Wednesday, February 1, 2012

Competition’s Unintended Consequences

Bruce Henderson, the founder of the Boston Consulting Group, so believed in the virtues of competition that early in the firm’s life he broke the company’s employees into three groups. He then left the groups to compete against each other for clients, profits, and glory. The blue group (the others being the red group and the green group) triumphed easily. In fact, the group did so well in attracting clients and creating profits that one of its leaders, Bill Bain, left BCG and formed his own consulting company, Bain & Company. On his way out the door, Bain poached most of the blue group’s employees and clients, including Black & Decker and Texas Instruments. Bain & Company would go on to become one of BCG’s fiercest rivals.