McKinsey & Company : Managing

Knowledge and Learning

Group 3

Early History
Mckinsey- Accounting and Engineering Advisors 1962

James (Mac) Mckinsey, University of Chicago professor

General Survey Outline - Undeviating sequence of
analysis

Goals
Strategy
Policies
Organization
Facilities
Procedures
Personnel
Encouraged the to think for themselves

Early History
Marvin Bower

Upgraded the firms image to efficiency experts or business doctors

Vision
Focus on issues important to top-level management
High standards of integrity, professional ethics, and technical experience,
able attract and develop men of outstanding qualifications and committed
to raising its stature and influence
Serve its clients superbly well
ONE FIRM policy
Required all consultants to be recruited and advanced on a firm wide basis
Clients to be treated as responsibilities
Profits to be shared from a firm pool
Every assignment should bring more than revenue experience/prestige

Initial Challenges
Growth started to slow down
Contributions: growing competition and client sophisticated needs
Conclusion: company had been growing too fast and neglected
internal skill development
The generalist view to problems no longer held beneficial due to
increased client sophistication
Need for development of T shaped consultants

Ron Daniel and the Practice Development

Initiative
Challenges Faced

Economic Turmoil
Broad Generalists Vs. In-Depth Knowledge
Competition (BCG)
Experience Curve
Growth-Share Matrix

Ron Daniel and the Practice Development

Initiative
Solutions
A full time director of
training
New Commitment and
Mission Update
Serve Clients and
Train/Develop its
Consultants

Structural Changes: Matrix

Organization
Industry-Based Clientele
sectors: consumer
products, banking
industrial goods,
insurance etc.
Functional Expertise
Strategy, Organization

Problem Raised:

Product focus vs customer

focused
Fly in Fly out
Leveraged Company Expertise
Assemble working groups to
develop knowledge in two
areas: strategy and
organization

Results:
Growth and Confidence
resumed
New Group to articulate the
firms existing K in the
organization arena

Fred Gluck and Centers of Competence

Building a Knowledge Infrastructure:
Wanted to bring an equally
capture and leverage the learning
stimulating intellectual
environment to McKinsey
Launching of a KM Project (1987)
Common Database of Knowledge for all
Creation of Centers of Competence
Knowledge Development was core
Institutionalized and ongoing
Responsibility of Everyone

Goals: Develop Expertise +

Renewal of the Firm Intellectual
Resources
SNOWBALL MAKING (practice
development) X SNOWBALL
THROWING (client development)

Hire of a Full Time Coordinator for each

Practice Area
New Career Path

Tools & Managerial Practices

FPIS (Firm Practice Information System)
PDN (Practice Development Network)
KRD (Knowledge Resource Directory)

Benefits and Limitations to the Approach

Benefits

Enhanced knowledge creation

Common methodologies and standards for knowledge
management
Technical and professional expertise
Attain sustainable growth and eliminate pressures of competition
Limitations

Short term focus

Longer time and unwillingness to create knowledge
Difficult to embed the knowledge into critical client problems
Islands of competencies due to poor communication

Environmental Challenges of
International Management

Evaluate the role of

thought leadership in the
development of the firm.

 Thought Leadership is establishing a relationship with and delivering something of

value to your stakeholders and customers that aligns with your brand/company value.
In the process you go well beyond merely selling a product or service and establish
your brand /company as the expert in that field and differentiate yourself from your
competitors.

~ Forbes

Thought leadership as a buzz word or jargon used to describe a futurist or person who
is recognized among their peer mentors for innovative ideas and demonstrates the
confidence to promote or share those ideas as actionable, distilled insights.
~ Wikipedia

It is the recognition from the outside world that the company deeply understands its
business, the needs of its customers, and the broader marketplace in which it
operates.

~ McKinsey

Thought Leadership & McKinsey

Launch of the McKinsey Staff Paper series in 1978.
By the early 1980s the firm was actively encouraging its
consultants to publish their key findings.
Initiative got a major boost with the publication in 1982 of two
major bestsellers
Peters and Waterman's In Search of Excellence and Kenichi
Ohmae's The Mind of the Strategist.

Moving ahead.
Reengineering the Corporation by Michael Hammer and James Champy, and
Built to Last and Good to Great by Jim Collins
Introduction of the idea of Practice Bulletins- two page summaries of important
new ideas that identified the experts who could provide more detail.
Collected the 2,000 documents that they believed provided the critical mass to
launch PDNet.
The Knowledge Resource Directory (KRD) became the McKinsey Yellow Pages
and found immediate and widespread use firm-wide.
Although the computerized data bases were slow to be widely adopted, the
KRD found almost immediate enthusiastic acceptance.

The RAT framework

The capabilities
developed in the
US and European
market were
relevant to
customers in the
target market. In
other words,
would they create
value for the
customer by
providing
expertise in
consultancy.

Appropriable?

Transferable?
McKinsey
deployed its
capabilities
effectively in the
target foreign
locations like
Geneva,
Amsterdam and
Paris without
sacrificing too
much value
creation.

The CAT framework

The new assets
and capabilities
that McKinsey
developed were
complementaryto
the existing
capabilities that
constituted the
base of the
companys
competitive
advantage

They appropriated
enough of the
value of these new
capabilities by
increasing the
client base.

The company
effectively
transferred them
back from the
experts and
consultants and
integrated them
into its capability
set without
sacrificing their
value.

How can we integrate the insight

from this case to our overall
understanding of the competitive
advantage of multinational firms?

Competitive advantageKey
insights
Vision for an MNC firm
usually focuses on issues of
importance to top level
management, adhering to the
highest standards of
integrity, professional ethics,
and technical excellence.

Result:
Ability to attract and develop young
men of outstanding qualifications,
and committed to continually
raising stature of the organisation.
Ability to serve clients superbly
well.

Multinational
firms
advantageousl
y tap both
internal and
external
expertise to
develop
"state-of-theart"
formulations
of each key
issue.

Competitive advantageKey
insights
Provides a
means to do
longer term,
bigger
commitment,
crossfunctional
development.

Result:

Creating other
pools of
dedicated
resources
protected
from daily
pressures and
client
demands, and
focused on
long term

The firm's
functional
knowledge is
reasserted.

Organisation
can recruit
more
researchoriented
people and
link more
effectively
into the
academic
arena.

Competitive advantageKey
insights
Multinational companies
believe in implementing and
creating industry-based
Clientele Sectors in
consumer products,
banking, industrial goods,
insurance, etc., cutting
across the geographic
offices that remains the
primary organizational
entity.

Result:

Creation of
expertise in areas
like strategy,
organization and
operations where
knowledge and
experience are
usually diffused.

Competitive advantageKey
insights
To complement the
growing number of
Clientele Industry
Sectors, MNCs
create Centers of
Competence built
around existing
areas of
management
expertise like
strategy,
organization,
marketing, change
management, and
systems.

Result:
Help in the development
of consultants and
ensures the continued
renewal of the firm's
intellectual resources.
For each Center, one or
two highly motivated,
recognized experts in
the particular field can
be identified and named
as practice leaders.

Competitive advantageKey
insights
Big MNCs have a strong foundation of a common database of
knowledge accumulated from client work and previously developed
practice areas.
They hire a full time practice coordinator who could:
Be responsible
for monitoring
the quality of
the data

Be useful in
helping
consultants
access the
relevant
information.

Result:
This way, all possibilities are explored in which the firm could ensure
that the expertise it has been developing creates positive measurable
results in each client engagement.

Competitive advantageKey
insights

Capitalizing on the
firm's long term
investment in
practice
development driven
and supported by
the knowledge
infrastructure
(eg.PDNet and FPIS).

Embracing a grassroots knowledgedevelopment

approach where
teams from around
the world are
encouraged to
develop ideas out of
recent client
engagements at a
regional competition
with senior partners
and clients as
judges.

Result:
Their value added is
in their access to
knowledge, the
intellectual rigor they
bring, and their ability
to build
understanding and
consensus among a
diverse management
group in the company.

If I help a partner serve his client better, he will call me back. It's all
about relationships, forming personal bonds, helping each other.

MNCs like McKinsey have specific intranet link designed to allow

members direct access to:
the practice's
knowledge
base (PD
documents,
conference
proceedings,
CVs, etc.)

its members'
capabilities
(via home
pages for
each practice
member),
client base
(CST home
pages, links
to client web
sites)

external
knowledge
resources
(MIT's
Multimedia
Lab, Theseus
Institute, etc.)

Result:
Telecom Intranet accelerates the "engage-explore-apply-share"
knowledge cycle.

Firms industry sectorwise approach

Industry Insights

Conditions differ significantly from sector to sector.

No standard solution applicable uniformly across different sectors.
McKinseys growth stalled.
Started losing clients as well as recruits.
Economic turmoil, growing sophistication of the clients, new focussed
competitors.
Generalization was slowly getting replaced by expertise.
Mckinsey struggling to meet the challenges laid out in the commission
report
Aggressive competitors have entered into the arena with totally
different and efficient models than Mckinseys local office-based model
of Client Relationship Consulting.

Benefits of such approach

Development of client as well as consultant.
New clients demands were in the lines of the industry practises and
not according to the traditional practises of Mckinsey, thus they can
cater to the new clients and expand business.
This approach eventually created a knowledge management system
within the organization which helped in taking key management
decisions for the clients.

Drawbacks
Required serious structural changes.
Resistance to change.
Could damage Mckinseys current advantage of local office presence
which might lead to losing a fair bit of clients.

Knowledge Development
Challenges

Knowledge Development Challenges

Identifying key tacit knowledge assets and managing these assets so that they
are accurate and available to people throughout the organization remains a
significant challenge
Overlooking the need of sharing knowledge
There is also a dark side on technology; it can drive out communication and
people start believing that e-mailing someone is the same thing as talking to
them. So teams shouldnt stop meeting and practice conferences should not be
held on discussion forums online.
In addition, IT can sometimes lead to information overload; the more time
employees at McKinsey spend searching out the ideal framework or the best
expert, the less time they spend thinking creatively about the problem.
Too much focus on knowledge, and less on service
Data becomes out of date very quickly
High Cost
Uncertain payback on the investment- High Risk

How to best utilize the

knowledge
Better communication between the Research Centers/ Global
Institutes and the Company
Aggressive use of technology
Not only to support knowledge transfer, but also in allowing partners to
mentor more young associates.

Improving knowledge transfer through job rotation

Appreciation & Incentives for the individual sharing useful
knowledge & insights
Knowledge networking through communities of practice
Ongoing basis
Share ideas & insights

How to best utilize the

knowledge
The interaction of Knowledge Management and Strategy
The importance of developing a Knowledge Culture
The Knowledge Management dilemma: Looking Backward vs.
Looking Forward
The relationship between Knowledge Management and Value
The relationship between Knowledge Management and Technology
The relationship between Knowledge Management and People
Networks

KNOWLEDGE REQUIREMENTS OF A GLOBAL MANAGER

Strategic
Management
Concepts
Country-Specific
Knowledge

Global
Environment

(i.e., culture, govt

regulations, market
conditions, etc.)

(macroeconomic,
financial, political,
competitive)

Firm-Specific
Knowledge
(capabilities,
products, etc.)

Technology

Role of TechnologyIS Infrastructure

Support Decision Making &

FPIS (Firm Practice Information System)
Business Processes
Databases of clients engagement
Competitive Strategy
Increased accessibility & reliable information
PDN (Practice Development Network) To gain Business Intelligence
Organizations rely on a
Manage documents
complex, interrelated
Core knowledge of each practice
KRD (Knowledge Resource Directory) information systems
infrastructure to effectively
List of all firm experts and key documents
thrive in the ever-increasing,
For internal use
competitive digital world.

Linking knowledge
management approach to
strategy

Advantages of Technology
Stocks of knowledge
Flows of knowledge
Knowledge management
efficiency
Offer new possibilities to the
KM processes
higher capacity data storage
knowledge engineering
approaches
computer-aided DSS

Strategic decision-support systems

A set of adequate combination of
specialized software and hardware
Explicitly to link strategy, knowledge
and performance in order to increase
the probability of adding value
Needed links between the strategy
and what their intelligent agents
need to know, share and learn to
operate during the strategy
implementation

Thank you