturing configurations while retaining 99 percent of the options that customers wanted. Although these successes were tangible, some questioned how much value Bain, or any consulting firm, actually provided its customers. All too often, according to conventional wisdom, consultants were brought in to write up a CEO's plan and be available to take the blame should it fail. To help aid its case that Bain added true value, the firm in 1983 created the "Bain Index" to measure the improved performance of clients' stocks against the Dow Jones industrial average. The goal of the firm was to increase values for its clients at a rate ten times its fees.

Rather than just rely on fees to provide growth, Bain began to look for direct investment in companies, which ultimately led to the acceptance of equity as part of its compensation, not only to more closely align its interest with the clients but also to reap the rewards of its successful strategies. In 1983, the firm acquired Salt Lake City-based Key Air Lines Inc., a local commuter carrier, and assigned several staff members to manage it. In 1984, it created Bain Capital, a limited partnership headed by W. Mitt Romney, son of politician George Romney, which invested in start-up companies and buyouts that could be readily improved. According to The New York Times, Bain Capital "has managed to steer clear of conflicts of interest by having Bain & Company retain veto power over investments. But it is not entirely a neutral operation." Nonetheless, Bain maintained that Bain Capital was not a sister company or a division but rather a completely separate company that simply shared a similar approach to producing results. The firm was, however, housed in the same building as Bain & Company and its employees shared the same cafeteria.

Bain Capital provided an investment opportunity for Bain partners who were becoming increasing disenchanted with the partnership agreement. In 1985, to help redress their longstanding grievances, Bain was incorporated, and over the course of the next two years Bill Bain and seven senior executives sold off 30 percent of their equity to two Employee Stock Ownership Plans (ESOP) for $200 million, the payout funded by debt that, because of the high valuation of the deals, saddled the firm with burdensome annual interest payments to the tune of $25 million. The price had been based on Bain's ability to maintain its strong growth, but the company soon endured a number of setbacks that prevented it from realizing those expectations. In 1987, the firm endured a public relations nightmare when it became entangled in a scandal involving one of its clients, Guinness plc, which had been one of Bain's notable success stories. The relationship began in 1981, at a time when Guinness shares were trading at penny stock levels after a decade of diversification efforts that took the company far from its core business. After selling off some 150 companies, Guinness' head, Ernest Saunders, then took Bain's advice and looked to move into the hard liquor market by acquiring two scot whiskey producers: Arthur Bell & Sons and Distillers Inc. By the end of fiscal 1986, Guinness and Bain were flying high, with the client posting profits of nearly $400 million, a six-fold increase since contracting Bain, while at the same time the company's stock reached a high of $5.75 per share. In December 1986, however, Britain's Department of Trade and Industry began to investigate the $3.8 billion stock acquisition of Distillers, masterminded by a "war cabinet" that included a Bain associate named Olivier Roux, who had been "lent" to Saunders and became one of his top aides. At issue were acts taken by Guinness to illegally inflate the price of its stock to fend off a competing offer from Argyll Group, including the charge that Guinness bought its own stock during the offering period and indemnified other companies against loss if they purchased stock on behalf of Guinness. In the end, Saunders went to jail for his part in the scheme, and although Bain escaped unscathed legally, the revelation of the company's conduct in the affair led several top clients to drop the firm or to at least cut back on their contracts. Hurt further by a sluggish economy, in addition to its high debt service, Bain was forced to cut its staff by 10 percent in 1988. According to Forbes, there was now considerable friction between Bain professionals: "Infighting became intense and the split between the graybeards and the young Turks grew as the younger partners worried their bonuses would get squeezed." To help revitalize the company's fortunes and make up for the defection of key rainmakers, Bain hired Peter Dawkins, a former U.S. Army general and Heisman Trophy winner for his college football exploits. Dawkins may have had impressive contacts in the corporate world, but he lacked experience in consulting and proved ill suited as the head of North American operations. Even more turmoil developed within the ranks of Bain, and many talented people opted to leave the company. In the fall of 1990, Bill Bain attempted to sell the company but found no buyer. Another 200 consultants were terminated, resulting in even more discontent from the younger partners. To bring peace to the situation, Mitt Romney was brought in to replace Bill Bain as the head the company. Moreover, the founding partners returned about $100 million to the firm by dissolving Bain Holdings, an investment fund that was partially funded by the ESOP. A recapitalization plan was also instituted by which the founding partners turned back the 70 percent stake in the company they held, so that the firm's 75 younger partners now owned 60 percent of the business and the ESOP the remaining 40 percent. Other than some stock in the ESOP, Bill Bain no longer owned any of the company that continued to bear his name.

New Leadership in 1993

Although Bain had ironed out its internal difficulties, it now faced the daunting task of convincing potential clients to contract its services when it had so clearly mismanaged its own affairs. A major step in the revitalization of Bain's fortunes came in 1993 when one of the younger partners, Orit Gadiesh, was named the new chairman, becoming the first female head of a major consulting firm. She had been a key player in preventing senior partners from abandoning the firm. Born in Israel, she earned a degree in psychology from Hebrew University, then spent two years in the Israeli army, serving in military intelligence, before earning a degree from the Harvard Business School, where she graduated in the top 5 percent of her class despite the handicap of simultaneously mastering English. When Romney left to pursue politics, Gadiesh continued the revitalization of Bain that he had initiated. Financially, the company regained lost ground, and it loosened its guidelines so that it could work for more than one company in a particular industry, thereby making the firm less dependent on a limited roster of clients. Bain also began to expand the number of offices it maintained around the world. Finally, in the summer of 2000, Bain opened an office in New York City in an effort to accommodate talented people who wanted to work for the firm but preferred to live in New York.

To meet a changing business environment and to keep pace with rival consulting firms that were tending towards specialization, Bain began to adjust the services it offered in the late 1990s and early years of the new century. It looked to the Internet in 1999, establishing bainlab to serve as an incubator to help entrepreneurs with Internet-based business plans. Later, bainlab began to work with venture capital firms to help them improve the value of the Internet and technology companies in their portfolios. One of bainlab's first initiatives was Ideaforest.com, an online seller of arts and crafts products and kits. Also in 2000, Bain launched BainNet in conjunction with several high-tech companies to help clients implement technology-driven strategies. In that same year, Bain founded The Bridge Group to aid non-profit corporations, as well as to provide a place where Bain associates could take time out, up to six months, to do volunteer work. As the economy began to struggle in the early years of the new century, Bain, like other management consultant firms, attempted to change its approach, offering such specific services as managing supply chains and engendering the loyalty effect in customers. Nevertheless, Bain remained dedicated to the generalist approach to strategy consulting.

Principal Divisions: Bainlab; BainNet.

Principal Competitors: Booz Allen Hamilton Inc.; The Boston Consulting Group; McKinsey & Company; BearingPoint Inc.

Hey anjali, thanks for your help and sharing the Customer Relationship Management report on Bain & Company. Well, i have also a document and uploading it where you would get more information on Bain & Company.
 

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