June 21st, 2012 Bruce Henderson
Bruce D. Henderson (1915-1992) was the founder of the Boston Consulting Group (BCG). Henderson founded BCG in 1963 in Boston, Massachusetts.
Originally called the Management and Consulting Division of the Boston Safe Deposit and Trust Company, what became BCG was itself a subsidiary of The Boston Company. A former Bible salesman for Southwest Publishing (which his father owned for 50 years), Henderson attended the University of Virginia and then earned an undergraduate degree in mechanical engineering from Vanderbilt University before attending Harvard Business School. He left HBS ninety days before graduation to work for Westinghouse Corporation, where he became one of the youngest vice presidents in the company's history. He was named one of Time Magazine's top 10 news makers under 30 years old.
He left Westinghouse to head Arthur D. Little's management services unit before he accepted the challenge from the CEO of the Boston Safe Deposit and Trust Company to start a consulting arm for the bank. The billings for the first month of BCG were only US$ 500. Nevertheless, Henderson hired his second consultant, Arthur P. Contas in December 1963.
The Economist magazine stated that Henderson did more to change the way business is done in the United States than any other man in American business history. Well known to many now is the famous Growth Share Matrix ('cash cow') and the 'Experience curve'. His books were published in 27 languages.
Henderson retired to Nashville, and taught at The Owen School of Management at Vanderbilt University. He was also honored by Vanderbilt's School of Engineering by being named to their rarely bestowed 'Distinguished Engineering Alumni'. Today BCG is among the largest and most profitable management consulting companies in the world. It has 63 offices in 37 countries and in 2006 had a revenue of US$ 1.8 billion.
The Experience Curve Effect
The concept of the Experience Curve was first hypothesized by Bruce Henderson of the Boston Consulting Group in 1966, as a result of observations he made related to the semiconductor market. The concept was revised over subsequent years and has now become a universally accepted principle of business strategy. Similar to the Law of Gravitation (and other fundamental principles in Physics), the proof of the Experience Curve concept is purely empirical.
The Experience Curve is defined as: "Costs of value added activities, net of inflation, will characteristically decline 25 to 30 percent each time the total accumulated experience has been doubled."