Boston Consulting Group, Inc. (BCG)

Company information

• Date founded: 1963
• Industry: Business services; industrial services
• Corporate headquarters: Boston, Massachusetts
• Type: Private

Overview

The Boston Consulting Group, Inc. (BCG) is a publicly held business consulting company headquartered in the United States. BCG provides management consulting services to other companies to help them improve their operations and performance. When it was founded in the 1960s, BCG helped develop the field of management consulting, eventually becoming an industry leader. Management principles that were developed at BCG, such as its growth share matrix, have become commonly used management tools. The company is also known as one of the “big three” management consulting companies because of its size and popularity.

BCG offers consulting services in a broad range of industries including aerospace and defense, consumer products, education, financial services, medical devices and technology, oil and gas, private equity, retail, technology, media, and transportation and logistics. The company’s clients include mostly corporations, but they also include nonprofits, nongovernmental organizations, and members of governments.

BCG offers consulting that is meant to help businesses or other organizations grow, increase profitability, and better compete in their respective industries. Some of the consulting the company offers is in specific areas, such as business transformation, business purpose, finance strategy, customer insight, marketing and sales, and pricing and revenue management. BCG also offers consulting related to data science and IT architecture. BCG also collects data and conducts studies in numerous sectors so that it can provide its clients with trends and information that they can use in their strategic planning.

Since its inception, the company has formed numerous corporate partnerships, including with Amazon Cloud Services, Microsoft, and Meta (Facebook’s parent company), that it uses to provide further consulting services. BCG also partners with organizations, such as the World Economic Forum and the Gates Foundation, to create social and economic change. Although BCG is headquartered in the United States, it has corporate offices and clients in countries throughout the world.

History

A business executive named Bruce D. Henderson founded the Boston Consulting Group (BCG) in 1963 to advise the corporate clients of the Boston Safe Deposit and Trust Company, a bank. In the beginning, Henderson ran BCG as a one-person operation but soon saw an opportunity for growth and the possibility of broadening the company’s consulting services. In 1964, Henderson developed the Perspectives publication, which was a brief brochure-like document that he gave to clients. At first, the publication reprinted business strategies from other sources and offered the information to clients in an easy-to-read format. Over time, however, Henderson began creating original content for Perspectives. Henderson’s essays focused on business strategy and recommended tools for businesses to use to improve their growth and profitability. The publication remained an important part of the company’s identity for years, and some of the concepts introduced in Perspectives became popular management tools.

Because BCG’s model of management consulting was novel in the 1960s and its services became popular, the company quickly grew, becoming an international company by the end of the 1960s. BCG helped develop business concepts, such as long-term and strategic planning, that were still relatively new in the corporate world. BCG opened offices around the world, and the company became independent in 1974. Henderson remained the chair and CEO of BCG until his retirement in the 1980s.

The management consulting company continued to grow dramatically in the 1980s and 1990s. Changes in technology, transportation, and society transformed numerous industries, including management consulting, at the end of the twentieth century. By the mid-1990s, BCG had more than one thousand employees. At the same time, BCG and other consulting firms also had a major influence on corporations and business culture in the United States and around the world. For example, BCG and other consulting firms advised corporate clients around this time to remove low- and mid-level manager positions, as the consulting firms saw these positions as expendable. The firms advised their corporate clients to remove the positions to save money and make them “leaner.” Such reductions became commonplace throughout the US corporate world.

The company began to create numerous specialty subsidiaries in the 1990s and continued to do so into the 2000s. For example, BCG Digital Ventures, founded in 2014, supports clients in developing and launching digital products and platforms. BCG BrightHouse, founded in 2015 after BCG acquired the BrightHouse consulting firm, focuses on helping businesses identify their purpose. BCG GAMMA, founded in 2016, is a specialty group that uses data science and analytics to advise clients. BCG TURN is also a specialty group that focuses specifically on business turnaround or helping to save businesses that are in danger of failing. Expand, which is a BCG subsidiary company, was founded in 2001 and offers consulting to financial firms. Inverto, another BCG subsidiary, specializes in supply-chain logistics.

By 2023, BCG operated companies in more than fifty countries with more than 30,000 employees, of which 46 percent were women. With $11.7 billion in sales, 2022 was a year of financial growth for the company and a year of advancement in environmental sustainability.

Impact

BCG has remained an industry leader in management consulting throughout its history, in part because it helped to pioneer the industry in the 1960s. BCG is known as one of the “big three” management consulting firms because of its influence in the field. When he started to grow BCG, Henderson had a clear vision for the company’s future and believed that it could help shape the management tools and practices that many companies used.

BCG arguably achieved Henderson’s goal in part through the development of numerous important management tools. BCG developed a famous management tool called the BCG growth share matrix. The matrix, which Henderson published in one of the Perspectives brochures in the 1960s, helps companies conduct strategic planning and improve profitability. BCG used the matrix for the first time in the 1960s when Mead Paper hired BCG to consult on strategic planning. Mead Paper had six product groups and numerous divisions, and the company wanted to determine which should receive the most resources. BCG used the matrix to help Mead Paper develop a strategic plan. The matrix helps companies to determine the value of various holdings, which can help the companies decide whether to keep, sell, or invest in each sector. The growth share matrix categorizes holdings as dogs/pets (low share, growth), cash cows (low growth, high share), stars (high growth, high share), and question marks (high growth, low share). The BCG growth share matrix became extremely popular and was used by many Fortune 500 companies in the late 1970s and 1980s. As of 2022, the matrix was still used by companies to develop strategic plans.

Another important concept developed at BCG is time-based competition. This concept was also introduced through the Perspectives publication. Time-based competition promotes the idea that effective time management is one of the most important advantages that companies can use to outperform their competitors. Time-based competition is different from time management because it uses time as the basis for a company’s strategic planning. For example, a company that plans to get its products to market sooner than its competitors and produce its product more quickly than its competitors is using time-based competition.

BCG has also been a target of criticism for some of its work. BCG, like other huge management consulting firms, offers to help its clients—including corporations, governments, and other groups—reach their goals. Evaluations by management consultants can sometimes cause companies to downsize their workforces, improving the company’s profitability but costing former employees their jobs. BCG and other management consulting firms have been accused of negatively impacting workers and the middle class because of their focus on increasing profitability and creating value for company shareholders.

BCG and other management consulting firms have also been accused of helping governments and other groups engage in corruption. For example, in the early 2020s banking documents showed that BCG and other management consulting firms made tens of millions of dollars while attempting to restructure Angola’s state-owned oil company, which was known for its corruption. BCG received huge payments while helping the oil company’s CEO, who was also the daughter of Angola’s president, retain power. Around the same time, BCG was condemned for accepting a contract with the government of Saudi Arabia to help determine the country’s ability to host the World Cup. Saudi Arabia’s government had been accused of numerous human rights violations, including being implicated in the 2018 murder of Saudi journalist Jamal Khashoggi, and BCG was criticized for accepting their business.

Bibliography

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“What Is the Growth Share Matrix?” Boston Consulting Group, www.bcg.com/en-us/about/overview/our-history/growth-share-matrix. Accessed 28 Apr. 2023.

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