"Actually, we are not doctors for companies"

Yong Tang(L), People's Daily Washington-based correspondent and Hans-Paul Buerkner(R), Boston Consulting Group President and CEO.

Interview with Boston Consulting Group President and CEO Hans-Paul Buerkner

The Boston Consulting Group (BCG) is an international strategy and general management consulting firm. Founded in 1963 in Boston by Bruce D. Henderson, a former Bible salesman, BCG had just $500 billings in the first month of operation and the number of its consultants was only two. Today it has grown into one of the most prestigious and biggest consulting firms in the world, with a revenue of US$1.8 billion in 2006 and more than 3,300 consultants working in 63 offices in 37 countries.

BCG's focus on conceptual, strategic thinking has yielded many breakthrough ideas that have become classics of strategy. The experience curve, time-based competition, sustainable growth, and total shareholder value are BCG concepts that many organizations have leveraged to enhance positioning. BCG works with some of the world's most innovative companies. A majority of BCG clients rank among the 500 largest corporations in North America, Asia, Europe, and Australia.

Recently Yong Tang, a Washington-based correspondent of People's Daily, conducted an exclusive interview with BCG President and CEO Hans-Paul Buerkner in his New York office.

About Management Skills

Yong Tang: I know the threshold of becoming a BCG consultant is very very high. Can you tell me something about your employees? Where do they come from? What kind of education have they received? How do you admit them?

Buerkner: Today we have more than 3,300 consultants around the world. Our employees come from a wide variety of backgrounds. Of course we have people coming from business schools, but we also have lawyers, scientists and engineers. Some come straight from schools or universities; others have worked in the industry for three to five years or even longer. The key element is to have people with a broad spectrum of experiences and expertise, not just a focus on business.

Yong Tang: But someone said only Harvard or University of Chicago MBA students qualify for working at BCG as a consultant?

Buerkner: I am not an MBA from Harvard or the University of Chicago. I studied economics, business administration and even Chinese in Germany. Then I received an MA degree in economics from Yale University and a PhD degree from Oxford University. Overall, we have people with different backgrounds and broad experience. In the US, many of our employees come from business schools such as Harvard, University of Chicago, Stanford, Wharton, Kellogg, MIT and Columbia. But when you look at the whole spectrum, we have people who have PhDs from MIT or Cambridge University or Kyodai in Japan. We have people who have studied philosophy, communications, psychology, political science and other fields.

Our criteria for selecting people are twofold: you need to be very strong analytically and conceptually; and you need to be able to communicate with other people effectively -- you should be passionate about people. Our ultimate objective is to help people become leaders in business and society, so you have to be passionate about solving problems. Just having the right solutions is not sufficient. You also need to be able to mobilize people, to convince people and make them work together.

Yong Tang: The salary for your consultants should be very competitive?

Buerkner: Consultants are paid differently country by country. But it is fair to say we pay in the top tier in the global consulting industry.

Yong Tang: You have a large pool of talent. Every consultant is very intelligent. Smart people are usually harder to deal with. How do you manage them, train them and develop them?

Buerkner: Everybody gets formal training and on-the-job-training continuously. Every consultant has a career advisor and a sponsor to help him or her to find the right path. In addition, I would give every consultant two pieces of advice: The first, of course, is to do your homework. But everybody can and should add something special. For example, you can develop new ideas, you can organize things internally or you can have a passion for helping the community. You need to do something beyond your homework. The other piece of advice, which is very important for your career, is to help others. You do not accelerate your career by having sharp elbows. You accelerate your career by helping others succeed. The key to success is continuous learning and development, doing something special and helping others develop.

Yong Tang: BCG has developed some concepts like Time-Based Competition, the Growth-Share Matrix, the Experience Curve, Competitive Advantage, Total Shareholder Value and Disease Management. They were once very popular consulting tools. Are they still effective and relevant in today's world?

Buerkner: Yes, Total Shareholder Return is important, Time-based Competition is important, the Experience Curve has its merits, but they don't provide the answers. They are concepts that help frame the issues so that you can work together with your clients to find innovative client-specific solutions.

Yong Tang: In today's world economy, manufacturing industry is becoming less and less important while service and financial sectors are becoming more and more important. How does BCG adapt to this profound change? It seems that BCG covers everything but what is your business focus?

Buerkner: We do indeed cover all industries, from financial services to industrial goods, from healthcare to energy, from technology and communications to consumer goods and retailing. Our focus is on helping clients achieve competitive advantage. We therefore help them to develop the right strategy, but also to improve their operations, find the right organization and the best systems architecture, identify and execute M&A transactions, and sharpen their marketing and sales.

Yong Tang: I have a friend who is a Fidelity Investment employee. She said during her work she often comes across a lot of financial reports and publications created by your major competitor McKinsey, but can hardly see any relevant reports published by BCG. Why?

Buerkner: We publish about two in-depth reports a month plus lots of shorter articles. We probably produce around 100 publications every year. Of course, many do not cover financial services, and thus would not be sent to Fidelity. Still, we do need to improve our distribution and create more awareness for BCG; though our marketing people claim we are sending out too many reports and too many articles already! (Laugh)

Yong Tang: McKinsey is your major competitor. Compared with McKinsey, what is BCG's advantage and disadvantage?

Buerkner: Our clients usually have experience with several consulting firms. They clearly see BCG as helping them find innovative and specific client solutions rather than just applying standard solutions to every client. They say that we really work with their people at all levels rather than pushing recommendations from top down. They also emphasize that we help them gain competitive advantage. I think they see huge differences between BCG and other consulting firms.

Certainly we have lots of room for improvement. We are somewhat smaller, about half the size of McKinsey. We are less well known and we need to make sure that companies get to know us.

Yong Tang: Somebody said the global consulting industry is going downhill right now. Less and less multinational companies are willing to hire consulting firms. How do you respond to that comment?

Buerkner: Actually, the consulting industry is growing worldwide. There are more and more companies both in developed markets and in emerging markets like China, India and Latin America that are hiring consultants. BCG is growing across the whole world in almost every market. Our firmwide revenue growth last year was 20%.

Yong Tang: So it seems the pie is becoming larger and larger?

Buerkner: I believe the pie is becoming larger. We are growing somewhat faster than the market so we are also getting a larger piece of the pie. I would estimate the consulting market around the world probably grew by about 10% last year, with huge variations by country, of course.

Yong Tang: The global consulting industry is dominated by McKinsey and BCG at the moment. Do you think the status quo will change in the near future?

Buerkner: The consulting market is huge. There are many other consulting firms that are very competitive. Some firms are focusing on outsourcing, others on IT consulting, some firms are doing HR (human resources) consulting, others financial consulting. There is also marketing and PR (public relations) consulting firms; and many others specialists. In the area of top management consulting, BCG and McKinsey are clearly in the lead. Overall, the market is very fragmented with thousands of players. There are many new entrants every year; but there are also many mergers and acquisitions every year. The competitive landscape is constantly changing and you have to watch the major players and their movements continuously.

Yong Tang: Globalization is unfolding today. What is your strategy to cope with this reality?

Buerkner: Globalization is indeed the biggest challenge for companies around the world. You really have to optimize your global value chain. Where should you locate your factories or R&D (research and development)? Should you manufacture products yourself or source products from China? Companies have to fundamentally question what they are doing and in most cases fundamentally restructure their businesses. In additon, many companies from China, India and other rapidly developing economies are becoming competitors in the world arena. Many Chinese companies are conquering the world market by not only exporting, but also taking over companies in Europe and America. The same is true for Indian companies. Suddenly you are finding more competitors, some you have never heard of before. So you need to see how the whole competitive dynamic is changing. We help our clients to understand the challenges and opportunities of globalization and gain advantage from them.

Of course, BCG itself has become global. We have 63 offices in 37 countries. Many of our teams consist of people from around the world. Our consultants move a lot between different countries to help others with expertise, say from Europe to China, from China to Australia, from Australia to Latin America, from Latin America to North America, from North America to Europe. There is a constant exchange of expertise and experience and constant teaming across the world.

Our teams in China are mostly local people. We hire local Chinese because you need to understand the language and culture. But we also have people who come from other parts of the world to bring special expertise to our teams in China.

About Communication with Clients

Yong Tang: Can you name a few major clients for our readers?

Buerkner: It is our policy not to name our clients. We have promised them that we will keep their names out of the general public. If our clients say in newspapers or magazines that they are working with BCG, that's fine. But we don't do it ourselves. We feel that in order to have a trusting relationship, we should keep client names absolutely confidential.

Yong Tang: Frankly I can't understand the logic behind this confidentiality. If you disclose the name of a successful client, it would be a lot of publicity or free advertisement for BCG!

Buerkner: Naturally, we benefit when one of our clients speaks about us to another company or mentions us in the press. But we don't publicize clients ourselves. Just this week a longtime client of mine -- a mid-sized German company that produces agricultural machinery and trailers -- was interviewed by a German newspaper. During the interview the company's owner explicitly said that ˇ°BCG people really helped us back on our feet.ˇ± That was very gratifying, but we would never say it ourselves or publish a list of clients, unlike many other consulting firms.

Yong Tang: Do you have any small clients?

Buerkner: Yes, we have clients that are small-sized. Our criterion for choosing a client is not its size. Rather, we look for clients that really want to achieve something, that want to become leaders in their field. Some of our clients were very small when we started working with them. Today they are market leaders.

Yong Tang: How do you charge your clients?

Buerkner: We charge them for a specific assignment. We agree that we will help them address specific problems together, let's say, over the next six months. Our budget then covers the work to be done during these six months. Our product is not a plan; it is what we do together with our clients to make the plan reality. Sometimes a project takes several years to complete. There are many clients with whom we have been working for ten years or more.

Yong Tang: How are you getting paid by your clients?

Buerkner: We are usually paid on a monthly basis. How much we get paid depends on the time needed for the assignment and the size of the team.

Yong Tang: If your plan doesn't work, does your client still need to pay?

Buerkner: We always find a way to deliver the value we have promised and work hard to exceed clients' expectations.

Yong Tang: Can you give me some examples of either big successes or big blunders for BCG?

Buerkner: Fifteen years ago, a small company from Latin America approached us to support them developing their future strategy. We have been working with them ever since. Today they are a world leader in their industry.

In terms of failures, the e-commerce boom produced some disappointing results. Like many firms, we overestimated the impact of the Internet and how far it would transform companies, at least in the short-term. Some of our projects to build e-businesses worked in the end, but some failed.

Yong Tang: Some experts describe consulting firms as doctors and clients as patients. How do you think of that?

Buerkner: I disagree. Some of my colleagues explain their job to their children as ˇ°I am a doctor for companies.ˇ± Actually, we are not doctors for companies. Our work really requires working together with our clients to get things done. We have joint teams with almost all clients. A doctor tells you what kind of disease you have because you are not an expert and don't know what is going on in your body. Most of the executives we work with are experts themselves. Together we find a solution.

Yong Tang: So what is the point of hiring a consulting firm if companies themselves have the resources to even create a consulting department in-house?

Buerkner: There are some companies that have internal consulting firms, but they still work with outside consultants. Maybe they don't have the right expertise; maybe they don't have enough people; maybe they don't have the people for this kind of issue. Really good companies are never satisfied with what they have. They are always open to finding better ideas and making them work in better ways. If a company says ˇ°we know everything, we don't need any ideas from outside,ˇ± they are missing a big opportunity.

Yong Tang: How do you ensure effective communication with your clients?

Buerkner: By working with them very intensely. We have working teams consisting of people from our clients and from BCG. They get to know each other. They discuss and analyze the issues together. Then they find solutions together. And finally they make change happen together.

Yong Tang: What level of persons from your client companies are usually involved in working with BCG?

Buerkner: It can be the CEO or it can be people on the shop floor, depending on the issue that needs to be solved. Over the last several years, we have worked with a major commercial vehicle producer, and the issue has been about the quality in the factories. So we have been working with the top management, with middle management and with the workers in the factories. All have ideas and all need to contribute to solving the issues. Therefore, all are part of the team.

Yong Tang: What if your recommendations are turned down by your clients?

Buerkner: It happens at times. I wouldn't say often. Sometimes clients say, "You are probably right, but we can't do it. It is too ambitious. It brings too much change." Or they may say, "I don't believe it."

Hans-Paul Buerkner, Boston Consulting Group President and CEO.

BCG Activities in China

Yong Tang: Can you tell me something BCG has done in China?

Buerkner: We were the first consulting firm to have an office in Mainland China. We had a joint venture with the Bank of Communications in Shanghai in the early Nineties. Today we have offices in Beijing, Shanghai, Hong Kong and Taipei. We work across the whole country. In addition to the coastal areas, we have projects in Xinjiang, Inner Mongolia and Chengdu.

Yong Tang: What is your major challenge in China?

Buerkner: In China, explaining what consultants can do is still a challenge. Chinese companies are quite skeptical of consulting. Many local consulting firms don't have a good reputation. Therefore, one needs a lot of patience to build the business.

Yong Tang: Can you tell me a few Chinese clients?

Buerkner: No, but I can say that we cover all the major industries in China including financial services, automotive, technology, consumer goods and retailing. It takes quite a while to establish good relations with Chinese companies, but it has worked. Now we have more than 150 consultants in China. Our growth rate in China is between 20 and 30% per annum.

Yong Tang: You once said Chinese companies usually have good strategies but the implementation of the strategies is quite poor.

Buerkner: Some Chinese companies have a good strategy and good execution, some have a poor strategy and poor execution, and others have a good strategy but poor execution. It differs from company to company. What I see is that Chinese companies are very dynamic, trying to learn things all the time. Our research shows that 41 companies from Mainland China are ranked among the top 100 competitors from rapidly developing economies. There will be a lot more within several years.

Yong Tang: What is your plan in China?

Buerkner: The key element for us is to hire and train more top-notch people. I am sure we will have more offices in China as we expand. We will also make sure that companies know BCG better and see that we can really help them better than anybody else.

Yong Tang: How many times have you been to China?

Buerkner: I usually go to China three or four times every year. I have always been very interested in China. In the late 1960s, I started learning Chinese. I also learned a lot about Chinese history and Chinese literature. At that time, I read People's Daily and Red Flag in my university library. Hopefully, some day I will find time to brush up my Chinese again.

About Personal and Professional Experience

Yong Tang: Why are you based both in Frankfurt and New York?

Buerkner: Most of our business is still concentrated in Europe and the Americas, and Frankfurt and New York are important places for us. But I actually spend most of my time visiting clients and our 63 offices around the world.

Yong Tang: How many times do you fly every month?

Buerkner: On average once a day.

Yong Tang: Can you tell me something about yourself?

Buerkner: I was born in Germany in 1952. I studied at the University of Bochum and at Yale University. I got my PhD degree from Oxford University in the United Kingdom. After my studies, I worked for two years in a bank. In 1981, I joined BCG, and in 2003 I was elected CEO by the partner group.

Yong Tang: You have said that as BCG CEO you have two goals, one is to expand relations with your clients, second is to make your partnership system stronger. Do you still think that?

Buerkner: Actually, I have three fundamental goals. The first is to create stronger relations with top companies around the world and help them to become leaders in their industries. The second is to strengthen our partnership and to ensure that BCG creates the best career opportunities for the top talent. The third is continuing to generate innovative ideas and concepts and helping clients to translate these ideas and concepts into reality.

Yong Tang: How is your family?

Buerkner: My family is in Germany. My wife and I have a 21-year-old son and a 15-year-old son. Because of the work, I can only spend weekends with them.

Yong Tang: You are the first BCG CEO who comes from Europe. Is there anything special about this?

Buerkner: BCG was established in 1963 in Boston. But today it is neither an American nor a European company, it is a global company. Our central accounting is in Boston but we don't have a headquarters. We have 63 offices around the world. We have about 30% of our people and our business in America, about half in Europe, about 20% in Asia/Pacific.

Yong Tang: Why do you like saying, I am always on the road?

Buerkner: The world is global. It is important to be close to your people. I try to see every one of our employees every year. So I visit every office at least once a year.

Yong Tang: You need to be very energetic and physically strong in order to accommodate such a tight schedule.

Buerkner: As long as I don't have to walk or swim to those places, I am fine. (Laugh) There are good airports.

Yong Tang: What do you like doing during your spare time?

Buerkner: I like playing soccer with my sons, hiking and reading.

By Yong Tang, People's Daily Washington-based correspondent