Bruce Henderson

Bruce Henderson

   

Bruce Doolin Henderson was born in Nashville, Tennessee, on April 30, 1915. He earned an undergraduate degree in engineering from Vanderbilt University in Nashville and attended Harvard Business School.

Bruce joined the Westinghouse Corporation in 1941. He worked there for 18 years, becoming one of the youngest vice presidents in the company’s history. In 1959, Henderson joined Arthur D. Little as senior vice president of management services.

It was four years later that Henderson was encouraged by the CEO of the Boston Safe Deposit and Trust Company to start a consulting department within the bank. He accepted the offer and started what would eventually become The Boston Consulting Group. During his tenure, BCG grew from a one-man operation to an international management consulting firm.

It’s hard to overstate Henderson’s impact on both BCG and business strategy. The former he not only founded but also shaped through the force of his character, intellect, and vision; “bold” is perhaps the best way to describe all three. The latter he influenced through his groundbreaking ideas as well as his relentless—and, for the time, wholly unconventional—focus on helping clients think and do things differently. Neither would be what it is today without him.

An Early (and Unorthodox) Focus on Strategy

Henderson had long been fascinated with competition, and he knew that it was only under pressure from the marketplace that most companies would change long-established ways of doing business—or hire upstart consulting outfits, for that matter.

As the fledgling consulting division looked for a specialized offering that would help it stand out, Henderson pushed for strategy. Perhaps the best-known story from BCG’s early history involves a Saturday retreat in 1965, when Henderson and his colleagues deliberated on the firm’s positioning. BCG needed something to distinguish itself in a crowded industry. When Henderson suggested strategy, someone objected that it was too vague. “That’s the beauty of it,” Henderson responded. “We’ll define it.”

The anecdote conveys a kind of arbitrariness, but in retrospect the choice of this foundational idea seems as inevitable as it was extraordinary. For Henderson, strategy was not just a buzzword—something to attract attention or sell projects. It was a vehicle for changing executives’ mind-set—especially with respect to how they understood their responsibilities.

Until then, most ambitious American companies had focused mainly on growth. They worked on expanding sales, establishing responsive administrative structures, modernizing accounting and controls, building up managerial talent, and boosting marketing. The most significant high-level move that companies made was diversification, a means to growth that would not trigger government antitrust concerns. International expansion was another common move.

Henderson was hardly opposed to growth, but he had seen firsthand the inefficiencies that a bias toward growth could engender. He wanted to streamline companies so they could grow in more effective ways and focus on areas in which they excelled. The only way to understand where a company would excel in the long run, he argued, was to compare it with its rivals.

BCG’s focus on strategy also differentiated the company from much larger, more established competitors. Then as now, many consulting firms made a living by sharing the best practices of industry leaders with their clients. Focused largely on organization restructuring or incremental operational improvements, they paid scant attention to competitive differentiation. Henderson and his small team had far too little client experience to compete credibly as knowledge brokers. But they could offer services in the new area of strategy, where the established firms had no track record.

For Henderson, the attention to strategy was as much a personal crusade as a business calculation. Over the years, he would aspire to bring intellectual rigor to the management decisions of American business. He aimed at transformative, not incremental, change.

An Original “Influencer”

The early emphasis on strategy helped distinguish the young firm, but just as important to the development of BCG, especially during its formative years, was Bruce’s intellectual openness and curiosity. Colleagues from those years remember an exciting atmosphere of tireless exploration and collaborative idea generation.

They also remember his larger-than-life personality, which had a rough edge to it. A true iconoclast, he never shied away from testing conventional wisdom or questioning the status quo. Although this did not bother recruits—who were won over by his remarkable intellect and the almost evangelical fervor he brought to his pioneering enterprise—his bold personality did pose a challenge to potential clients.

Rather than win over clients directly, Henderson simply took advantage of what he was good at: ideas. In 1964, he developed a novel approach to marketing a consulting firm: Perspectives was a series of highly provocative essays on strategy, published in a brochure format small enough to fit easily in an executive’s coat pocket. Henderson crafted these essays with the help of a full-time editor who was an early hire. At first, the Perspectives pieces merely excerpted ideas from other publications that had appeared in less user-friendly formats. But soon Henderson and his colleagues were introducing their own ideas, which proved far more appealing than what executives were seeing elsewhere.

It was one thing to offer intriguing ideas, quite another to demonstrate their impact. As Henderson and his colleagues worked with more and more clients, they identified something powerful: the experience curve. Although some observers saw this as little more than a broader version of the familiar learning curve, the experience curve had far more practical power. For one thing, it shook up the long-held assumption of most industrial executives that costs were largely constant. For another, it was analytically predictive.

It also gave the emerging focus on strategy an immediate agenda. Companies could regain competitive advantage by concentrating on products with a large market share—actual or potential. Greater market share meant greater scale, which led to volume, which meant experience and, in turn, lower costs.

The next few years brought more ideas that built on the early concepts of the experience curve and the growth-share matrix, most of them focused at the nexus of production economics, finance, and market competition. Henderson continued writing pieces for the Perspectives series, and his style set a benchmark for distilling complex ideas into short, sharp arguments (the New York Times, in its obituary of Bruce Henderson, referred to him as a “consultant and writer on business strategy”).

The Decisions That Defined BCG

It wasn’t long before Henderson’s consulting division expanded beyond what Boston Safe Deposit had expected. In fact, Bruce decided to open an office in Tokyo only three years after starting the firm. It was the first of many international expansions that would broaden BCG’s horizons, along with its knowledge and expertise.

In 1968, as part of a larger reorganization around a holding company (called simply The Boston Company), the bank spun off the consulting arm as a legally separate but wholly owned subsidiary. In a nod to Henderson’s growing prominence as a novel thinker, and in accordance with other consulting firms, his colleagues suggested he call the new outfit Henderson & Company. Henderson resisted. He recognized that only as a team of engaged and independent thinkers could the firm have the far-reaching impact to which he aspired. Accordingly, he took a more collegial approach and called it The Boston Consulting Group.

Soon BCG was doing even better than expected. The firm’s reputation continued to soar, and BCG opened offices in Munich and Menlo Park. Profits were strong enough to allow the BCG Employees Trust to pay off the remaining amount due to The Boston Company in 1979, five years ahead of schedule.

Then Bruce Henderson did something truly extraordinary. As founder and longtime leader of the firm, he was in a position to dictate most of the terms for the new organization. He could have designed an ownership structure that gave him the lion’s share of the firm’s equity and voting rights. Yet Henderson structured the transaction so that he held only 5 percent of the firm’s shares for himself. He also gave himself and all the other officers a single and equal vote in the firm’s decisions.

Henderson’s move was all the more remarkable in light of what immediately followed. The other officers (today called partners) coaxed Henderson into stepping down, and in 1980 he became chairman of the board. It was, in a way, a natural outcome of his leadership style and his belief in the power of BCG as a collaborative institution.

In 1985, Bruce retired from BCG to become chairman emeritus. He then dedicated his time to a teaching career at Vanderbilt University’s Owen Graduate School of Management. Bruce Henderson passed away on July 20, 1992. At his death, the Financial Times observed: “Few people have had as much impact on international business in the second half of the 20th century.”

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