By modeling how learning effects would lower the costs of manufacturing electronics over time, they helped TI develop a plan to lower prices in an attempt to align with those savings such that they could capture a larger market share of the emerging personal calculator space. One example of this happening in practice was Boston Consulting Group using “experience curve” work to help Texas Instruments (TI) change how it thought about planning for the future. The economist Tyler Cowen has made a convincing augment that spreading this assumption via consulting firms setting up shop abroad has been one of the best things that have happened for global growth and prosperity. The series explored capitalism and markets and was enthusiastically consumed by people in the US and then millions more around the world throughout the decade.Īs company leaders turned these ideas into profits, finding and implementing better ideas became an organizing assumption in business. A great example of this is Milton Friedman’s multi-part “Free to Choose” series that aired to millions in the United States on television in 1980. Yet from the 1960s to the 1980s, there was a hunger for new ideas in the business world and in society at large. The phrase “shareholder value” probably doesn’t even incite a reaction in even the most cold-blooded CEO. Within five years, they had turned out twenty-three, which bore titles such as “Strategic Market Segmentation,” “Competitive Cost Analysis,” and even “The Experience Curve as a Strategy Tool.Īgain – these ideas sound obvious if you have some experience in the business world. The In Lords of Strategy, author Walter Kiechel III described McKinsey’s embrace of ideas in building a “knowledge culture” in the late 1970s:Īs part of building the “knowledge culture,” its consultants began grinding out staff papers-often twenty pages long, based on experience with clients and internal debates, and some suitable for repurposing as Harvard Business Review articles. They were the product of unique cultures which put tremendous value on the discovery of new ideas. These ideas also did not show up out of thin air either. Yet until they emerged in the consulting-academic-industrial idea complex during the 1960s to 1980s, these ideas were not common knowledge. Strategy is important! Listen to your customers! Pay attention to the “soft side” of organizational change! Maximize shareholder value! If we look back at some of the ideas popularized in consulting firms, we might laugh. How is this possible and what does it mean about where ideas might emerge in the future? These Firms Were Generative and Important Despite fewer resources and no “brand” to lean on, I’ve been able to unlock a level of creativity and idea generation as an independent researcher and writer of words on the internet that is ]beyond what I felt possible at any point in my previous path. Today’s top three strategy consulting firms, McKinsey, Bain, and Boston Consulting Group, are large organizations that haven’t seen a serious competitor in more than thirty years and are known more for scandals and 100-page PowerPoint “decks” than being the source of innovative and creative new ideas.ĭuring Bill Bain’s time at Boston Consulting Group and then at Bain & Company, however, strategy consulting firms were a central force in creating, shaping, and popularizing many of the most important business ideas of the 20th century.Īt some point, these firms became “too big to think” which occurred to me after I decided to leave the industry after nine years to work on my own in 2017. In 1971, he left the company to start Bain & Company and took many of Boston Consulting Group’s top leadership with him.Īfter spending seven years working in the strategy consulting industry, it’s impossible to imagine this kind of experiment taking place in those same firms. Unfortunately, Bain also decided that he should start his own firm. In a few years, Bill Bain and his blue team prototyped a new fee model that enabled them to increase fees and deepen partnerships with clients. He hoped that the experiment would generate new ideas for how to run a consulting firm. These teams were instructed to compete against each other. In the late 1960s the founder of Boston Consulting Group, Bruce Henderson, divided his company into three color-coded teams: red, blue, and green.
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