{"id":270,"date":"2015-11-28T19:36:33","date_gmt":"2015-11-29T00:36:33","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/bain-company-what-we-can-learn-about-operating-models-through-a-services-firm\/"},"modified":"2015-12-06T13:50:47","modified_gmt":"2015-12-06T18:50:47","slug":"bain-company-what-we-can-learn-about-operating-models-through-a-services-firm","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/bain-company-what-we-can-learn-about-operating-models-through-a-services-firm\/","title":{"rendered":"Bain &amp; Company: What we can learn about operating models through a services firm"},"content":{"rendered":"<p><a href=\"https:\/\/i4tsk12in2b2y7uts14c528g-wpengine.netdna-ssl.com\/wp-content\/uploads\/sites\/4\/2015\/11\/bain-true-north-logo.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-268\" src=\"https:\/\/i4tsk12in2b2y7uts14c528g-wpengine.netdna-ssl.com\/wp-content\/uploads\/sites\/4\/2015\/11\/bain-true-north-logo.png\" alt=\"bain-true-north-logo\" width=\"267\" height=\"30\" \/><\/a><\/p>\n<p>Bain &amp; Company is a leading strategy consulting firm servicing large and small companies, investors, and non-profits alike from across their 53 offices in 34 countries.\u00a0 Founded in 1973 Bain did some $2.2B in revenues in 2014 and employed over 5,500 people.<\/p>\n<p>For an intro to Bain see here: <a href=\"http:\/\/www.joinbain.com\/why-bain\/world-changing-impact\/default.asp\">http:\/\/www.joinbain.com\/why-bain\/world-changing-impact\/default.asp<\/a><\/p>\n<p><strong><u>Effective Operating model:<\/u><\/strong><\/p>\n<p>Put simply, Bain\u2019s business model is selling expertise, strategic thinking, process management, and human capital resources to the world\u2019s leading organizations.\u00a0 Bain continues to differentiate based on the quality of its human capital, relationship management, and its subject matter expertise.\u00a0 While simple on the surface there are a number of key operating model elements which align directly with, and support, this successful business model.<\/p>\n<p>To me, Bain\u2019s operating model is centered on three things: labor, intellectual property, and organizational structure\/incentives.\u00a0 While other factors such as capital allocation matter, they are not as important to the day to day success of the firm.<\/p>\n<p><em><u>Labor:<\/u><\/em><\/p>\n<p>A consulting firm is only as good as its people.\u00a0 While this is said in many organizations it is especially true in this industry where the product is more nebulous.\u00a0 The ways in which Bain addresses this need are:<\/p>\n<ul>\n<li><u>Sourcing-<\/u> Bain recruits at many top academic institutions globally and has established itself as a preferred employer. Bain also runs much of its recruiting centrally (amount to which this is true can vary by region).\u00a0 This ensures consistent approaches to assessing talent and funnels candidates through a few people who have a lot of say over hiring decisions.<\/li>\n<li><u>Training-<\/u> Bain trains all levels of its staff together globally. This comes at substantial cost but it accomplishes a few critical things.\u00a0 First and foremost it ensures similar approaches and training standards across offices and regions.\u00a0 It also helps support a consistent culture across offices as trainers help establish these ways early on.\u00a0 Finally, it builds long lasting relationships across offices which are then reinvested in annually through subsequent social and training events.<\/li>\n<li><u>Retention\/satisfaction-<\/u> Bain invests substantial amounts of resources in local, regional, and global events that are firm building. From drink nights to global soccer tournaments, these make it a fun organization to be a part of and a top place to work. Bain knows that keeping top employees is far cheaper than repeated hiring and leads to better results as employees are more experienced and engaged.<\/li>\n<\/ul>\n<p><em><u>Intellectual property:<\/u><\/em><\/p>\n<p>To support the development of IP Bain deploys several structural elements to its operating design.\u00a0 First, it follows a quasi-matrix structure in which it has regional areas of focus\/P&amp;L\u2019s but also practice area specializations.\u00a0 Practice areas support the development and capture of key concepts across cases and across geographies. On a day to day level Bain has systematized the capture of templates, analytic processes, and learnings into a central system.\u00a0 Doing so allows each subsequent case to benefit from non-confidential advances made by previous engagements focusing on a similar task.\u00a0 Finally, Bain has structured incentives of senior members to include contributions to this global information platform.\u00a0 This ensures this critical step is not overlooked for other more near term imperatives.<\/p>\n<p><em><u>Organizational structure &amp; incentives:<\/u><\/em><\/p>\n<p>Consulting firms make very clear tradeoffs in their organizational design.\u00a0 Three are most critical to Bain\u2019s success:<\/p>\n<ul>\n<li><u>Regional, generalist, model:<\/u> Bain staffs its cases largely by region vs. nationally or globally. Bain feels this is critical to its culture as it can reduce travel and ensures teams know each other well, and return to the same offices.\u00a0 Bain sacrifices some on utilization but believes the tradeoffs are worth it.\u00a0 The generalist approach is also not without flaws, but allows Bain to put its resources onto whatever assignments are the best fit for them and office needs.<\/li>\n<li><u>Group performance not \u201ceat what you kill\u201d:<\/u> Partners at Bain are not incentivized directly based on what they can bring in.\u00a0 As a result, compared to other firms, top performers may arguably be \u201cunderpaid.\u201d\u00a0 But Bain\u2019s leadership has chosen to optimize around cooperation and group productivity.\u00a0 At the end of the day this is only good if it leads to a better product for the client, and Bain believes it does, which creates a virtuous cycle supporting follow-on sales.<\/li>\n<li><u>Pyramid vs. diamond design:<\/u> Bain has more pre-MBA resources than do its peers.\u00a0 This goes back to the core principal that retaining talent is less costly and delivers a better product than hiring at more senior levels.<\/li>\n<\/ul>\n<p><strong><u>Conclusion- Why this has been sustainable?<\/u><\/strong><\/p>\n<p>There is no shortage of consultants in the world.\u00a0 And Bain continuously faces competition from direct competitors, smaller shops, and large multi-service firms alike.\u00a0 But the operating model it has chosen continues to support a profitable, high growth business model because of the virtuous cycle it has created around its people and product.\u00a0 Bain attracts a certain type of individual, trains and retains them, motivates\u00a0employees towards cooperation to deliver the top product, and sells and resells based on its reputation and performance.<\/p>\n<p><a href=\"https:\/\/i4tsk12in2b2y7uts14c528g-wpengine.netdna-ssl.com\/wp-content\/uploads\/sites\/4\/2015\/11\/stock-price-chart-2015.gif\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-269\" src=\"https:\/\/i4tsk12in2b2y7uts14c528g-wpengine.netdna-ssl.com\/wp-content\/uploads\/sites\/4\/2015\/11\/stock-price-chart-2015-300x163.gif\" alt=\"stock-price-chart-2015\" width=\"300\" height=\"163\" \/><\/a><\/p>\n<p><strong><u>Sources?<\/u><\/strong><\/p>\n<p><a href=\"http:\/\/www.bain.com\/about\/people-and-values\/our-team\/index.aspx\">http:\/\/www.bain.com\/about\/people-and-values\/our-team\/index.aspx<\/a><\/p>\n<p><a href=\"http:\/\/www.forbes.com\/companies\/bain-and-company\/\">http:\/\/www.forbes.com\/companies\/bain-and-company\/<\/a><\/p>\n<p><a href=\"https:\/\/www.glassdoor.com\/Best-Places-to-Work-LST_KQ0,19.htm\">https:\/\/www.glassdoor.com\/Best-Places-to-Work-LST_KQ0,19.htm<\/a><\/p>\n<p><a href=\"http:\/\/www.bain.com\/industry-expertise\/index.aspx\">http:\/\/www.bain.com\/industry-expertise\/index.aspx<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>We tend to think about operating models as they relate to fixed asset or repeatable process businesses.  But operating models are as important if not more with services firms, where your competitive advantage may walk out the door every day.  This post is not to say Bain has been, or will be, more successful than any of it&#039;s competitors.  Rather it looks to examine why their chosen combination of operating design principles appears to support a successful business model that works for them, and how the firm has created a virtuous cycle between its people, processes, and results.<\/p>\n","protected":false},"author":1106,"featured_media":0,"comment_status":"open","ping_status":"closed","template":"","categories":[],"class_list":["post-270","hck-submission","type-hck-submission","status-publish","hentry"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/the-tom-challenge-tom-winners-and-losers-assignment\/","yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Bain &amp; Company: What we can learn about operating models through a services firm - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/bain-company-what-we-can-learn-about-operating-models-through-a-services-firm\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Bain &amp; Company: What we can learn about operating models through a services firm - Technology and Operations Management\" \/>\n<meta property=\"og:description\" content=\"We tend to think about operating models as they relate to fixed asset or repeatable process businesses. But operating models are as important if not more with services firms, where your competitive advantage may walk out the door every day. This post is not to say Bain has been, or will be, more successful than any of it&#039;s competitors. 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