CEO Carl Stern speaks to interviewers about the effect of the economic downt
urn on BCG, the company''s outlook, the impact of both on recruiting, and wha
t makes BCG different.
BCG CEO discusses economy, recruiting
By Michael Aberman, WG ''02 and Rohit Menezes, WG ''02
In July, Michael Aberman WG’ 02 and Rohit Menezes WG ‘02, met with Carl St
ern, President and CEO of The Boston Consulting Group (BCG), for a brief int
erview on behalf of The Wharton Journal.
Wharton Journal: What is BCG’s current strategic position within its indust
ry?
Carl Stern: Currently our strategic position in the overall management consu
lting market is better than it has been in a good long time. While our growt
h numbers are, not surprisingly, less than we forecasted a year ago, they ap
pear to be significantly better than our competitors’ numbers. If you buy B
CG’s thinking on deconstruction, the types of uncertainties that companies
are facing today result in the basic need for navigational assistance. And u www.chinahrlab.com
ncertainties such as industry structure are exactly the kind of stuff we are
good at. In such situations, methodology driven consulting doesn’t do it.
Also, while a few years ago there was a lot of competition in the consulting
world from information technology specialists, our clients have realized th
at there are some questions where the answer is not “you need a new system.
”
WJ: How will the economy affect BCG’s business?
CS: While it is partially true that the consulting business is counter-cycli
cal, this is overwhelmed by the fact that our funding comes from corporate d
iscretionary spending. In general, we tend to look better in a recession tha
n other companies. In the early stages of recession however, there’s a lag
effect as people complete projects. Then, we grow faster than others coming
out of a recession as companies use us to help react.
The only unique aspect of this recession has been its abruptness. We went fr
om a 10-year high of industrial capacity to a 20-year low in three months. T my.chinahrlab.com
his has left many corporations confused about which way to proceed, the so-c
alled “deer in the headlights” effect. Once senior management is comfortab
le with what is happening in the economy, be it good or bad, they will be ab
le to make the decision on how to proceed, be it cost cutting or growth stra
tegy. If a recession lasts a long time, cost reduction will be more importan
t. If it is a shorter recession, a deconstruction scenario becomes more impo
rtant. Deconstruction is a huge idea and it favors us. I predict that the ne
xt five years will see a big demand for strategy work.
WJ: What is BCG’s recruiting outlook given the current economic situation?
CS: Our recruiting targets are on track with previous years. As far as I’m
concerned, it will be “steady as she goes”, even though it might feel a bi
t different. As you know, other consulting firms appear to be planning to re
duce the number of their recruits. This will result in higher acceptance rat
es for our offers and, therefore, the number of offers will be adjusted acco 中华英才实验室
rdingly. In addition, since the supply situation has clearly changed, we wil
l not continue our efforts to broaden recruiting sources. With respect to no
n-traditional sources of non-MBA recruits, I would hope that it would contin
ue the same level of hiring (20-25%) as diversity of all kinds helps the cre
ativity of teams.
WJ: How would you describe BCG’s culture?
CS: BCG’s culture has got to do with our history and our values, which incl
ude inventiveness, scope for individual freedom and creativity, autonomy (in
fact a bit of anarchy), less hierarchy, and a culture that is critical of o
urselves and our work as well as of our clients. What we are and how we diff
er from other firms are subtle but quite real. They are very apparent to the
clients that have used us as well as our competition. Our policy of “one p
artner, one vote” is an eloquent expression of who we are, one that we don’
t talk nearly enough about. [Under this policy, all BCG partners have equal www.chinahrlab.com
say in the governance of the firm.] To my knowledge, there is no major firm
that works this way. It is a metaphor for a lack of hierarchy and the belief
in the influence of individuals as well as the group.
WJ: How is BCG’s culture different from that of its competition?
CS: When you get to cultural differences, you should ask about a firm’s ori
ginal basis for competition. It’s amazing how much the culture incorporates
those things. McKinsey was the first company that set out to “professional
ize” the consulting business and still emphasizes ethics and professional r
elationship to the clients. Bruce Henderson started BCG thinking about devel
oping strategy as concepts, emphasizing the intellectual side. Because of ou
r beginnings, BCG is a bit more entrepreneurial and anarchic. We are the onl
y significant firm where the brand is based on a reputation for innovation.
We “out- think” – as opposed to “out-charm” or “out-relate” – our co
mpetitors. In fact, our clients consistently rate us highly in relation to o bbs.chinahrlab.com
ur competition for both objectivity and creativity.
WJ: Why does BCG emphasize a generalist approach instead of an approach buil
t around expertise?
CS: This is the age of expertise, and we need to evidence expertise to get i
n the door [with our clients]. However, if you want to talk about BCG’s ide
als of insight, impact, and trust then you have to recognize that expertise
does not necessarily guarantee attainment of these goals. From a career deve
lopment standpoint, our aspiration is not to make you, as a BCG consultant,
an expert. We will make you a leader. There are experts who are leaders but
very few leaders are leaders simply because of their expertise. To make grea
t leaders – consultants, CEOs of public companies, or entrepreneurs – you
need to develop business judgment, not expertise. BCG provides its consultan
ts with experiences and puts them in situations that help develop business j
udgment. There are plenty of consulting “experts” out there at lower price bbs.chinahrlab.com
points, but what BCG aspires to provide is the more valuable “business jud
gment”.
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