Bain & Co. solves Middle East crisis

Instantly, the Middle East crisis came into sharp focus. Applying NPS®, the entire conflict could be cast in terms of a company (Israel) whose customers (Palestinians) were not brand loyal.

Seth Redniss
21 August 2012

In Jean Luc Godard’s Breathless, charismatic criminal Michel Poiccard states:

“Informers inform, burglars burgle, murderers murder, lovers love, consultants consult.”

My slight liberty with the end of this pithy truth does little to alter its premise: human beings tend to act in conformity with their nature. Nowhere is this clearer than with Mitt Romney, a staunch adherent to the management consulting techniques developed by Bain & Co. Romney has used Bain consultants to assess virtually all of his professional decisions in both the private and public sectors. Seen in this light, it becomes self-evident that quibbles about when Romney left Bain miss the point altogether. Romney never stopped being a Bain consultant. At a certain point, he merely reversed roles and became a Bain employer.

Management consultants love military terms and military strategy. They understand, after years of second and third-hand military experience, that corporations are more than mere people. Corporations are also war zones. It is not uncommon in Boston board rooms to see highly ranked consultants clad in Kevlar pinstriped suits performing tracheotomies with a laser pointer. Indeed, the Bain web site makes lavish use of the most important military term: the “front line.” A search of Bain’s website, www.bain.com, for the phrase “front line” yields an astonishing 231 results. I am not kidding.

Given Mr. Romney’s loyalty to the Bain Way, would it be instructive, it occurred to me to ask, to consider how the Bain model would cope with weaponized conflict in the Middle East ?

Phase one: selecting a metric for success

Bain’s website details a mind-blowing variety of fix-it methodologies. In just a few minutes online, I saw that Bain had at least 25 different ways to solve the Middle East crisis. Against instinct, my confidence rose. It was not a question of if Bain could solve these problems; the only legitimate question was which approach would deliver the fastest and longest-lasting solution.

As I scoured the list of proprietary Bain solutions, I could practically feel peace envelope the region. Complexity Management. PI X-Ray. Lean Six Sigma. Sales & Channel Effectiveness. Decision and Organization Diagnostic. Decision Effectiveness. Measures & Incentives. Performance Culture. I almost expected 7 Minute Abs to make an appearance.

It was reassuring to know that there was a cool, textbook approach for even the most entrenched problems. Then something caught my eye: Bain’s trademarked Net Promoter System, with an ®. I estimated that Bain had invested at least $1,500 in registering a federal trademark and surmised that this Bain methodology would be even more potent than the others.

According to Bain.com, the Net Promoter System, or “NPS®”, is a way to quantify the attitudes that customers have towards the companies they do business with. Through thousands of interviews, Bain discovered that the way customers answered a single question could predict their behavior. Bain calls this, and, again, I am not kidding, the “Ultimate Question.” This is the Ultimate question:

“How likely is it that you would recommend Company X to a friend or colleague?”

Instantly, the Middle East crisis came into sharp focus. Applying NPS®, the entire conflict could be cast in terms of a company (Israel) whose customers (Palestinians) were not brand loyal. Restated, geo-politically, the Ultimate Question to be asked of the Palestinians was:

“How likely is it that you would recommend Israel to a friend or colleague?”

Phase two: data gathering

Bain NPS® ranks satisfaction on a 10 point scale and classifies customers in three groups. Promoters are the most loyal fans and score a 9 or 10. Passives are “passively satisfied” customers and score a 7 or 8. Lastly, Detractors who are known for “criticisms and bad attitudes [that] diminish a company’s reputation, discourage new customers and demotivate employees” score only a 0.

The lower the NPS score, the bigger the satisfaction problem.

There are more than 4 million Palestinians in West Bank, Gaza and Jerusalem. Of this total population, anecdotal evidence, including schoolbooks in circulation, suggested that there would be a statistically insignificant number of totally satisfied Palestinian Promoters completely loyal to the Israeli brand.

I moved onto the next category, hoping to quantify the population of Palestinians “passively satisfied” with Israel. I knew that there were few better sources for local Middle Eastern intelligence than the American CIA and went to my source.

The CIA’s website pegged Palestinian GDP at $2,900 per year. Given Romney’s recent upward revision of this figure to $10,000, I used my math to average out GDP at $6,500. In order to sustain this level of production, the Palestinian Authority had to maintain steady employment of almost 76%, equal to a work force of 745,000. These were my “Passives” – satisfied but just barely.

Finally, by calculating the 18.3% of the population below the poverty line, I identified 732,000 Palestinian Detractors, the lowest scoring on the NPS scale.

Now that I had my NPS numbers, I simply needed to subtract the number of Detractors (732,000) from the number of Promoters (0). This calculation yielded an NPS of negative 732,000. [Click here to see the math].

Looking at the NPS score, the core issue was obvious: the levels of dissatisfaction were extremely low and a high percentage of Detractors needed to be converted into Promoters. I also noticed that by translating the issues into numbers, there no longer was a “crisis” at all, only a low NPS score.

Now that the goal of raising the NPS score was crystal clear, I needed to analyze and interpret the data I had gathered.

Phase three: analysis and recommendations

Bain told me that investment is a bedrock principle of earning customer loyalty and that it was “possible to calculate loyalty economics with great precision.” In order to determine the level of investment, I had to quantify the “lifetime value of average customer” according to Bain’s formula.

After plugging my data in this formula, I saw that there was a zero lifetime value for the simple reason that the average Palestinian did not invest in Israel, obviously preferring to invest in other markets and assets. As I stared at the numbers and the data on the CIA’s website, another insight came into focus. I saw that Palestinians spent very little money on importing food, and much more money on guns.

Obviously, a nation able to spend millions more on target shooting than on food meant that they had to be 100% self-sufficient. If they grew everything they needed and had an essentially unlimited food supply, they must also have housing and other infrastructure. Accordingly, I took those needs off the lists I was making of satisfaction-related issues that needed to be addressed as part of a solution.

By removing what for many other countries are necessities off this list, only a single category of goods that the Palestinians could purchase from the Israelis was left: luxury goods. I don’t know why I hadn’t seen it sooner. Despite its conspicuous absence from commerce, the Israeli’s had no marketing initiatives directed towards building awareness of Israeli luxury goods in the West Bank or Gaza.

I wasn’t immune to the disparity in GDP’s between the two countries, but that seemed only a question of pricing. With the right pricing strategy, the two groups could begin to invest in each other, develop synergies, and the Palestinian NPS score would rise, increasing levels of satisfaction.

I didn’t want to get ahead of myself, but assuming that the peace held, they could even patent their conflict solution model and license it to other war-torn regions across the world, sharing revenue as the two former enemies gradually reconciled around the globe, for profit.

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