MBA Alumni

Bain & Company Managing Partner Shares Key Business Lessons You Need To Hear Now!

Hernan Saenz, who heads Bain & Company’s Dallas, Houston and Mexico offices, returned to Cornell’s Johnson School of Management to share eight lessons he’s learned since he graduated in 1999!

Bain & Co. Managing Partner Hernan Saenz thinks inside the box first

Bain & Co. Managing Partner Hernan Saenz thinks inside the box first

Commencement speakers inspire students by advising them to follow their dreams but Bain & Company partner Hernan Saenz recently headed back to his alma mater Cornell University to address a much tougher audience.

Saenz, who is Managing Partner of the consulting firm’s Dallas, Houston and Mexico offices, returned to Cornell’s Johnson School of Management as the keynote speaker at the School’s reunion.

Saenz has been at Bain & Co. for over 15 years, and has worked in the firm’s Boston, Sydney, Madrid and Texas offices. He is a “turnaround specialist”, combining expertise in strategy, organization and performance improvement. He is also the founder of LATBA, the firm’s professional network for Latinos.

In addition, Saenz started Bain & Co.’s formal recruiting programme at the Johnson School 15 years ago, and also serves on the school’s Advisory Council. As well as an MBA from the Johnson School, he holds an MS in Industrial and Labor Relations from Cornell and an MS in Economics from Stanford.
 
So, how did Saenz inspire Johnson alumni, who have already been in the business world for many years? He focused on dispelling some of the common myths in the business world, and on the difference a great company culture makes. Below are a couple of nuggets from his speech (more in the link below).

1. Think inside the box
Nine out of ten companies fail to sustain profitable growth, and the ones that do focus on their core business. Reinvestment goes to one or two core or adjacent businesses, with the goal of attaining leadership. These successful businesses are not distracted by hot sectors and typically implement using a successful, repeatable formula. Nike is a great example: it has a great brand, works with the best athletes and invests in great performance design, one category at a time... Think inside the box to make sure you’ve exploited every opportunity in your core business! Most businesses, particularly successful ones, operate far below their full potential.

Re-organisations are usually a waste of time and money because they fail to address the key driver of high performance organization (decision-making!). More than half of new CEOs embark on a reorganisation of their business, but less than a third of reorganisations add value. In fact, most structures work in most situations. Which brings us to… successful businesses focus on organizational “software” vs “hardware”. What really makes a difference, in Saenz’s experience, is to make higher quality decisions faster than your competitors and then following up on implementation. He describes a firm’s processes to connect people, make decisions and then implement them as part of this key “software”. Organisations that have higher decision effectiveness have higher employee engagement, experience higher growth rates, and deliver higher shareholder value.

2. We asked Saenz to describe a recent project…
He recently led a one-year project serving a Texas-based global construction company. The firm wanted to transform itself from a “collection of local businesses to a pan-regional organisation that shares best practices cross-regionally”, exploiting all the expertise within the firm. The goal was both to increase market share and to reduce costs, and thus deliver better shareholder returns.

This was a year-long project led by three Partners with expertise in the industry, the type of project or “capability" and the region. Bain uses the concept of “integrated expertise” by bringing together partner teams to deliver the relevant vertical, capability and geographic expertise to every project. In addition, there was a dedicated team of consultants on the ground and a parallel team at the client site, working together day to day. Saenz referred to the collaborative process as “co-creation". A further advisory team came on board as needed during the year. In total, approximately one dozen Bain consultants were involved.

“Bain & Co. had experts in strategy, operating model and organization on this project. We also had experts in different sub-sectors of construction: hospitals, water treatment plants, transportation, highways and airports.”

We also asked Saenz about any best practices in the consulting world. “One of the bad practices in the consulting industry is taking a problem at face value and deploying analytics immediately to answer the question that was asked,” says Saenz. Bain & Co. runs a “Phase Zero” before any project kicks off, during which consultants and the client make sure they’re asking the right questions, agree on methodology, and ensure they have the required organisational commitment to make decisions and implement actions. It is a “part and parcel of our Results DNA,” Saenz said.

3. We also asked Saenz about the impact of social media…
Saenz is convinced that the social media revolution will have a lasting impact on the way business is done in every sector. “Ubiquitous connectivity will lead to some of the biggest innovations in the years to come,” he says. It now costs next to nothing for governments, businesses and other organisations to reach millions of people. “It’s entered the mindset of business leaders now… even if they’re not in an industry that has been completely re-shaped by it.” One of the big changes Saenz predicts is an elevated place for customer service in the priorities of senior management. He suggests a “closed loop system” for customer feedback, in which reactions and experiences are quickly measured, recorded and shared. The next frontline person you encounter in a business will be fully briefed on your last experience, and potentially responding to your direct feedback. Eventually, it will be real time.

4. We asked Saenz about Mexico, given that he runs a large part of Bain’s business in Latin America.
Mexico has experienced growth every year since 2010, and the export sector has bounced back strongly. The big challenge in Mexico is growing the domestic economy, and providing greater value for Mexican businesses and consumers (vs export-led growth). Part of the issue is that many domestic sectors are still oligopolies - including oil, telecoms, electricity and media; this tends to reduce competition and thus innovation and investments. President Enrique Pena Nieto, who took office last year, has a “great reform agenda”. He has pushed aggressive reforms in education and telecommunication through the legislature, which makes Saenz “very hopeful.”

Finally, we asked Saenz about culture...  

5.  Running a business of any size? Saenz’ advice: Focus on your culture...
Bain & Co. has 50 offices in more than 30 countries, but it has an incredibly strong culture, says Saenz. A “Bainie” landing in Texas from Japan is supported so that he or she can step up straight away to work with colleagues and take on a project. Saenz believes in rewarding behaviour that “confirms your operating principles”, something companies often forget to do. “If I ran a business, building an amazing culture would be a non-negotiable priority."

And we asked about high performance cultures… Saenz praises these firms for their investment in employees, and obsession with customer service.

Enterprise Rent a Car - a branch manager discovered that customers reported high satisfaction when they got a cold bottle of water in the car. Within a few hours, every Enterprise Rent a Car vehicle was stocked with water!

SouthWest Airlines - based in Saenz’s home town of Dallas, Texas. It has focused on customers since it was established in the early 1970’s, and, for four decades, there’s a “non-negotiable” set of expectations regarding excellence, loyalty, service and “doing the right thing” - all the way from management to every front line employee.

See the full video of Hernan Saenz speaking at the recent Cornell MBA reunion here!

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Maria Ahmed
Author:
Maria Ahmed
Published:
Thursday 1st August 2013 09:00:00 GMT

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