Why Trusting Algorithms Is Crucial For Digital Transformation

Q: How does Bain & Company leave a lasting impact on its client’s operations?

A: Bain & Company, as strategy consultants, advises CEOs and general managers across different topics. Unlike other consulting firms, we focus on advising top executives rather than engaging in other types of consulting. Bain & Company has been operating for over 50 years, and as we evolved, more companies have asked us to stay longer and be part of the transformation process.

Our projects often have multiple stages: assessing the problem, generating recommendations, and staying for their implementation. We are careful to balance our involvement so we do not lose our objectivity as external advisers. Our goal is to recommend, implement change, generate internal capabilities, and then leave, ensuring we make a significant impact.

Q: How do you ensure that the improvements you implement are sustainable over the long term?

A: It is crucial to work closely with the client during the transformation, ensuring a phased approach that is not abrupt. We do not leave suddenly; we phase out gradually while developing long-term relationships with our clients. We aim to achieve sustainable change, measured by tracking the stock performance of our clients compared to the S&P 500. Our clients typically outperform the market, indicating that our changes are effective and lasting.

Q: How does Bain & Company assist clients in developing and implementing strategies for a digital transformation?

A: It is rare to work on a project that does not involve a digital aspect. Bain & Company's technology and AI revenue already represents 30% of the firm's business in 2024 and Bain expects this to reach half of revenue in the coming years.

We employ more than 1,500 experts in its expanding digital teams across its Advanced Analytics, Enterprise Technology, and Innovation & Design practices. It has also expanded its ecosystem to more than 700 partner organizations, including key alliances with OpenAI, Microsoft, AWS, Google, SAP, Salesforce, and IBM.

Consumer Products, on average, are later in their digital transformation. Other industries were transformed or disrupted first, for example, retail, airlines. CP has lagged a little behind[1] . Over the past few years, we have supported several large CPCs in Latin America, helping them establish new capabilities, change their organization, and develop roles that are essential for bridging technology and business needs.

Q: What challenges do companies typically face when implementing their digital initiatives?

A: Scaling is the biggest challenge. Many companies are still in a trial phase, whereas others have managed to scale solutions, platforms, and models to run their businesses. Another challenge lies in shifting the mindset from using data to inform decisions to developing tools that run the business. Moving from descriptive analytics to prescriptive analytics requires trust in the algorithms and models that automate business decisions.

AI is particularly exciting because it can extract insights from unstructured data, making it easier for companies to leverage their information. This capability reduces the need for extensive data cleaning and allows for more efficient operations. AI is set to generate significant efficiencies across industries, including consumer products, financial services, and industrial companies.

Q: How does Bain & Company’s motto of fostering an insurgent mindset with integrated innovation and a collaborative culture help its clients?

A: The insurgent mindset concept stems from research showing that companies maintain agility, quicker decision-making, and a willingness to take risks when they operate with a founder’s mentality. As companies grow and professionalize, they tend to lose this mindset. Companies that manage to maintain it as they scale up are typically successful.

We incorporate this mindset into our strategy by simplifying decision-making processes, establishing dedicated teams for innovation and growth, and creating separate business units with different governance and metrics. This approach fosters agility and innovation while maintaining a large company's stability.

Q: How does Bain & Company assist companies in pricing strategies, particularly in the consumer products sector?

A: Pricing is a complex topic. Consumer products companies have struggled with volume growth in recent years, partly due to shifts in consumer preferences toward insurgent brands. These brands capture significant market share, leaving legacy companies needing to grow through pricing strategies.

Revenue growth management (RGM) is a critical capability that involves having the right price architecture by channel and leveraging big data for pricing decisions. Companies can now differentiate prices by region or outlet, providing tailored promotions and pricing strategies that were previously unmanageable. Developing internal capabilities around RGM is crucial for long-term success.

Q: How are the insights of Bain & Company’s Consumer Pulse 2024 report shaping the company’s recommendations to clients in the consumer sector?

A: The report offers insights into consumer intentions rather than behaviors, highlighting a gap between what people aspire to do and what they actually do. This indicates that companies need to be aware of these shifting perceptions, as customers are likely to evolve into new habits and, eventually, consumption patterns.

One of the key insights that this study provides is that 52% of Mexican consumers are increasingly focused on their health, seeking healthier food and beverage options. This trend has been consistent and is growing, underscoring the need for companies to innovate and provide healthier products. Ongoing global challenges, such as high inflation and geopolitical tensions, are leading to a growing concern for mental health. Consumers are looking for products that support their emotional well-being, presenting an opportunity for companies to develop and market such offerings.

While price and quality remain top priorities for consumers, there is also a significant interest in environmentally friendly products.  This represents a challenge for companies because even when 90% of the surveyed affirms that sustainability is a relevant factor in their purchase decision, only 24% would be willing to pay for a product of this type. In this context, companies need to integrate sustainability into their core strategies; this involves finding ways to offer eco-friendly products at competitive prices.

Finally, there is a growing preference for local brands in Mexico, with consumers increasingly valuing the quality of domestic products. This trend presents a significant opportunity for local entrepreneurs and companies to capitalize on the rising favorability of local goods.

Q: What are the primary objectives and key metrics for Bain & Company in 2024?

A: A primary objective is to continue our recent advances. In 2025, we will celebrate our 20th anniversary in Mexico, having grown significantly from a small team to making the division a major player in the region. Our goals include deepening client relationships, maintaining our agility, and continuing to drive significant transformations across various industries. We aim to stay at the forefront of digital and technological advances, ensuring we provide our clients with the best strategies and implementations for sustained growth and success.

Bain & Company is a global management consulting firm that serves clients across many industries, including technology, healthcare, financial services, consumer products, retail, energy, and manufacturing. It is considered one of the "Big Three" management consulting firms.