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jerryking : bain   30

Rethinking McKinsey - Schumpeter
Nov 21st 2019

Six years ago, Clayton Christensen of Harvard Business School warned that it was an industry “on the cusp of disruption”. Now that disruption is in full swing. According to Tom Rodenhauser of alm Intelligence, which analyses the industry, clients no longer just want to hire legions of people, however brainy they are. They want consultants to provide and install products, including new technologies, that transform them from top to bottom and keep disrupters at bay. Advice on strategy, which used to be meat and potatoes for firms like McKinsey and its peers, Bain and the Boston Consulting Group (bcg), is now a side dish; it accounts for about a tenth of revenues.

Mr Sneader could keep things ticking over as they are, at least for a while. Clients have shrugged off the media attention. McKinsey’s revenue has grown in recent years, to roughly $10bn. And the firm still attracts armies of aspiring candidates—last year 800,000 applied for 8,000 jobs. But he is making changes. McKinsey says it is “addressing the changing panorama both internally and externally”. Partly in response to the South Africa debacle, its standards and processes for selecting clients have been beefed up. Partners are discouraged from doing work for undemocratic governments.

McKinsey has also made advising on technology more integral to its business. It worked with 1,200 companies on digital and analytics issues last year. It creates and sells tools for companies to use in their businesses, which generates new sources of recurring revenues. And it has bought a dozen companies since 2011, including QuantumBlack, a British startup that developed advanced data analytics for Formula One. Nonetheless, industry-watchers say McKinsey is often outspent by the technology offerings of the Big Four, as well as by firms like Accenture.

Downsizing consultants
Mr Sneader should go further: that means getting leaner by ditching activities, clients and teams that bring in more headaches than cash, and investing in technology.
analytics  Bain  BCG  Clayton_Christensen  digital_strategies  disruption  Formula_One  management_consulting  McKinsey  scandals  strategy  tools 
12 weeks ago by jerryking
Robotaxis: can automakers catch up with Google in driverless cars?
January 31, 2019 | Financial Times | by Patrick McGee.

A new network of small tech companies could allow the car industry to compete with Waymo.

The automotive industry is among the most capital-intensive in the world: If the economy sours, assets turn into liabilities overnight as factories churning out thousands of cars begin to haemorrhage cash. So when toxic mortgage securities blew up in 2008, causing a recession, banks performed terribly — but carmakers fared even worse.

That is what makes auto consultants at Bain so worried. They fear that carmakers are about to be hit with a one-two punch: first, they project a US recession in the next 12 to 18 months. Then, increasing numbers of baby boomers will retire, causing a structural decline so big that, they warn, US car sales could shrink from more than 17m last year to just 11.5m by 2025 — the same level seen in 2008-09, which caused GM and Chrysler to go bankrupt and Ford to suffer a $14.6bn loss.....But there is hope. If carmakers play their cards right, they could be saved by what GM has called “the biggest business opportunity since the internet”. The potential saviour is the rise of shared, driverless “robotaxis”, which Bain expects to become mainstream in some large cities in six to eight years. This new market, virtually non-existent today, promises to be huge. ... Intel projects a “passenger economy” worth $7tn by 2050....Car brands typically earn $2,000 from a vehicle sale. That is just $0.01 per km over the lifetime of a vehicle, whereas for robotaxis “the potential is 20 to 25 cents per km”,...To realise this potential the industry will need to update its entire business model. The challenge for carmakers is to gain the expertise in self-driving algorithms, in-car entertainment, streaming services and fleet management for ride-hailing that will be central to this new era......Luckily, there has been an explosion of small companies developing the skills and technologies that carmakers can make use of. .......Waymo, the Alphabet self-driving unit that began as a Google project, is widely seen as the leader in this new has built a commanding lead since its founding in 2009. And with at least 600 of its vehicles driving more than 25,000 miles a day, it is perfecting its algorithms in a way that could blindside the competition. Last year UBS projected that Waymo “will dominate” the operating systems for autonomous vehicles, taking “60 per cent of the total projected revenue pool in 2030”.......The threat of Waymo is not that it will build better cars. It has no need to. Instead it is ordering vehicles from Chrysler and Jaguar — effectively turning them into suppliers — and then fitting them out with self-driving software and hardware built in-house. But its potential goes beyond superior self-driving capabilities. Once robotaxis are mainstream, Alphabet can collect data from Google Maps and Search, entertain with YouTube and the Play Store, offer advice through Google Home smart speakers and use its software knowhow to manage fleets. Aside from the vehicle itself, Waymo is a vertically-integrated “closed system”........Carmakers are responding by partnering up like never before and making big investments to acquire new expertise. Volkswagen has linked up with Ford, while arch-rivals BMW and Mercedes have pooled their mobility efforts. In 2016 GM paid $500m for a stake in Lyft, the ride-hailing group, and it spent more than $1bn to buy Cruise, a self-driving company.......These deals, however, are merely the tip of the iceberg. Beneath the car brands, an entire ecosystem of niche companies has spurred into existence. Known as the “data value chain”, these groups specialise in the software, sensors, data processing and navigation needed to make autonomous cars a reality. None has the willpower, resources or vision to take on Waymo. Instead, they are forming clusters, exercising “swarm intelligence” to independently work towards the same collective goal of creating a safe, driverless experience......The implications of this ecosystem are profound. It suggests the carmakers can catch the likes of Waymo up without being the best-in-class in the new technologies. They merely need to be competent enough to know who is best — and then partner with them.
Alphabet  automotive_industry  automobile  autonomous_vehicles  Bain  blindsided  capital-intensity  GM  Google  large_markets  partnerships  supply_chains  Waymo 
january 2019 by jerryking
The future of the Firm
September 21st 2013 | The Economist | Schumpeter.

Life is getting tougher for professional-services firms. Midsized consultancies are already suffering: Monitor Group went bankrupt last year—Deloitte later bought it for $120m—and Booz & Co and Roland Berger are agonising about their futures. If the legal profession is anything to go by, worse is to come: Dewey & LeBoeuf collapsed last year after borrowing heavily in a dash for growth, and other elite law firms are struggling to win business....Are McKinsey’s best days behind it? Two new publications offer some interesting answers. “The Firm”, by Duff McDonald, is a generally admiring book that nevertheless asks hard questions about the organisation’s future. “Consulting on the Cusp of Disruption”, by Clayton Christensen and two colleagues, is a penetrating article in the October Harvard Business Review, arguing that the comfortable world of the strategy consultancies is about to be turned upside down....Eden McCallum cuts costs by deploying freelancers, most of whom once worked for the big three. BeyondCore replaces overpriced junior analysts with Big Data, crunching vast amounts of information to identify trends.
McKinsey  capitalism  professional_service_firms  barbell_effect  HBR  Clayton_Christensen  books  BCG  Bain  alumni  management_consulting  mid-sized  law_firms  hard_questions 
november 2013 by jerryking
The strategy consultants in search of a strategy -
August 28, 2013 | FT | By John Gapper.
The strategy consultants in search of a strategy

Two decades ago, 70 per cent of McKinsey’s revenues were from strategy and corporate finance but most now flow from hands-on work on risk, operations and marketing.
management_consulting  strategy  professional_service_firms  McKinsey  BCG  Bain  Monitor  Deloitte  winner-take-all 
september 2013 by jerryking
Personal Data: The Emergence of a New Asset Class
January 2011 | An Initiative of the World Economic Forum
In Collaboration with Bain & Company, Inc
data  mydata  frameworks  privacy  Industrial_Internet  Bain  asset_classes 
july 2013 by jerryking
Gushers of Growth
December 8, 2003 | The Wall Street Journal Europe |By Chris Zook and Jimmy Allen
Chris_Zook  growth  Bain 
december 2012 by jerryking
Andy Kessler: The Incredible Bain Jobs Machine -
July 16, 2012,| WSJ | By ANDY KESSLER.
The Incredible Bain Jobs Machine
In a competitive economy, $5,000 computers become $500 tablets. Consumers get
Andy_Kessler  Bain  productivity  job_creation 
july 2012 by jerryking
The One Number You Need to Grow
December 2003 | HBR | by Frederick F. Reichheld, director emeritus of the consulting firm Bain & Company and a Bain Fellow. He is the author of Loyalty Rules! (Harvard Business
School Press, 2001) and “Lead for Loyalty” (HBR July–August 2001).
If growth is what you’re after, you won’t learn much from
complex measurements of customer satisfaction or retention.
You simply need to know what your customers tell their friends
about you.
growth  HBR  Bain  customer_loyalty  metrics  Fred_Reichheld 
july 2012 by jerryking
Romney’s Former Bain Partner Makes a Case for Inequality -
Published: May 1, 2012

“Unintended Consequences: Why Everything You’ve Been Told About the Economy Is Wrong,

Now we’re at a particularly crucial moment, he writes. Technology and global competition have made it more important than ever that the United States remain the world’s most productive, risk-taking, success-rewarding society. Obama, Conard says, is “going to dampen the incentives.” Even worse, Conard says, “he’s slowing the accumulation of equity” by fighting income inequality. Only with a pro-investment president, he says, can the American economy reach its full potential.
high_net_worth  Bain  inequality  Mitt_Romney  books  innovation  unintended_consequences  incentives  income_inequality  Occupy_Wall_Street 
may 2012 by jerryking
Lessons from Private-Equity Masters
June 2002 | Harvard Business Review| by Paul Rogers, Tom Holland, and Dan Haas.

The Four Disciplines of Top Private-Equity Firms

Define an Investment Thesis

Have a three- to five-year plan

Stress two or three key success levers

Focus on growth, not just cost reductions

Don’t Measure Too Much

Prune to essential metrics

Focus on cash and value, not earnings

Use the right performance measures for each business

Link incentives to unit performance

Work the Balance Sheet

Redeploy or eliminate unproductive capital—both fixed assets and working capital

Treat equity capital as scarce

Use debt to gain leverage and focus, but match risk with return

Make the Center the Shareholder

Focus on optimizing each business

Don’t hesitate to sell when the price is right

Act as unsentimental owners

Get involved in the hiring and firing decisions in portfolio companies

Appoint a senior person to be the contact between the corporate center and a business
HBR  Bain  lessons_learned  private_equity  metrics  investment_thesis  measurements  dispassion  incentives  constraints  leverage  focus  sweating_the_assets  unsentimental  debt  owners 
november 2011 by jerryking
The new masters of the universe - Bain & Company - Publications
July 27, 2005 | The Wall Street Journal | By Hugh MacArthur and Dan Haas.

Blueprint the path to value:
Hire hungry managers:
Measure what matters:
Make equity sweat:
private_equity  KKR  Bain  metrics  investment_thesis  measurements  value_creation  blueprints  what_really_matters 
november 2011 by jerryking
Writing a Credible Investment Thesis
11/15/2004 | HBS Working Knowledge | by David Harding and
Sam Rovit
Many companies are "terrifyingly unclear" to themselves and investors about why they are making an acquisition, according to the authors of a new book, Mastering the Merger. Support comes when you spell it out.

Tough truths, on the other hand, are things like when and where you invest and under what circumstances.
HBS  HBR  mergers_&_acquisitions  M&A  private_equity  investment_research  writing  themes  thesis  value_creation  value_propositions  investment_thesis  Bain  tough-mindedness 
december 2010 by jerryking
Seeking Start-Up Help? Give Bain a Virtual Pitch - DealBook Blog -
Seeking Start-Up Help? Give Bain a Virtual Pitch
July 14, 2010, 2:00 pm

From Susanna G. Kim, a DealBook colleague:
july 2010 by jerryking
"Outsmarting China's Start-Arounds"
07/07/06 | Far Eastern Economic Review | by Steve Ellis and
Orit Gadiesh. The best way for global firms to defend core markets,
then, is to focus on areas where Chinese firms still have a lot to
learn. (1) Most important, of course, is building customer loyalty. (2)
Second is innovation. (3) Third, multinationals need strategies for
developing talent that optimize diversity in skills and experience.
Bain  China  competitive_strategy  multinationals  weaknesses  customer_loyalty 
march 2010 by jerryking
Googling Growth -
APRIL 9, 2007 | Wall Street Journal | by CHRIS ZOOK. Rapid
shifts in markets and technologies are forcing companies of all sorts to
change direction faster than ever. Many management teams are tempted
by "big bang" solutions: dramatic, transformative mergers or aggressive
leaps into sexy new markets. The success rate for major, life-changing
mergers is only about one in 10. For most companies, reinvention of a
core business doesn't have to involve such high levels of risk. The
solution lies in mining hidden assets -- assets already possessed but
not being tapped for maximum growth potential.
One way to open management's eyes to hidden assets is to identify the
richest hunting grounds, usually camouflaged as hidden business
platforms, untapped customer insights, and underused capabilities.
accelerated_lifecycles  Apple  assets  Bain  big_bang  business_models  Chris_Zook  core_businesses  customer_insights  GE  growth  hidden  high-risk  iPODs  latent  life-changing  M&A  mergers_&_acquisitions  moonshots  Nestlé  Novozymes  rapid_change  reinvention  resource_management  Samsung  success_rates  transformational  underutilization 
february 2010 by jerryking
Seeking New Core Business? It Often Hides in Plain Sight
March 28, 2007 | HBR reprinted in the Wall Street Journal | by
Chis Zook. What happens when the core business goes rotten or offers no
more opportunities for growth? Some try to dig in and defend the
status quo, others buy a company in a hot new sector, while still others
transform themselves through a big merger. These tactics rarely work,
says Chris Zook, who leads Bain & Co.'s global-strategy practice.
Instead, according to the results of a study he led, the greatest
successes at corporate redefinition came from finding an alternative
core business that lay dormant somewhere in the company. In nearly all
25 cases studied, the successful shifts were guided by examining
existing customers' needs.
HBR  Chris_Zook  Bain  growth  core_businesses 
february 2010 by jerryking
Shoes, Handbags, Sunglasses, Accessories: The Changed State of Luxury
September 9, 2009 | WSJ. Magazine | By Lisa Bannon.
World-wide accessories sales, the engine driving the explosive growth of
the luxury-goods industry over the past decade, are projected to
decline 10 percent in 2009, according to Bain & Co., the first real
decline since Bain began tracking the sector in 1995. “Consumers have
lost 40 to 60 percent of their assets broadly in the U.S. Long-term,
they’ll start spending again, but not at the levels they spent before,”
luxury  accessories  economic_downturn  Bain  decline 
december 2009 by jerryking
Bain & Company chairman Orit Gadiesh on the importance of curiosity -
September 2009 | Harvard Business Review | by Daisy Wademan
Dowling who interviews Bain & Company chairman, Orit Gadiesh, on the
importance of curiosity. Always ask those two questions, and then the
third, and the fourth. Don’t ever stop being curious—and never let go
until you find the answers. "If you’re not asking questions, you’re not
doing your job."
Bain  women  HBR  curiosity  questions  second-order  follow-up_questions  Orit_Gadiesh  management_consulting 
august 2009 by jerryking The power of managing complexity
May 11, 2009 | Globe & Mail | by PIERRE M. LAVALLÉE.

Reducing process complexity should be a company's last step. It involves looking for process improvements that add the most value and by eliminating unnecessary data collection. One of the world's largest natural resources companies found that it had no fewer than 483 process improvement projects in the works – and that only 25 would deliver a significant impact. In combination with product and organizational simplifications, the company boosted operating income by more than 20 per cent. Meantime, the same company found it could reduce its volume of reports by 40 per cent in one major business unit.
complexity  economic_downturn  Bain  data  simplicity  information_overload  process_improvements  data_collection 
may 2009 by jerryking
Embracing Debt, Enhancing Value
Feb. 13, 2008 book review by Philip Delves Broughton of
"Lessons From Private Equity Any Company Can Use" by Orit Gadiesh and
Hugh MacArthur.
book_reviews  private_equity  lessons_learned  Philip_Delves_Broughton  Bain 
january 2009 by jerryking

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