Bain & Company

Company information

• Date founded: 1973
• Industry: Business services
• Corporate headquarters: Boston, Massachusetts
• Type: Private

Overview

Bain & Company is a privately held management consulting company headquartered in Boston, Massachusetts. Bain & Company was founded in 1973 at a time when the management consulting field was growing. Bain & Company is often cited as one of the “big three” management consulting firms along with Boston Consulting Group (BCG) and McKinsey & Company. Bain & Company offers advice to its clients, many of which are corporations, to help them increase profitably, manage growth, and outpace competitors. Bain & Company is also well known for implementing the suggestions they provide to their clients through internal work and corporate partnerships.

Bain & Company, along with other large management consulting firms, is seen as a powerful organization that has influenced huge corporations, large nongovernment organizations, and even world governments. Some of the Bain & Company’s work has been controversial, however, and the company has been implicated in unethical business practices in the past.

Bain & Company advises clients around the world in numerous industries. Some of the industries in which Bain & Company specializes include advanced manufacturing, aerospace and defense, aviation, chemicals, consumer products, financial services, media, mining, oil and gas, private equity, and technology. The company offers specialized guidance and consulting in various fields. Bain & Company is adept at improving customer service. Bain provides clients with data, and it helps implement processes to simplify and digitize customer service offerings.

Bain also offers what it calls “cost transformation services.” Bain & Company is well known for its focus on cost-cutting, and its consultants offer advice and implement plans to reduce expenses. The company also offers learning and development consulting through its Bain Academy solution, which provides customizable training and learning opportunities for clients.

Bain & Company also offers consulting about mergers and acquisitions (M&A). The company helps plan possible M&A, and they assist companies in completing their due diligence when planning for M&As. Bain also offers consulting for other business deals including spin-off companies, joint ventures, and alliances. Furthermore, the company advises clients about sales and marketing. The company uses proprietary tools to develop marketing plans and provide data about customer loyalty and other metrics. Bain & Company offers consulting in numerous other specialized fields including operations, procurement, and strategy.

History

William W. Bain Jr. joined the young management consulting firm Boston Consulting Group (BCG) soon after it started in the 1960s. BCG’s founder, Bruce Henderson, offered Bain a job at the firm, and Bain quickly rose through the company’s ranks. He became one of the most successful consultants at the firm, and in 1973 he decided he wanted to create a consulting firm of his own. Bain, along with a colleague named Patrick Graham told Henderson that they would be leaving to start their own company. Henderson left that evening for a business meeting in Spain, but he flew back to the United States after he heard that Bain’s new company had poached several BCG clients. This started a rivalry between Bain & Company and BCG.

Although Bain & Company had started years after other large firms, such as McKinsey & Company and BCG, it quickly became one of the leading firms in the field. It serviced large companies such as Texas Instruments and Black & Decker. Bain & Company became known for receiving business from word-of-mouth advertising, and it became well known for consulting directly with company CEOs. Bain & Company was extremely secretive about its work and its clients. In 1977, Bain hired Mitt Romney, who was working as a consultant at BCG at the time. Romney became an important figure at Bain & Company, and Bain himself mentored Romney. In 1984, Romney led Bain Capital, which became a spin-off company from Bain & Company. Bain Capital was also known for cost-cutting and a focus on profitability and shareholder value. The spin-off was also quickly successful.

Throughout the 1980s, Bain & Company increased the value of numerous businesses it consulted. An audit overseen by Fortune magazine in the mid-1980s indicated that Bain & Company’s corporate clients in the United States had roughly a 320 percent increase in value, compared to a 141 percent increase in value in the Dow Jones Industrial Average. Furthermore, Bain & Company touted individual success stories. For example, the company began to consult National Steel in 1981. The company went from having the highest production costs among American steel makers to having the lowest production cost. Although Bain & Company reduced the company’s costs, some National Steel executives claimed that Bain & Company had ruined National Steel. Between 1973 and 1986, Bain & Company’s revenue increased at an average of 50 percent each year.

By the early 1990s, however, Bain & Company had collected a great deal of debt, and it had to reorganize to stay in business. Romney became the CEO and replaced Bain, who remained the company’s chair. The company liquidated Bain Holdings, Inc., an investment fund that Bain & Company created in 1987 to help pay its debts. It also restructured its employees’ stock benefits. After the reorganization, Bain & Company continued to be a leading firm in the management consulting field.

In the 2000s and 2010s, Bain & Company introduced a number of new tools and systems that were meant to help it meet client needs. The company launched its Net Promoter System and Net Promoter Score in 2003. The system and score help organizations understand how their products and services impact consumers. In 2017, Bain & Company launched the Bain Alliance Ecosystem, which is a network of corporate partners that help Bain provide clients with particular services. The company also launched the Bain Advisor Network, which is made up of experts from numerous industries that help consult with specific issues or industries.

In the early 2020s, Bain & Company made a commitment to invest $1 billion in pro bono services for nonprofit groups and similar organizations. At the same time, the company had grown to have corporate offices in more than thirty-five countries. In 2021, the company reported having roughly 13,000 employees.

Impact

Bain & Company helped shape the field of management consulting, and it is known as one of the most important firms in the field. In the 1970s and 80s, the firm influenced the field by focusing on personal relationships, especially with CEOs and other executives. Bain consultants’ close ties with CEOs helped them get more business from word-of-mouth advertising.

Bain & Company was also known for being secretive. People who worked at Bain & Company became known as Bainies in part because they were often loyal to the company and to William Bain, while he was the company’s CEO. Bainies have the reputation of being focused almost entirely on increasing profitability and decreasing costs. Bainies also gained the reputation of all coming from privileged backgrounds, holding Ivy League degrees, dressing sharply, and having good manners.

Although Bain & Company is known for innovating management consulting, it is also known for being controversial. In the 1980s, Bain & Company faced controversy after one of its clients, Guinness, was investigated by the British Department of Trade. Bain & Company helped Guinness increase its profitability significantly by advising it to sell off some of its holdings and by advising it to diversify into hard liquor. Guinness purchased two distilleries, and the British Department of Trade investigated whether the company had inflated its stock prices so that the distilleries would make a deal with Guinness over a competing company. Although several individuals, including Guinness’s CEO, were implicated in wrongdoing, Bain & Company did not face any charges. In 2022, the UK Cabinet prohibited the company from obtaining any government contracts for three years because of findings of misconduct.

In the late 2010s and early 2020s, Bain & Company was a key figure in another scandal. In the early 2010s, Bain & Company was hired as a consulting firm to advise South Africa’s government in its restructuring of its tax agency. However, documents later revealed that Bain had conducted little research about the restructuring and made “recommendations” that seemingly benefitted then-leader Jacob Zuma and his allies. The leader of the tax agency then purged employees who were political opponents of Zuma’s. The lack of research and the seemingly biased recommendations made many believe that Bain & Company had been influenced by Zuma and his allies. Bain was accused of enabling corruption, and the company apologized and paid back fees it received for the work. Other management consulting firms, such as McKinsey & Company, were also implicated in the scandal. The South African National Treasury barred the company from acquiring contracts in the country for ten years as a result of the poor behavior.

Bibliography

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“Bain & Company.” Forbes, 23 Nov. 2021, www.forbes.com/companies/bain-and-company. Accessed 28 Apr. 2023.

“Consulting Services.” Bain & Company, 2022, www.bain.com/consulting-services. Accessed 28 Apr. 2023.

De Greef, Kimon. “Boston Firm Admits ‘Massive Failure’ in Plan to Aid South Africa Tax Agency.” The New York Times, 2 Sept. 2018, www.nytimes.com/2018/09/02/world/africa/south-africa-tax-agency-bain.html. Accessed 28 Apr. 2023.

Fabrikant, Geraldine. “Bain Names Chief Executive and Begins a Reorganization.” The New York Times, 30 Jan. 1991, www.nytimes.com/1991/01/30/business/business-people-bain-names-chief-executive-and-begins-a-reorganization.html. Accessed 28 Apr. 2023.

“Industries.” Bain & Company, 2022, www.bain.com/industry-expertise. Accessed 11 Mar. 2020.

Kao, Joanna S., Kaye Wiggins, and Joseph Cotterill. “Bain Under Fire for Enabling South Africa Corruption.” Financial Times, 17 Jan. 2022, www.ft.com/content/eceaec7d-34cd-43ad-96e1-a77f6809e40a. Accessed 28 Apr. 2023.

Kelly, Kate. “William Bain Jr., 80, Business Consultant and Romney Mentor, Dies.” The New York Times, 18 Jan. 2018, www.nytimes.com/2018/01/18/obituaries/william-bain-jr-business-consultant-and-romney-mentor-dies-at-80.html. Accessed 28 Apr. 2023

Perry, Nancy J., and Susan Caminiti. “Bain: A Consulting Firm Too Hot to Handle?” Fortune, 15 Jan. 2012, fortune.com/2012/01/15/bain-a-consulting-firm-too-hot-to-handle-fortune-1987. Accessed 28 Apr. 2023.