This week, we will focus on the second ‘B’ in the infamous ‘MBB’ acronym, which stands for McKinsey, Boston Consulting Group and Bain. We will delve into the history of Bain and Company in this first part, and focus on the specifics of their case interview in our second post.
Bain and Company: History
Bain and Company was founded in 1973 by Bill Bain, a former BCG vice-president. Instead of following up Bruce Henderson, the founder and president of BCG at the time, Bill Bain decided to form his own consulting firm, taking six other BCG consultants with him to form Bain & Co. It differentiated itself from BCG, McKinsey and other competitors in a few ways. For one, it decided to take on only one client per industry, using codenames instead of the real company names and forbidding consultants to walk around with client business cards, all to guarantee that no information could be leaked to competitors, at least not through Bain. Another innovation was its longer-term approach, in which Bain did not only deliver rapports, but also guided the implementation. This longer term approach is also seen in Bain’s policy of accepting stock in lieu of fixed fees. It is proud that its clients outperform the stock market by 1:4.
In 1984, Bill Bain asked Mitt Romney to found Bain Capital, a private equity firm with ex-Bain consultants but without any other connection to Bain & Co. It applied consulting techniques to the firms it invested in, often turning the business around. This method has now been copied by many investment firms, as it was very successful: Bain Capital started with only $37 million in assets, which has grown to over $ 66 billion today.
In the late 1980’s increased competition, economic downturn and overstaffing brought Bain & Company in a crisis. Next to these external factors, internal fights amongst its managers almost brought Bain & Co. to its knees. Mitt Romney was brought back from Bain Capital to bring the company back to shape, loosening its one-client-per-industry policy and re-establishing Bain’s financial health. This allowed the company to grow once again to it’s current size of over 5,500 employees.
To help charities and nonprofits allocate funds, the Bridgespan Group was incubated by Bain in early 2000. It applies (for-profit) consulting techniques to the complex world of not-for-profits to help these charities with their problems, ‘spanning the bridge’ between profit and non-profit.
Next week, we will delve into the specifics of the Bain case interview. Want to ace your interview with confidence? Check out my book and its features, including a free preview now!