THOSE WHO CAN'T,CONSULTby David Owen

Why do experienced executives pay millions for theadvice of young punks who've never run anything?

My article-writing consul-tant advised me to be-gin this essay with anattention-grabbing joke.

I can think of two: 1) a consultantis someone who borrows your watchto tell you the time; 2) a consultantis someone who knows a hundredways to make love but doesn't knowany girls.

Nowadays you can hire a consul-tant to tell you whether or not youought to hire a consultant. Or, ifyou already have a consultant, youcan hire another one to tell youwhat to do with the first. For fiveyears now more top business schoolgraduates have gone into consultingthan into any other field. Masters

David Owen is a New York writer andthe author 0/ High School: UndercoverWith the Class of 1980, published byViking.

Photograph: Bain & Company's Boston offices.

of Business Administration who ac-tually go to work administeringbusinesses are looked down on asbeing a touch, well, proletarian.

The main problem with the Amer-ican economy may be an excess ofadvice. It almost goes without say-ing that there are relatively fewmanagement consultants in Japan,and that one of the biggest foreignmarkets for American consultingfirms is Great Britain. But of course,it isn't as simple as it sounds.

On the other hand, if you spendtime talking to management consul-tants, you notice that the sentence"It isn't as simple as it sounds"crops up often in their speech. Per-mit yourself a giggle while a con-sultant is describing his job and hewill quickly add, "But of course, itisn't as simple as it sounds." Talksome more, and you may begin to

! '

wonder.Management consultants are peo-

ple hired, at enormous expense, totell executive's how to run theircompanies. i The advice they sellcan ~over ,anrthing f~?m what kindof toilet paper to buy for employeewashrooms to whether or not topmanagement ought· to sell off astruggling division and invest theproceeds in an oil company. Likelife itself, cbnsulting firms gravitatetoward empty ecological niches.When the economy began to sour afew years ago, the A. T. KearneyCo., one of the largestinanagement .consultancies in the: country, di-rected a chunk of its resources intothe thitherto unexploited field ofbankruptcy consulting. -Yes, youcan't even go broke anymore with-out hiring a consultant.

Living, breathing managementconsultants tend to be recent grad-uates of big-name business schools,especially Stanford and Harvard.Image is everything in this business,so competition for fancy diplomascan be wicked. "Second year Icould have had a free meal everyday," boasted a well-fed recentgraduate, now a consultant withMcKinsey & Co., over a free mealprovided by this reporter. Startingsalary at a top consulting firm for atwenty-four-year-old Stanford MBAwith good table manners and nobusiness experience approaches$55,000, not including bonuses. (Iwas told that at the Boston Con-sulting Group this year, some Har-vard MBA s were offered a bonusof $6,000 and an Apple computersimply for signing with the firm.)That anyone lin the world wouldbe willing' to pay that much forsomeone who has never used a mailroom, much less worked in one,suggests that there is more at workhere than the rational allocation ofhuman resources by the laws ofsupply and demand.

The hottest field in managementconsulting is called strategic plan-ning. Strategic planning began asa consulting fad twenty years agoand today is an industry unto it-self. A handful of consulting firms-known in the business as "strat-egy boutiques"-do nothing but.

•

c>:.,z

•

A definition? "Strategic planning,"says a young strategic plannerwith a vintage 1978 Harvard MBA,"is a process for developing aproduct, which is the plans them-selves, and a process, again, a mon-itoring process for ensuring thatthose plans are implemented andmeet with the expectations, thegoals, the objectives, or the resultsthat were anticipated out of theplans. In the sense that it is appliedin industry, it is several things. Inthe sense that it is applied in theconsulting world, there were a num-ber of semiproprietary tools andtechniques that are no longer reallyproprietary at all, and a process ofgetting that done in the most effec-tive and efficient way possible."

Well, it isn't as simple as itsounds.

•

THOUGH younger than time, itself, the management con-

sulting business has beenwith us for quite a while. It

began a century ago with the in-vention by Frederick Winslow Tay-lor of the time-and-motion study, amethod of analyzing the flow ofpeople and materials around a fac-tory floor. "Taylorites" were trou-ble-shooting inspectors who roamedproduction lines with stopwatchesand notepads, sleuthing mit pocketsof inefficiency. They were detailmen absorbed by the particular.

The first enduring American con-sulting firm was founded in 1886by an MIT graduate named ArthurD. Little. Little's field was chemis-try, and he set up a lab in Boston totest for impurities in shipments ofsugar and spices. His firm's con-sulting work remained mostly tech-nical for decades, but gradually cli-ents began to ask for general adviceas well. The professor's laboratorychanged with the changing times,and today Arthur D. Little, Inc.is the largest management consul-tancy in the world.

In the years since World War II,the management consulting businesshas been characterized by somethingof a hula-hoop mentality. The fadshave come and gone. Businessmenlook on consulting schemes the way

fatties look on gimmjpky diets: asshortcuts to the good [ife. Why beatyour brains out wrestling with yourproblems when you can hire some-one who's got it all figured out?While the original emphasis in con-sulting was on finite problems of atechnical nature, the focus gradual-ly widened until today it can be saidto encompass almost anything. It isrevealing of the consultant's way ofthinking that "strategic planning," aterm so vague it defies most effortsto define it, is referred to in the in-dustry as a "specialty."

Vague or not, strategic planningmay be the sturdiest hula hoop con-sultants have yet devised. It was in-vented by a man named Bruce D.Henderson, a twenty-two-year vet-eran of American industry whofounded the Boston ConsultingGroup in 1963. BCG's ticket tofame and fortune was a conceptcalled the "experience curve," anamalgam of older ideas, includingthe learning curve, economies ofscale, and common sense. The expe-rience curve revealed that the hun-dredth unit on a production linewould cost less to manufacture thanthe first one did, and by a predict-able amount. This is a fairly simpleconcept (though not, of course, assimple as it sounds). But in thehands of a skillful MBA it is ca-pable of almost limitless complica-tion. BCG consultants used thesecomplications to sell and resell, forlarge fees, the same basic advice:the bigger your share of a givenmarket, the higher your profits willbe, since your elevated productionrate will enable you to move downyour experience curve (and hencereduce your costs) faster than yourcompetitors. Market share becamethe holy grail of American industryin the 1970s.

Unfortunately for companies thatblindly accepted the emerging gos-pel, the experience curve proveddecidedly fallible. Like most con-sulting schemes, it was an attemptto treat concrete problems asthough they were hypothetical sit-uations, and the usual conflicts withreality ensued. The curve, for ex-ample, was hard pressed to explainthe success of a company like Mer-

9

cedes-Benz, which turned a heftyprofit on a modest market share, orto prescribe useful strategies forcompanies that didn't fall into tra-ditional categories. The experiencecurve, in short, could mean as muchor as little as its practitionerswanted it to, and while this vague-ness proved fertile for consultingfirms, it sometimes bedeviled theexecutives who applied it to theirreal-life problems.

And so the experience curve fellout of favor. But it gave birthto other vendible concepts-or"tools," as consultants call them, inan effort to lend their calling ahammer-and-nails solidity. Among

Bruce D. Henderson oi the Boston Con-sulting Group: "l don't think oj strategyas being anything but a buzz word."

the newer tools was the "productportfolio," a colorful but innocu-ous-looking chart that depicts theallocation of resources among thedivisions of a company. Take apiece of paper and divide it intoquarters. In the upper left-handcorner draw a star; _in the lowerleft-hand corner draw a cow with abulging udder; in the lower right-hand corner draw a dog; in the up-per right-hand corner draw a ques-tion mark. This, friends, is a productportfolio, also known as a growth-share matrix, and its meaning is asfollows: stars are divisions that usea lot of cash but pay their way bygenerating equivalent amounts; cashcows are divisions that consume rel-atively little cash but generate greatamounts of it; dogs are divisions

HARPER'S!NOVEMBER 1982

10

that eat cash for breakfast; questionmarks are inscrutable gambles.

To a layman, a product portfoliomay seem as inscrutable as a ques-tion mark, but to a consultant itcan be a treasure trove of mean-ing. With the vertical axis repre-senting market share and the hor-izontal axis representing marketgrowth, the matrix is a handy de-vice for depicting the size, type, andquality (in terms of net cash gen-eration) of the various productsa company makes. If a given com- SOWHAT is strategic Planning.?pany consists mostly of dogs (low' Let's try again. Bruce D.growth, low market share), it's in . Henderson: !'I don't think ofserious trouble. If it consists mostly '. strategy as being anything butof cash cows (low growth, high a ·buzz word to indicate an area ofmarket share), it's fat and happy concern that you'd have a hard timefor the moment, although it isn't defining but that is clearly impor-going anywhere. In the ideal con- tant to you."figuration, the company's cash flows During the early years of the Bos-are balanced, with contented. cows ton Consulting Group, concoctingfinancing risky question-marks, and strategic tools was less importantworthless dogs kept toa minimum. than attracting MBAs. As a youngAs it is generally presented, the and struggling firm, ~CG found itmatrix is a colorful array of differ- impossible to hire the Harvard de-ent-sized circles that stops the grees it needed to certify.its legiti-breath of executives when it's flashed macy. Older consulting' firms, likeonto a slide screen. It can be used McKinsey & Co. and Booz, Allen &

Hamilton, Inc., were making offwith all the choice diplomas. SoHenderson and his lieutenants tookradical action and changed thecourse of consulting history; theydecided to offer higher salaries thananybody else. Business studentsdrooled appreciatively, and BCGtook off. .

"For two or three years," Hen-derson says today, "we hired any-one we wanted. The Harvard fac-ulty got up in arms because we werepaying starting MBAs twice as muchas they Were making as full profes-sors. But we got the reputationamong all the MBAs of being themost elite firm, and we got the rep-utation all over the United States ofhaving the best and smartest peoplein the country."

As the market for strategy con-sulting began to heat up, some ofthe dynamos on BCG's staff real-ized that they could grab a littlemarket, share for themselves. Thusfrom time. to time BCG consultantsspun off to form consultancies oftheir own. Most of the departureswere reasonably friendly-like a

~

.cataloqs absolutely tree!Just check three of your most

. favoritecategories inthe couponbelow and send it to us along with

only $1.00 for processing your order.You won't be disappointedl

Onlythe finestofmailorder catalogs willbe sent to your home .... A~t To~ay!___-~-----~-..-l!YES, I'd like to receive dozens of new, color-ful, exciting catalogs. I've checked my threefavorite categories below and enclose $1.QOfor processing. I understand that all catalogswill be sent to me absolutely free and I amunder no obligation to purchase any1hing.o Cosmetics 0 F.ood Coupons PH-42o Jewelry 0 Clothingo Gift Ideas 0 Home Furnishingso Electronics' 0 Sewing & Knittingo Toys & Games 0 Health Products'o Automotive 0 Collecting (Coins,o Magic & Gags stamps,-etc.)o Hobbies & Crafts 0 Other _

Name(please print)

Address

City State Zip

Mail to: Nationwide Catalog Network"lnc.373 Fif.thAvenue, New York, N.Y:10016L ~ ....;..;.. J.

to illustrate why a client companyought to fire a group of managers,or attempt an unfriendly merger, orunload an ailing division. It is, inshort, the philosopher's stone oftheconsultihg business. And al-though the product portfolio hassuffered a loss of esteem in the yearssince it was introduced, it and its'numerous offspring are still favor-ite "tools" in strategic planning.

proud mama, BCG published a listof thirteen of her children in 1979-but some were decidedly not.

In 1973, William W. Bain, r-.,broke away from BCG to form Bainand Company. Bain's case wasespecially interesting because he,like Bruce Henderson, had neverreceived an MBA. In fact, Bainwasn't even remotely a businessman.Before Henderson had hired him in1967, he hac! been head of alumnifund-raising at Vanderbilt Univer-sity, where he had received his bach-elor's degree in history and econom-ics eight years before. BCG's otherpartners thought Henderson was afool to hire him, since Bain clear-ly knew nothing about business, butHenderson, himself a Vanderbiltman, was impressed by Bain's charmand easy manner in dealing withimportant alumni, and he wanted toput him in charge of running BCG'sconferences with executives.

Despite Bain's ignorance of fi-nance-Henderson claims to havespent two hours on an airplane onceexplaining to him what depreciationis-the former fund-raiser made ameteoric ascent through BCG. Inno time at all he became a partnerand developed a reputation as thefirm's most effective salesman.

Bain left BCG with two otherpartners, followed almost immedi-ately by four more, and with at leasttwo important BCG clients, TexasInstruments and Black & Decker.Bain also took BCG's MBA-recruit-ing strategy, which he had helpeddevise, and applied it with a ven-geance. The firm quickly becameknown as the most aggressive re-cruiter at the Harvard BusinessSchool, where it concentrated mostof its recruiting efforts.

Bain's most notorious lure wasthe so-called exploding offer, a bo-nus package that diminished in val-ue while a potential recruit pon-dered it. A business school studentmight be offered a job for a givensalary plus a bonus worth, say,$4,000 if he accepted it immediate-ly. If he waited a week to say YeS,the bonus would be cut to $2,000.MBAs were thrown into a frenzyof anxiety, and Harvard respondedby banning exploding offers in a set

•

•

14

of recruiting guidelines handed downin the late 1970s. When Bain per-sisted, Harvard briefly banned Bain'srecruiters from certain campus func-tions. This controversy only in-creased Bain's allure in the eyes ofpotential recruits-and potentialclients.

BILL BAIN is the ReverendSun Myung Moon of themanagement consultingbusiness. The people who

work for him are known in the in-dustry as "Bainies." They lookalike, they dress alike, they refuseto talk about their company. Whena Bainie goes on a business trip;according to industry legend, hedoesn't tell his mother where he'sgoing: she might guess the clientand blab it to her bridge club.

Like that other great temple ofcapitalism, the Unitication Church,Bain and Company is prospering.The firm's growth rate is estimatedby industry insiders to .be as high as50 percent a year, and it has neverbeen lower than 30 percent in thedecade since Bill Bain broke awayfrom BCG.

The campus, Harvard Business 'school:"These are the famous trees that money

. grows on."

Discovering more than this aboutBain and Company is difficult to do.Bainies simply do not talk to out-siders. Bill Bain's cone of silencecovers every level of his firm, past,present, and future. Not even Bainclients will talk about the firm; noteven former Bain clients will talk

HARPER's/NOVEMBER 1982

about the firm. A young man whowas about to go to work at Bainagreed to an interview but calledback the next day to say the firmhad asked him not to cooperate."There are interesting things I couldsay," another Bain consultant as-sured me. "There are even interest-ing things I· might say; but thechance that you could get me to saythem is so slight that I would hateto let you waste your money onlunch." Machismo is second only tosecretiveness on the list of charmingBain characteristics.

The ostensible reason for suchsecrecy is that it protects the in-terests .of clients. But in fact thesecrecy is part of consulting ma-chismo, creating a valuable aura ofmystery. It also helps prevent out-siders from assessing-or even de-tecting-what strategic consultantsdo.

The covert style is part of themyth Bain has worked hard to cre-ate about itself, and it's a key in-gredient in the team loyalty BillBain cultivates in his employees.Bainies are told from the beginningthat they are the best in the busi-ness, the biggest hotshots around.Rather than trying to temper thelegendary arrogance of the green-horn MBA, Bain and Companyfans it to a white heat. Image iswhat counts, and Bain's image isthat of the KGB of consulting firms,the guys you call when asses needto be kicked. All of this is meantto impress potential clients, but thetruest believer is often the Bainiehimself. Consulting, for him, is al-most a religion. Every time he saysno to a reporter, every time he hidesa plane ticket from his wife, a littlejolt of omnipotence courses throughhis veins. .

The bulk of all consulting workis done by extremely junior people,who receive their training on thejob. If the truth be known, manyof the people who work for Bainare scarcely old enough to orderthree-martini lunches. An executiveof a client company once explodedwith rage when he overheard a con-versation in the men's room after apresentation and realized that theyoung Bainie whose advice he had

just listened to respectfully (a priv-ilege for which his firm was payinga hefty sum) was a summer interndue back at school the next day.

This sort of experience is alwaystrying for a client. But it can bepositively inebriating for a youngconsultant. "Strategic consulting isreally a whole different kettle offish," says one, comparing the bou-tique life with that of more tradi-tional consulting firms. "Take acompany like Booz. They're a bigcompany, but a large proportionof their business is things like as-sessing the EPA clean-air stan-dards, doing executive-compensa-tion reviews, estimating housingparity rates for company transfers.Those are all sort of bread-and-butter things to do, but they in noway represent the big-hitter, wheel-er-dealer, rock-and-roll consulting,where you whiz around in the com-pany jet drinking Chi vas on therocks and telling the CEO thatwhat he really needs to do is selloff a few divisions."

•

AND NOW a lesson in cou-. ture. "One of the' thingsthey used to tell us at Bainand Company," recounts a

former Bainie, "was how to dress.There's a method of dressing, yousee. You have to know what yourclient wears and then dress one lev-el above him. If he wears a sportcoat, you wear a suit. If you'remeeting him in a midwestern corn-field and he's wearing a T-shirt, youwear a button-down. You might ac-tually drive to his office in beigepants, a jacket, and a tie. But youcan look in through the windowwhen you get out of your car andthen take off as much as you haveto." Another ex-Bainie learned toavoid "the Four Ps": plaids, pleats,pointed collars, and polyesters.

Different firms have differentstyles. A partner at a competingboutique-the word begins to re-verberate-described to me hisown organization's attitude aboutappearance. "We're a little bit down-home," he said, "we're a little bitfolksy. And sometimes we lay thaton a little bit. We don't put onairs."

•

•

With so much intimidation in theair, Bill Bain had to do somethingto keep his hot young MBAs fromslitting one another's throats. So hehired-yes-a management con-sultant, a firm called 'Dialectics,Inc., of Stamford, Connecticut.Dialectics offers its clients a curioushodgepodge of business advice andposthippie pop psychology. The firmis run by Pam Cuming, betterknown, perhaps, as the author ofThe Power Handbook. Her con-sulting package includes somethingcalled "assertive' responsiveness,"which, according to a spokesperson,"teaches you how to assert yourown rights while at the same timenot stepping on someone else's." Inother words, says a former Bainie,the point is "to get you over thenotion that power is a dirty word."Bainiesrefer to Dialectics sessionsas "charm school." Every so oftenthe staff is shipped off to, say, theMarriott on Route 128 for whatanother ex-Bainie describes as"touchy-Ieely sessions."

Bainies don't leave their hard-won sensitivity at the Marriott. Thefirm's Boston headquarters are aliving monument to the Dialecticsideal. The place looks like a fernbar, the kind of joint where every-body drinks spritzers and you haveto tip big if you want an ashtray.Walls and doors are kept to a min-imum in favor of a more openenvironment. Nobody can be respon-sively assertive (assertively respon-sive?) if the conduits of communi-cation are blocked. When a Bainiehas .something to say to anotherBainie, he doesn't put it in a memo,he delivers it face-to-face. This isknown at the firm as "touchingbase."

Here we come to another exam-ple of Bainmachismo. Managementconsulting firms traditionally con-clude projects by handing in writtenreports: here are your problems,here are our solutions. Bain doesnot. It makes oral reports and slidepresentations, and although it mayhand over a copy of the slide show,it doesn't give the client anythingto read and ponder. "It gives youa tremendous advantage, as youcan imagine," a former Bainie told

•

me with a grin. "All the informa-tion sits with Bain, so if you haveany interpretive questions aboutthe study, guess who you have toask? And for a fee, of course." Any-way, he says, reverting to Bain-likearrogance, "it wouldn't do themany good. The reason they came tous in the first place was that wehave this superior understanding ofthe process and are better imple-menters of that process. It's an ex-ample of a little learning being adangerous thing."

But the most important reasonfor avoiding written reports is ac-countability. A client who has nowritten document to refer to hasno objective basis for judging a con-sultant's worth. This is also thereal reason why consultants don'twant you to know who their clientsare: if you had a clear idea of whowas working for whom, you mightstart' trying to compare perfor-mance, or even ask whether clientswere 'getting their money's worth.

If American corporations werereally serious about making money,they wouldn't .hire consultants,they'd open consulting firms. Whilethe rest of the economy sits dead inthe water, top management consul-tancies are having the time of theirlives, and Bain is doing at least aswell as anybody else. The only limitto the firm's growth for the momentwould appear to be its ability to sta-ble its ever increasing herd of MBAs.Last year it hired sixty-five newones, thirty of them from Harvard,bringing its total professional workforce (not counting a few dozen"research associates" without ad-vanced degrees) to about 300. Thefirm expects to triple in size by1987, by which time it may havemoved into a renovated building onthe Boston waterfront. Bain hashinted that it wouldn't mind if thecity of Boston ran a ferry service be-tween the waterfront and LoganAirport, on the other side of theharbor, to make it easier for Bainiesto swoop in on clients.

Bain's growth rate makes it oneof the few places on earth whereit's possible to get ahead by stand-ing still: sign on now, and in a cou-pie of years there'll be more people

15

GREAT GIFT IDEA!

THEGREEN MOUNTAIN

CHRISTMAS WREATHFreshly made in Vermont, 22" diameter.Fragrant balsam boughs richly decoratedwith natural red hollvberrles, nut browncones and large red ribbon, Only $21.25ea. ppd. in continental U,S.

50 years in business shipping nationally.Order for yourself or gifts. (Make idealbusiness gifts for employees, customers,c1ients.1 We'll ship direct to your list.Write or phone for 4-color brochure withmany other Holiday decorating items.

FREE! Holiday Decorating FolderPUTNEY NURSERY, INC.BOX HM~2 Putney, Vt. 05346

Phone: 802/387-5577

FREEBANKBOOKOF SAVINGS.

Call toll-free or send for88 pg. catalog of fine traditional

clothing for men & women.

Shop conveniently from our full-colorcatalog, It's brimming with classicclothing and accessories, priced farbelow most fine stores, Your satisfactionis guaranteed, ~ Call toll-free800-228-5000 anytime ... or mailcoupon below,

JOS. A. Bani{ Clothiers109 Market Place/Baltimore, MD, 21202

Please send free catalog to:

Name

Address _

City

Slate Zip __

©1982 BAX

16

below you than above you. This isa potent selling point for businessstudents. A brand-new Bainie canbecome a partner in as few as threeyears, sending his salary into thestratosphere and opening up. roomat the bottom for more MBAs.

Bain supports this pyramidscheme with a relatively tiny clientbase. consisting of only twenty-fiveor thirty companies. The· firm'sstrategy is to gain access to a com-pany with an initial study "and thenmetastasize," in the words of a for-mer Bainie. In the ideal scenario,

Richard Hamermesh, Harvard BusinessSchool professor and you-know-what,

Bain is hired by top managementfora study that gradually expandsuntil Bain's case teams constitutea sort of auxiliary corporate staff.The more pervasive the infiltration,the more money in it for Bain. Thefirm reduces its marketing costs bystressing long-term relationships,and bells chime when a client agreesto "roll over" a lucrative account.As recently as five years ago, ac-cording to a former Bainie, 40percent of the firm's revenues werederived from a single client, theMonsanto Company.

THE first service a firm likeBain performs. for a clientcompany is often to revealthat its problems are not

what the client thinks they are.Redefining the problem is a consult-ing tactic of almost canonical stat-ure, for the simple reason that it

HARPER'S!NOVEMBER 1982

enables the consultant to set hisown criteria for success or failure.If Company X comes to you com-plaining that it's being whipped inthe marketplace by Company Y,your first move might be to tell itthat its true competition isn't Com-pany Y at all, but rather CompanyZ. Former English majors will re-member this ploy affectionately asthe Old Switcheroo ("And so wesee that King Lear is actually acomedy ... "). Redefining the prob-lem is also a handy way to makesure a client's case is compatiblewith the "tools" in the consulran-cy's "kit."

Bain is known in the industry asa cookie-cutter consultancy, a firmthat has a standard set of proce-dures that it applies in one combi-nation or another to every client inits portfolio. No two clients areidentical, of course, but as the ex-perience curve teaches, there aredefinite advantages to making themall seem as alike as possible. Theprocedures Bain uses, ex-Bainiessay, are the ones that have alwaysbeen synonymous with strategicplanning: the experience curve, theproduct portfolio, and any numberof their direct descendants. Bainiesuse these "tools" to analyze theirclients' costs, to define what mar-kets they're competing in, and toidentify who their real competitorsare. This is precisely the sort ofacademic analysis that is taught atbusiness schools. Why a corporatechairman needs to pay hundreds ofthousands of dollars for a greenMBA to tell him what business he'sin and who his competitors are isthe great mystery of strategic con-sulting.

Young consultants at almost anyfirm will brag to you until you in-terrupt them about their "intellec-tual horsepower," the attribute forwhich they presume they were hired.But Bainies are valued. as much fortheir relentlessness as for their IQs.Park a Bainie in front of a spread-sheet and a calculator and he'll staythere until you tell him to get up.As a result, Bain's studies are oftenmagnificently detailed;' with oceansof minutely pointed data trans-formed into the catchy, colorful

charts and graphs that make up thefirm's final slide-show presentations.

After the slide show, reality in-trudes. "I remember going to avery high-level meeting with a num-ber of division heads from a majorAmerican chemical concern," saysa former Bainie. "And this youngMBA gets up there and starts talk-ing about opportunity cost, andabout strategic relocation of re-sources, and about market dynam-ics, trends, and competitive factors.And what he was really saying wasthat there are some businesses weought to be in and some we oughtto be out of. But those divisionmanagers, some of whom had beenwith the company for forty years,realized that what he was reallytalking about was making decisionsand firing people."

Making decisions and firing peo-ple are only two of the business ac-tivities that most management con-sultants never have anything to dowith. A consultant could pass anentire lifetime in his business with-out ever having to meet a budget,or fire anyone more senior than hissecretary, or stake his career andreputation on the outcome of oneof his plans. While there is littlecorrelation between success in busi-ness school and success in businessmanagement, there is a very strong-nay, nearly a precise-correlationbetween success in business schooland success in management con-sulting.

Besides the more arcane studiesthey undertake, strategic consul-tancies are usually careful to per-form a good deal of old-fashionedcost-reduction for their clients. Whena consultant boasts that a givenstudy "more than paid for itself,"this is almost always what he means.But hiring a consultant is not themost efficient way to eliminate or-dinary inefficiency. Overpaid to be-gin with, a Bainie bills out his time;one of them told me, at nearly fourtimes his salary. A major client canshell out several million dollars ayear for the divided attentions offewer than a dozen flesh-and-bloodconsultants. Clients might find itcheaper to hire a few MBAs of theirown, even at Bain-type prices. .

•

•

c:'sQl

Z

•

Just precisely what it is that aconsulting firm does for its clientsis a question that even consultingfirms occasionally feel inclined toask. A few years ago Bain's topmanagement held an in-house es-say contest, offering a prize of sev-eral thousand dollars for the bestanswer to the question "How dowe add value?"

Bain's no-talking rule extends toclients, too-part of the mystique.Merely finding out who the firm'sclients are is difficult, in part be-cause consultants who leave thefirm sign agreements promising nev-er to reveal the list. Still, with someresolute digging, it's possible to turnup a few names. Current clients in-clude Firestone Tire and Rubber,Shawmut Bank, Dun & Bradstreet,Shell (London) ,and Hewlett-Pack-ard. Recent (and, in one or twocases, perhaps current) clients in-clude National Steel, Morton-Nor-wich, the PHH Group, McCormick,Siemens, Monsanto, Burlington In-dustries, Maryland National Bank,and the Shaklee Corporation.

Bain's original clients, Black &Decker and Texas Instruments, arenow both customers of Braxton As-sociates, a Bain spinoff. Texas In-struments uses other firms as well.TI started out as a BCG client,moving to Bain when the new firmbroke away in 1973. "Up until1973, Texas Instruments was do-ing fine," says Michael Krasko, aMerrill Lynch analyst who has stud-ied TI for a dozen years. "Thensubsequent to that the record be-Came very erratic, the peaks andvalleys were greater, there was morevolatility. All this volatility trig-gered substantial managementchanges, changes in product direc-tion every two or three years ...They've been doing better more re-cently, but it's still a long climb up-ward."

Bain and Company may have hadabsolutely nothing to do with TI'sstrategy in the middle and late1970s; then again, Bain may havedesigned it. But you'll never find outwhich by reading the business press.In August, for example, Fortunemagazine ran a cover story on TexasInstruments. The article-under the

•

subhead "With profits under attack,a powerful pioneer of the micro-chip business cleans house and triesto shake some bad habits"-issprinkled with consulting buzzwords like "strategy," "matrix," and"portfolio." But there are only acouple of passing references to con-sultants, none of whom is men-.tioned by name.

SUMMERTIME in Cambridge.The waters of the CharlesRiver gently lap the shoreof the Harvard Business

School. In a building not far away,a door opens on a handsome office.Fireplace to the left, sofa to theright, carpet on the floor. Half adozen pictures on the walls-aRauschenberg, an Appel, a handfulof others-presumably on loan fromthe Fogg Art Museum, but whoknows? We are standing, after all,in the office of a Harvard BusinessSchool professor. Through the win-dow straight ahead, a panoply ofleafy branches. If you look hardenough you can almost read thewriting on the leaves: THIS NOTE ISLEGAL TENDER FOR ALL DEBTS,

PUBLIC AND PRIVATE. These are thefamous trees that money grows on.They shade the campus from theriver to the parking lot, blanketingthe ground with green.

The tenant of this well-appointedoffice is Michael Porter, a brilliantyoung professor who, like virtual-ly all his colleagues, is also a con-sultant. Harvard Business Schoolprofessors are allowed to spend oneday a week plying the consultingtrade. One day out of five may notseem like much, but at a couple ofhundred dollars an hour it can addup. Some professors-Porter amongthem-further supplement their in-comes by writing fast-selling bookson strategic topics. A professor whois casual in his interpretation of theone-day-a-week limitation can earnperhaps $150,000 a year on the side(or "150K," as consultants almostalways say, weary of lugging aroundthose zeros). Business school pro-

o fessors like to grumble about the"black hole" that swallows up theirbrightest students, but remember

17

that these are people who have al-ready heaved themselves into thesame dark chasm.

To find out where this consultingmania is leading us, I followed myinstincts and called in a consultantof my own. "I think the mission ofthe Harvard Business School," saysRichard Hamermesh, Harvard pro-fessor and you-know-what, "is totrain a future generation of man-agers, people who can run our com-panies both big and small. The skillsto do that are in part strategic, butthey are also managerial skills, ad-ministrative skills, skills that involvedealing with large groups of peopleand managing large budgets andrunning complicated projects. Theproblem with consulting is that thelargest project you'll ever work onwill involve three or four people,maybe as many as ten, all of whomhave IQs over 140. That's not thetraining that we need to deal withthe problems of industrial America,or of postindustrial America, even.

"To me the perversity of U.S. in-dustry is that we have CEOs get-ting $600,000 to $1 million a yearand huge executive payrolls, andyet with all their employees and alltheir resources they are unable tomake decisions. 1 think it's a badmark on U.S. management and onU.S. industry in general."

It was while talking to businessschool professors that 1 finally cameto understand what managementconsulting is really all about: it's ascheme for earning enormous sumsof money while still preserving theheady irresponsibility of graduateschool. And at Bain you never evenhave to turn in your term paper.

Alternatively, consulting can beseen as a scheme for making corpo-rations pay retail prices for man-agement skills that used to be avail-able wholesale. The same principlecould be applied in other situations.For example, certain bothersome,though not insurmountable, finan-cial considerations severely limit I

the amount of information any re-porter can convey in a mass-marketmagazine article. Naturally I've hadto leave out all my best material. Ican be reached in care of this mag-azine. •

HARPER'S/NOVEMBER 1982__ I