It may sound like the national budget today, but the crisis was Bain & Company in the early 1990s. The Boston consulting firm was in deep trouble. Workers and clients were starting to jump ship. Mitt Romney was called in to save the day.
Theres nobody that I can conceive of who could have come into that fractious situation, and pull that together, said Clay Christensen, a former Romney colleague whos now a professor at Harvard Business School.
As interim CEO of Bain & Company, Romney negotiated with banks to buy time. He convinced employees and clients to stay on. And most spectacularly, he won $130 million in concessions from the founding partners, including Bill Bain, the very man who brought in Romney to fix the mess. Christensen says it was Romneys crowning business achievement.
It was a remarkable political feat, considering that Romney built his career not on bringing people together, but rather on bringing companies in line. In 1984, Romney was chosen to run a spinoff venture of Bains consulting business not because he was a consensus builder, but because he was a tireless pragmatic.
Mitts a guy who goes and goes and goes all day long, said Geoffrey Rehnert, who worked with Romney from the very start at Bain Capital, Bain & Companys then-new private equity firm.
Ive never worked harder in my life, Rehnert remembered. I think the first four years at Bain Capital, I took one week of vacation. Not one week per year, one week in a four-year period.
On the surface, Romneys team did what other management consultants did. Theyd look at a company, go through its books, find out everything they could about it and its industry. Theyd even count cars in the parking lot of competitors to figure out how many people worked there. Rehnert says Romney was ruthlessly data-driven.
Dive into the detail, Rehnert remembered of Romneys capability, to the point of building models, reading legal documents, drawing slides, taking notes, and then he could zoom right back up to 50,000 feet and look down and see the big picture.
And then decide what to do. What made Romney a millionaire hundreds of times over was the fact that Bain Capital owned these companies. The venture wasnt simply a consulting firm that wrote a report with a list of recommendations, hoping the client company would follow through. It made the company follow through.
Hes a very self-confident problem-solver and deal-maker, too, said Walter Kiechel, who wrote a book on management consulting, The Lords of Strategy. He says at the time Romney was running things, the American corporate landscape was ripe for improvement. A lot of companies were basically coasting. They were not focused, and they were poorly managed.
One of the most common problems was that companies didnt really understand their own costs, Kiechel said, as surprising as that may sound.
Romneys operation at Bain Capital employed different strategies to make its acquisitions more profitable. It would sell peripheral business units and concentrate on the cash cows. It would close down operations that were losing money. Sometimes, that meant bringing in a new CEO to get things in order. Sometimes, it meant laying off people.
