My first Bain project with real responsibility: My life as a management consulting star and partner
Terence was a consulting partner at 2 leading international management consulting firms. He has worked on engagements in the USA, UK, Brazil, Turkey, Russia, France, Mexico, South Africa, Dubai and Canada. He rose rapidly through the ranks and made partner in a very short time frame. He has graciously agreed to write a limited series of posts about his journey from Pepsi into management consulting and his life as a consultant. This is his story and his fourth post.
In his first post, he discussed his move from Pepsi to Bain & Company. His second post discussed his early years at Bain & Company. His third post discussed his first client-facing engagement as an analyst at an airline client. His fourth post examined his role in developing the business case on an IT strategy project for an airline company. His fifth post examined turning around a struggling Eastern European airline in preparation for an IPO. His sixth post reviewed a project to create a new low-cost airline. His seventh post looked at Bain benchmarking techniques. His subsequent posts, approximately 15 additional chapters have been converted into a 287 book which completes the arc of his career started in these articles.
I felt lucky and relieved to have survived the scare of my last engagement. The relief did not last very long. I had to very quickly show that I deserved to be at Bain. With the engagement manager having left, I felt there was greater attention on my performance. Would I be able to rise to the occasion and prove that this was a personal issue or was there something really wrong with my performance? I also felt a personal obligation to not disappoint the partners who had stood up for me. I did not have long to wait for the opportunity to prove myself.
Just one week after my performance review, I was assigned to another aviation project. As you will see over time, the aviation sector and strategy became my area of specialization. Bain had been appointed to develop an IT strategy for one of the largest air carriers in the continental USA. I was assigned to lead an important piece of work. The firm wanted to test me and asked me to be the analyst leading the business case under the support of a senior consultant. It was going to be tough for me. I had no real finance or accounting background other than my 3 week MBA training at the Bain University.
Although I was assigned to work with a senior consultant, the partner made it clear that I would need to drive the business case. The senior consultant would oversee my work and provide input as needed. They would not be responsible for delivery. I would need to own this piece of work. To be honest I was scared. While I appreciated the opportunity to lead something this big, I was not sure I could do it, and frankly surprised the engagement manager would place such trust in me. My peers on the engagement did not help matters. The team assigned to this project was a stellar team. All were high-flyers within the ranks of Bain and were regularly cited for their outstanding team work, delivery excellence and exceptional client work. Bain awards outstanding consultants with vacations away to some exotic locale all expenses paid and they are allowed to take their families. Each of the guys on the team had won a vacation for the last 3 years running. The team consisted of 5 consultants including the partner leading the study.
I really appreciated the way the engagement manager approached this study. That is the reason I decided to bite the bullet and plunge into this project. We sat down and had a long discussion about what he wanted from the business case. He was very hands-off; which I found surprising. He spoke about the principles of the Bain philosophy. I could see this guy led teams by bringing in smart people, inspiring them and allowing them to work. He mentioned he asked for me to be on the project because he heard I had spoken up for the clients benefit on my last project. He admired that and wanted a similar style on this study. I clearly remember the 6 principles he had for the engagement:
- Take charge and dazzle the client, project team and Bain.
- Titles mean nothing. As far as he is concerned, I am the point man on the business case.
- A policy of no surprises.
- He would provide air-cover as needed and I just needed to ask for help.
- Follow the Bain approach but be creative.
- Have fun and work as a team.
Having this conversation really helped me. Not only did he inspire me to give my best, but he kept his word. At no point on the project was I treated like a junior member of the team. I was treated like a really senior and established Bain consultant. I remember sitting in the planning meetings and the engagement manager would deflect all finance questions to me. He made a point of ensuring that no one, not even the engagement partner, approach the Finance Director unless I was involved and it was part of my plan for the study. This gave me a tremendous boost in confidence. Now I just needed to deliver behind that.
What the hell do I do? Business cases can mean so many things. I spoke to the Bain business case experts and everyone had different ideas. In one project a business case meant working out the return-on-equity and in another it meant finding the increase in profitability. In another it meant calculating the reduction in labor. So for the first week, I worked with the engagement manager, partner and rest of the team to see where they were taking the study. I decided that if each business case is unique, then the business case must serve the needs of the project. Therefore I could only plan the business case once the needs of the project where clear. That sounded logical to me.
As I worked with the other team members to develop their plans, I developed a framework for my analyses. In hindsight, the framework is so obvious and logical, but at the time, I was pulling my hair out. It helps to arrive at the framework by yourself since you can then understand why it was developed in the format chosen. The engagement manager would calmly listen to me and make polite suggestions and it was up to me to make the final decision. With power comes great responsibility – or so they say.
So my analyses approach was simple:
- Step 1 – conduct a 2 week review of the IT department’s finances. Basically I was recreating their income statement, which they did not have and creating an easier to understand capital investment overview. Something which they again did not have.
- Step 2 – Determine if their total expenditure was appropriate.
- Step 3 – Determine if investments were made in the appropriate parts of the business.
- Step 4 – Determine what they could do to improve.
- Step 5 – Determine the business case for the recommended strategy.
I ran this by the engagement manager and partner and everyone was just happy. They thought it was easy to follow, exactly what was needed and just a question of finding the information and drawing the insights.
I already knew that the engagement partner would be on my case to prepare my storyboard. So I spent the first week doing the following:
- Summarizing the key questions and hypotheses I needed to answer.
- Building a decision tree to ensure I was not excluding anything important.
- Developing my analyses and data collection templates.
Once this was done, I used them to guide my storyboard. I must say that developing my first storyboard was a painful concept. It is such a foreign concept when done, by yourself, for the first time. Although I had practiced this in the office when I worked in the research team, I had taken for granted the important prompts and pointers provided by the partners. This really was useful to nudge me in the right direction. I would just have to work without them. I reworked my storyboard every single night and discussed it with the manager the next morning. Each morning he sent me back with the following kinds of comments:
- Do we need to tell clients we did this?
- What is this data telling us? Are you sure?
- What does it mean if they do not adhere to global best practice?
- What is the most important finding you expect? Why is it not in the story?
- Why is your story so long?
- Did you know Winston Churchill demanded his war cabinet provide feedback using one single-sided typed page with double spacing? Why are your storyboard 80 pages? Is the news eighty times as catastrophic as World War II?
He was never flippant or arrogant. He just asked interesting questions in a nice way. It forced me to think this through over and over. I used to literally spend hours talking to employees and helping the other consultants all the while stressing that I had not started my data collection and analyses. The engagement manager did not seem worried. He wanted me to first develop my storyboard.
By the end of week 2 I was still not sure what my final storyboard would be; this after 7 iterations. Unfortunately for me, the next day the entire project team was having a meeting and we each needed to present back our storyboard. We were scheduled to have the meeting from 9am to 11am. My tactic was to stall and hope to buy time to gather my thoughts over the weekend and hopefully Monday. The project partner rarely came in on Monday to Wednesday, so if I could survive Friday I would have about 5 days to spare.
I did quite well on Friday. Stalling that is. When the partner came in Friday morning, I strongly suggested he have some pastry from the new Dean & Deluca boutique on the ground floor. That killed about 25 minutes since I was extremely polite to allow every woman to pay before me. We spent another 10 minutes on pleasantries upstairs before getting into the detail. It was an intellectually tough session. The storyboards are dissected and analyzed. The partner checks for logic in thinking, robustness of the analyses and so on. It was interesting to watch. I also kept asking questions to stall. At 10:55am, the partner checked his watch and mentioned he was running out of time. The rest of the team got up to leave since they had 11am meetings. The partner motioned for me to stay and quickly brief him. He wanted me to give him the basic message from my storyboard. Damn! I thought I had escaped.
I basically sucked in a deep breath and told him what I thought the analyses would show. I just went with what I think the data was telling me and its implications:
- About 75% of the IT budget is locked into legacy contracts decided at corporate level and over which the IT department as no control.
- The legacy contracts are never reviewed and likely not meeting performance criteria.
- The planned budget cuts could only be taken on the capital projects side, where passenger and ticketing IT upgrades would be made. This would directly impact sales and customer satisfaction.
- Despite popular opinion, Pacific Air is not spending more than peers, although its pattern of spend does not make sense. It is spend too little on core systems (ticketing) and wants to cut them even more.
- It is the only airline in its peer group having such a large percentage of its IT budget tied to internal systems versus customer supporting systems.
- The IT department could invest in the customer systems without requiring a budget increase. They would be able to tighten internal IT costs and shift the savings to the customer facing systems.
I waited for the expected criticism. It never came. The partner said that was a “brilliant” storyline and he looked forward to seeing the analyses.
The insight which indicates you understand management consulting
That taught me a very, very important lesson. Sure, consulting firms have many phenomenal tools to construct decision trees, hypotheses and hundreds of guides to work out costing and rates of return. However, those tools only breakdown the problem. They do not put the pieces together to present the answer. That takes intuition, creativity, experience and guts. That was a fundamental lesson in this project which I believe set me up for great success as a management consultant. I realized all the tools exist to break down problems into neat parts for comparison. The truly outstanding consultants understand this and develop a knack for looking at the pieces and trying to fit them together to present a new picture. That’s a very important lesson that I hope to convey in this piece. Great associates and engagement managers can use formidable analyses to break down problems. Those who can reassemble them into the solution become partners. It’s that simple.
Much later I realized that Henry Mintzberg and Kenichi Ohmae (McKinsey) both outlined this understanding as a critical skill for management consultants. Mintzberg said that not everyone can be a management consultant. Bringing the right combination of intuition, creativity, experience and guts to a problem is something that cannot be taught and not everyone has it. Therefore not everyone can be a management consultant. Ohmae arrived at the same conclusion in his book “The Mind of a Strategist” but explained it differently. He said that engineers are linear problem solvers and are excellent at breaking down problems. However, this skill at breaking down problems is a major disadvantage when combining the pieces to develop the solution. Linear thinking does not work. In other words, all management consultants must have the skills of engineering thinking, but having these skills is by itself not enough.
In hindsight I cannot think why anyone would ever solve problems by scurrying of to analyze every piece of data. It is such a waste of time. The deductive approach of solving problem with decision trees and hypotheses is so powerful, it really boggles the mind. Once you make that shift to understanding and using the process, you become a powerful and efficient thinker.
You can imagine your career consisting of two parts:
- Part 1 – Learning to correctly break down problems and analyse them.
- Part 2 – Assembling the pieces to develop the solution and recommendation.
- Part 3 – Implementing the solutions and becoming an operator.
Analysts, interns, consultants, senior consultants, manager, case leaders, engagement managers (different terms for different firms) all are in phase 1. It’s that simple. They are still learning to break down problems. An analyst is helping to break down a problem, an associate is breaking down a problem and an engagement manager is overseeing many people as they break down a problem.
Phase 2 is much tougher and very few consultants make the transition. Until consultants get to the associate principal, partner, senior partner, director or managing director level, they are not crafting solutions. They are just preparing the pieces which the more skilled thinkers will use to craft the final solution. Many consultants managed out of Bain, and McKinsey and the Boston Consulting Group, never understand this point. They leave as associates or engagement managers and think they know how to develop solutions. Unfortunately they have not learnt the skills needed. They only have half of the skill set required. Do not get me wrong, the skills they have are still important, but not enough.
Phase 3 will be discussed much later. The bottom line is that you cannot be an operator in a management consulting firm. You need to transition to a corporate role, run a P&L with resources and fight the daily battle to succeed in the market.
It would be nice to say that I worked brutal hours every day. That fits into the stereotype for management consultants. I did not. Using the storyboard to structure my analyses and data collection made the project ridiculously easy. I should not say that, but it is true. If you follow the Bain approach to break down problems and follow the guidelines to develop the analyses, you cannot go wrong. Yes – you need to constantly think about what you are doing, communicate and incorporate information. If you do this, you will succeed.
Always learn the process for solving problems. Really understand them and use them. Then sit with the data and think about what it is saying. Think long and deep about it.
Despite being the junior person on this team, I can safely say that the business case did dazzle the client. Most of the hypotheses were proven. The client did manage to make huge investments in the customer facing side of the business, with only a 5% increase to the IT budget. Rather surprisingly, the client retained us for much more work. I was also surprised when people at the office started referring to me as an aviation and business case specialist. Yet that is the power of the management consulting approach. It works. My star was rising.