Consulting in the right direction
From The Economist print edition | Oct 20th 2005 http://economsit.com/printedition/displaystory.cfm?story_id=5053524 Orit Gadiesh has led Bain & Company from near-bankruptcy to surprising success ANYONE who thinks that management consulting is an all-American affair run by men wielding Powerpoint presentations and sharp elbows should meet Orit Gadiesh. The soft-spoken executive chairman of Bain & Company, a consulting firm with its headquarters in Boston, Massachusetts, was born in Israel and served in the army there. Her father was an immigrant from Germany; her mother came from Russia. Today Ms Gadiesh lives mostly in Paris with her British husband and a sheepdog called Guzel (Turkish for "beautiful"). She radiates continental European chic, clinking with bold silver jewellery that offers a sort of travelogue of her peripatetic working life. The advice she gives to clientsand she has retained a portfolio of them throughout her time as the firm's bossis never parochial. She is as likely to tell a CEO to read "The Man Without Qualities", one of her favourite novels, set in Vienna in 1913 and written originally in German by Robert Musil, as she is to promote Jim Collins's "Good to Great", or some similarly popular American business book. She reads widelyfiction, history and biography in particular"to stay connected and see the dots out there," she says. "When I want a break I pick up a good book; I don't have to spend two hours getting to a golf course." Advertisement Along the way Ms Gadiesh acquired an MBA from Harvard Business School. Although she spoke hardly a word of English when she first arrived on campus, she ended up among the top 5% of her year. Then she joined Bain, a firm founded in 1973 by a bunch of defectors from the Boston Consulting Group. Led by Bill Bain, the group wanted to set up a strategy-consulting firm that would not just give its clients a thick report on what they needed to do and then depart. They wanted to be involved in implementing their own recommendations, and to be judged by the results. This idea was revolutionary at the time, and it remains a core principle of the business today. "Bainies", as the firm's employees are known, are rewarded partly in line with the performance of the firms that they work for, and they have done well out of it. In Bain's corporate brochure is an audited chart showing the striking extent to which its clients' shares have outperformed the S&P 500 index in the past few years. This has been reflected in the firm's own results. Although it is a private company and does not publish figures, the industry acknowledges that it is currently one of the most successful firms in the business, with consistent double-digit growth in both profits and revenue. It has established itself as the leading adviser to the private-equity industry, and has ridden on the back of that booming business. Its traditional way of working is well suited to private-equity firms. They tend to be manned by dealmakers, not managersand so turn to Bain for a strategy to turn around the businesses that they buy. They then look to the firm to implement the strategy and produce a swift improvement in performance that will enable them to sell on the business at a handsome profit. It is the epitome of results-driven consulting. Yet it was not so long ago that, as Ms Gadiesh acknowledges, Bain was close to bankruptcy. In the mid-1980s, the founders sold out in a deal that left the firm with a huge debt to service. Within a few years it had brought Bain to its knees. Ms Gadiesh, a psychologist by training, was given the job of mediating between the company and its founders, to persuade the latter to make concessions that would enable their creation to continue. She succeeded, but the morale of the firm was badly damaged. Some consultants were laid off; others were lured elsewhere. Out of this crisis Ms Gadiesh emerged as a leader. At one crucial stage she gave a carefully considered speech with "no numbers" to the hard-nosed employees of a firm which stresses continually that it is "data-driven". She talked about turning round the firm's "collective pride" and, using the metaphor of magnetic north (which shifts around every year) and true north (which is fixed), argued that it should not be swayed from its founding principles. She received a thunderous ovation. "Everybody walked away completely in awe," said one witness. Soon after (in July 1993), Ms Gadiesh was appointed chairman of Bain, the only woman ever to have led a big consulting firm. "Gender has never been an issue for me," she says, though "it has been an issue for other people." Aiming straight The true-north idea was inspired partly by Ms Gadiesh's husbanda keen sailor who has rounded Cape Horn single-handedand it has since become embedded in the firm's culture. Bain's logo is a compass pointing a few degrees to the right of vertical, and Bainies use the phrase all the time. In the firm's Paris office there is a printed notice above the men's loo: "Veuillez viser juste, s'il vous plait. Le 'True North' c'est droit devant." ("Please aim straight. 'True North' is directly in front of you.") David Maister, an adviser to professional service firms and once a Harvard Business School academic, wrote recently that "the most successful organisations have an ideology. There is a McKinsey way, a Goldman Sachs approach and a Bain philosophy, to take only three examples of firms with strong ideologies and the financial success to match." That is exalted company for a down-to-earth philosophy that has as one of its principles what Ms Gadiesh calls the "80/100 rule": the most brilliant solution to a business problem is useless if it cannot be implemented, so look for the 80% perfect answer that can actually make a difference to a client's results. Sticking to its principles has served Bain well. But it is not a risk-free strategy. The firm was late to set up a specialist IT unit because (in principle) Bainies are generalists. And it has a low profile in the fast-growing public-sector consulting business, partly because its fee structure is inflexible. Head true north too blindly and you might eventually hit an iceberg. ------------------------ Yahoo! Groups Sponsor --------------------~--> Get fast access to your favorite Yahoo! Groups. Make Yahoo! your home page http://us.click.yahoo.com/dpRU5A/wUILAA/yQLSAA/uTGrlB/TM --------------------------------------------------------------------~-> -- This is ZESTGlobal. Post articles on international affairs to [email protected] If you got this mail as a forward, subscribe to ZESTGlobal by sending a blank mail to [EMAIL PROTECTED] OR, if you have a Yahoo! ID, by visiting http://groups.yahoo.com/group/ZESTGlobal/join/ Yahoo! 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