McKinsey & Co.

Managing Knowledge and Learning

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

Marvin Bower• Young lawyer w/ Harvard MBA• Upgraded the firm’s image to “efficiency experts” or “business

doctors”• Vision

– Focus on issues important to top-level mgmt– 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

Decade of Doubt

• 1970s, growth began to stall and the conclusion was the company has been growing too fast

• Associate to MGM ratio to be reduced from 7:1 to 5/6:1

• Emphasis to be placed on the “T-shaped” consultants” – those who supplemented a broad generalist perspective with an in-depth industry or functional specialty

Ron Daniel• Managing Director in 1976, Regional Manager for NY Office• Competitor BCG focused on “thought leadership” vs McKinsey’s “client relationship” focus.

– BCG used experience curves and growth-share matrix– McKinsey had a generalist model

• Debated on updating the firm’s commitment to serving its clients and developing its consultants• Created industry-based Clientele Sectors

* Consumer products * Banking *Industrial Goods * Insurance * etc.

• Development of firm’s functional expertise where knowledge and information was diffused and minimally codified

– Strategy– Organization– Operations

• Strategy created concern as was– Product focus vs customer focused– “Fly in Fly out”

• Leveraged Company Expertise– Assemble working groups to develop knowledge in two areas: strategy and organization– 3 day meetings to share ideas and develop an agenda for the strategy practice– 2nd group was brought together to articulate the firm’s existing knowledge in the organization arena.

• 1980s, growth resumed with a cautious optimism

Revival and Renewal

• Centers of Competence– Virtual Centers– Knowledge development had to be a core activity, ongoing,

institutionalized, responsibility of everyone– Changed internal hierarchy– “Snowballing”

• Building a Knowledge Infrastructure– Firm refocused on individual consultant training– Centers of Competence began generating new insights, and

many began to feel the need to capture and leverage learning– Non-packaged ideas 1978 launched the McKinsey Staff Paper

series. (capturing internal developed knowledge)

Knowledge Management

• 1987, Fred Gluck (managed the super group) launched a Knowledge Management Project. 3 recommendations were made:– Firm had to make a major commitment to build a

common database of knowledge accumulated from client work

– Ensure databases were maintained and used. Hire fulltime practice coordinator.

– Firm expand its hiring practices and promotion policies to create a career path for deep functional specialist “I” vs “T” shaped

Bill Matassoni

• Firm’s Director of Communications• Brook Manville, Yale Ph.D teamed to implement

Knowledge Management– First focused on FPIS, Firm Practice Information System

• Installed new systems and procedures to make data more complete, accurate, and timely, not just an archival record

– Practice Development Network(PDNet)– Knowledge Resource Directory (KRD) Assembled a listing of all

firm experts and key document titles by practice area and published it in a small book.

• Reflection: the infrastructure changes was not to create a new McKinsey, as to keep the old”one firm” concept as they grew

Managing Success

• Clientele and Professional Development Committee– Objective of replacing the leader-driven knowledge creation and

dissemination process with a “steward model” of self-governing practices focused on competence building.

• Engagement Team– Assembled to deliver a three or four month assignment for a

client– Highly efficient and Flexible unit– Focused on immediate task rather than long term need

• Client Service Team– Add long term value– Increase the effectiveness of individual engagements

• Develop Multiple Career Paths

Congruence Model

Critical Tasks

People Formal Organizations

Culture•Norms, Values•Communications Networks•Informal Roles•Informal Power

•Strategic Grouping•Formal Linking•Rewards•Information Systems•Human Resource Management Systems•Career Systems

•Human Resources Capabilities•Competencies

Strategic Choices•Strategy•Objectives•Vision

•Component Tasks•Work Flows/Processes

Executive Leadership•Competencies•Demography•Group Process

Jeff Peters and Sydney Assignment

• Challenges– Industry expertise “conflicted out”– Resources were unavailable due to timing in Australia

• Resolved– 20% of consultant hired for project were inter-office

loans– Internal specialists were assembled to consult the

team– Utilized the KRD, FPIS, and PDNet resources

Warwick Bray and European Telecoms

• Warwick Bray was an “I” specialist and was overwhelmed by demands for help

• Leveraged the practice coordinator, creating development and growth.

• Practice Development documentation is created by individuals associates who would step back after several engagements and write a paper on their new insights.

• It was a new generation of practice leadership– Attract the best associates– Developed a consistent pool of specialists

Stephen Dull

• Turn that frown upside down• Mckinsey focused on client personal

relationships, whereas Dull was more focused on industrial marketing– This led to Dull focusing on a B to B strategy– GDL decided that 20-25% should be functioning

experts

• Dull’s new center was successful and had new options available to him– Writing a book– Enhance internal credibility and external visibility

Rajat Gupta• Capitalize on the firm’s long term investment in practice

development– FPIS– PDNet

• Practice Olympics– Experiment began in German Office– 2-6 teams from office around the world were encouraged to develop

ideas that grew out of recent client engagements and formulize them for presentation at a regional competition

• 6 Special Intiatives-led by senior partners, focused on emerging issues– Internal and External Expertise to develop “state of the art” formulations

of each key issue.– Focused on the shape and function of the corporation of the future– Creating and managing strategic growth– Capturing global opportunities