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Pathfinder

Rich Lesser is driving the Boston Consulting Group's digital makeover.
Saturday, October 22, 2016 - 05:50

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“Often in our world I find most of the good ideas we pursue didn’t come from me, they came from somebody else, (so) your antenna has to be constantly up.”

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IT'S fairly remarkable, if not quite unheard of these days - a firm that has notched up double-digit growth for five decades in a row, which also happens to be almost all of its existence. Indeed, Rich Lesser, president and CEO of said firm, the Boston Consulting Group, describes it as "unique" and "quite extraordinary, relative to the rest of the world".

BCG - founded in 1963 by Bruce Henderson as a pioneer of bold, new approaches to running a company - is of course one of the trio of elite blue-chip consulting firms, along with McKinsey and Bain. Even then, what's behind BCG's sustained topline growth streak (which, by the way, includes a 16 per cent average in the last three years) ? After all, cynics like to say that consultants borrow your watch to tell you the time.

To Mr Lesser, a 28-year BCG veteran who took the helm in January 2013, there's no mystery behind the track record. But first, he puts the growth figures in context.

"So from 1965 to 2015 every decade we've averaged 10 per cent or higher growth... (at least) 10 per cent per year on average, for 50 years. So if you take 2005 to 2015, we didn't grow 10 per cent every year but we averaged 11 per cent growth over the whole decade, which is pretty unique. And this is organic growth; it's not because we buy companies or we're on a M&A". This year, the firm expects to surpass the 2015 US$5 billion global sales milestone it reported in March.

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The CEO, who was re-elected to a second three-year term last year, attributes the track record to three core BCG traits: being on the cutting edge of business ideas and practices; its customised solutions; and its highly collaborative approach.

"It's a very customised place," says Mr Lesser of his firm. "I think a lot of the consulting world has moved in the direction of very set products, where you almost come in to the client with a view of what the answer should be, and BCG by its heritage, and even today, comes in with tremendous knowledge, but we're actually very customised in how we work with a client to get the best answer for them."

And BCG's model of collaboration enables it to "bring the best of the firm" - drawing from its 85 offices in 48 countries - to each job, he tells BT during a visit in September.

"But even more important from our clients' point of view is how we collaborate with them - a CEO in today's world, unlike a quarter-century ago, realises that it's not a command and control world anymore.

"So what they really need in a partner like us is someone who can work with the organisation, not just at the CEO level but at multiple levels, to have people self-discover what changes are needed, work across the business boundaries, and be really effective at being agents for change.

"And so I think that combination of being able to think ahead, being able to be very customised in getting the right answer for a specific client, and then very collaborative so that we can make change happen in the organisation broadly, not just by getting the top to try to direct people on what to do - I think those three things are all more important in today's world than they were 10 or 20 years ago. As long as we stay true to those, and keep investing, I think it enables us to stay ahead."

Asked if companies still spend on consulting fees in tough times, Mr Lesser points to BCG's "above long-term average" growth in the last few years.

In fact, "we see enormous pressure on our clients right now to navigate this environment", he says. Clients are "feeling more pressure to change, in hard ways, to adapt to a lower growth environment and still perform well, to improve productivity, to take on the digital challenges in their specific business and industry, and to build and strengthen their organisations".

And "as the world gets more competitive and more challenged, actually companies even more than ever need to be competitively advantaged", he adds. "It's not enough to be average - average is very, very slow growth; average is hard to price to get value for your products."

Mr Lesser, who joined BCG out of Harvard Business School, ran the firm's New York operations for almost a decade from 2000, and then served as BCG's chairman for North and South America before becoming CEO.

"BCG under my predeccesor had had a remarkable performance; in fact in the 10 years before I took over, we had tripled the firm, organically. And so I came in with a focus on what was changing around us and what would be required to get to the next level.

"And it became apparent very early on, in fact in the first executive committee meeting after I'd taken on, that what was happening in technology and in digital was just at the cusp of really starting to fundamentally transform many of our clients. And so we made a huge push on how we would transform BCG to be prepared for that world."

And in gearing up to help its clients navigate the digital landscape, BCG reinvented itself. To be sure, the story of BCG over the years has been one of remaking itself to deal with the issues of the day, but the digital journey it embarked on in 2013, under Mr Lesser's leadership, is its biggest makeover yet.

"I think the difference this time around is just how broad the changes have needed to be, because digital and what's going on in technology touches all our industries, touches all our various functions, requires us to build new units like Gamma or DV (Digital Ventures) to be able to do that, and has also caused us to start new businesses. It's caused a broader set of changes across all of BCG than has often occurred in the past changes." In January 2014, the firm set up BCG Digital Ventures, to help clients "build product services, new businesses in a digital environment, sometimes linked to their core business, sometimes totally separate from their core business", says Mr Lesser.

BCG also created a Technology Advantage Practice to help clients rewire their internal tech operations and, in a big push on analytics capabilities, set up BCG Gamma, which brings together data scientists and consultants who specialise in advanced analytics.

Consulting firms are typically tight-lipped about specific client work, but Mr Lesser is happy to talk about BCG's partnership with Starbucks.

"Starbucks has a stated strategy to be the most personalised brand in the world," he notes. "It wants to be more connected to its customers, bring them more relevant offerings, a better personal experience, than anyone else."

BCG has come in to help the coffeehouse chain personalise its Starbucks Rewards loyalty programme.

"We've been partnering with them in that journey - Digital Ventures but also Gamma, because there's a lot of analytics, as well as traditional BCG." In particular Digital Ventures and Starbucks have jointly created a new company, Takt, a real-time personalisation platform for greater brand building and deeper two-way engagement between businesses and their customers.

"Companies are swimming in data; the data is not the problem. Doing something with the data, learning from the data, and adapting fast as you get more insight - that's what companies struggle with. So Takt is about helping companies to leverage their data, to be more effective, and it builds on BCG's skills. And Starbucks is Customer One."

Along with building new in-house capabilities in large-scale change, big data, and digital transformation, BCG has, under Mr Lesser's watch, opened eight new offices since early 2013 and grown its workforce to over 12,000, of whom 1,000 are partners.

Ernest and soft-spoken (his words spill out at a rapid clip though, when he talks about BCG), Mr Lesser, who calls himself a "career BCGer", didn't set out to be a consultant. Growing up in industrial Pittsburgh in the '70s, he majored in chemical engineering in college because it seemed like the best bet to get a job. He became a product development engineer at Procter & Gamble after graduation, enjoyed the problem-solving but not so much the engineering. Restless for change after a couple of years, he went to business school, during which consulting became a career path he wanted to explore.

"I wanted to do two things: I wanted to take on these really challenging issues and work with clients, I loved that stuff, I loved the impact that we can have, but I also wanted to build something myself. And so I feel like the combination of both client teams and client relationships that we've built over the years, leading the New York office, leading the Americas, now leading the firm, I feel like I've been able to combine the best of both - which is to work with some of the best companies in the world on these incredibly hard problems, and be an agent for change making them better, and to be part of building probably one of the more successful companies in the world."

Asked about his leadership style, he pauses long and hard before saying: "I feel like in a partnership culture like ours with a talent level so high, a lot of the role is around alignment rather than direction. And alignment means you're listening very carefully because often in our world I find most of the good ideas we pursue didn't come from me, they came from somebody else, (so) your antenna has to be constantly up - you travel the world, you see interesting client work, someone comes to you with a new idea - you have to be constantly in the mode of listening carefully for ideas, and then helping other people, across geographies or across practices, to see the power in that, and trying to align the group on the path forward.

"And so I don't see myself as the grand visionary who thinks up everything myself or the order giver who tells you what to do. I think of it as active listening, trying to help people shape their ideas to make them even better and then trying to align the organisation around some key elements of our direction, and then give them a lot of entrepreneurial spirit to take that direction and make it happen so that it's the right answer for that client, or it's the right way to approach this sector of the economy. That's how I see it."

He makes it a point to connect directly with BCGers, attending the global training programmes for project leaders, principals and partners, as well as the firm's two new partner orientation sessions every year.

"I was just at our worldwide principal training in Delhi on Monday, I spent a day with our team there. My predecessor had done that, and I thought it's so much the right way to think about your role as CEO - it's you're not just there to be distant and send messages, you're there to engage directly about where the firm is going, why are we doing what we're doing, get their feedback because they're on the frontline and sometimes you think things are going well but they know there are areas where we got to get better. And so it's a two-way dialogue, and it's a chance for them to hear directly what we're trying to achieve and how they contribute to it, and learn from them about what I can be doing to help them succeed."

Over the summer, he has been sharing the firm's strategy with BCG offices around the world, "and one of the things that I say over and over again is - complacency is the enemy", he tells BT.

"You look at so many successful companies, and what happens is, a mindset sets in that what got them to that level of success, they should just keep doing that to keep that level of success. But actually in so many organisations if you just keep doing what got you to success, you stagnate or you decline. And yet that's hard to change, because people have ingrained behaviours, leaders got promoted because they did those old things really well. So how do you create an impetus in an organisation to push itself into uncomfortable zones in order to foster the next wave of ideas, the next wave of growth? And that's what we help our clients to do, that's part of our role, but we have to do it ourselves.

"I want us to be incredibly sensitive that we have a responsibility to our clients to avoid that trap. As I said, we've grown double digits for so long... we are continuing our very strong growth path, but we can't for a second think that because it's going really well right now, we don't have to keep pushing ourselves to change."


RICH LESSER

President & CEO

Boston Consulting Group

1962 Born in the US

Education

BSE, chemical engineering, summa cum laude, University of Michigan

MBA, with high distinction, Harvard Business School

Career

1985-1986 Worked in product development in Procter & Gamble

1988 Joined BCG out of business school

2000-2009 Head of BCG's New York operations

2009-2012 Chairman for North and South America, BCG

Since Jan 2013 President and CEO, BCG

Honours

1988 Baker Scholar, Harvard Business School

2009 Top 25 consultants, Consulting magazine

Et cetera

Spends his leisure time on games, movies, tennis, and travel, mostly with family (he has one daughter and two sons).

Greatest influence during his youth:

"My parents. Dad was CFO at a small retailer and I liked talking to him about business issues. Mom was a great middle school teacher and we spent many hours discussing a huge range of people topics around our kitchen table."

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