McKinsey & Company

Current situation

Manage knowledge and learning

McKinsey in 1996 is one of the biggest consulting companies in the world and is famous for his knowledge. Within the company the revenue had more than doubled within the past 6 years and the focus was on knowledge development next to serving its customers. In 1994 there were 4 new plans made to stimulate these 2 objectives further. These were set by its current management director Rajat Gupta. The 4 key points are: • Capitalize firm’s long term investment in practice development driven by Clientele Industry Sectors, Functional Capability Groups, and the knowledge infrastructure of PDNet and FPIS and through new channels. • Use the new developed approach of the Practice Olympics throughout the entire firm, which is focused on the development of ideas within the company and those ideas are judged by the board of directors so there will be an internal competition focused on knowledge. • The launch of 6 special multi year internal assignments which were focused on tapping into the internal and external expertise to develop “state of the art” formulations of key issues. This was done so the firm’s functional knowledge was improved so McKinsey could focus more on longer term, bigger commitment and cross-functional development. • The last idea was aimed at expanding the model of the McKinsey Global Institute. This meant that they would try to create other pools of dedicated resources protected from daily pressures and client demands next to being focused on long term research agendas. Gupta knew that it could be possible that McKinsey would loose client work today but if it was in the best interest of the company for the future he said that they would be willing to. So he also could leave the firm stronger than he found it, which had been a key element for the leaders of McKinsey over the past decades.

Lisa Trubia, Daniel Sanders, Rutger van Wesel, Martijn Telderman Fred van Veldhoven, Aishlinn van Nikkelen Kuijper

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By doing this there became clarity in the succession of people. They are more focused on creating knowledge (within its company and in its employees) and also on the benefits for the company as a whole. McKinsey can’t keep on disaggregating their units to create niches for everyone because they have exhausted the capability of their integrating mechanisms. Another key element from McKinsey is the fact that they are not only there to serve the customer. Lisa Trubia. An important idea from McKinsey is the one firm policy. Also they try not to find a solution for the company’s current problem but moreover to find a new approach on the deeper lying problems and strategies of the firm. Also there is a focus on the client’s problem. In order to keep up with its competition McKinsey has practiced various strategies and ideas. McKinsey developed certain promotion plans. Nowadays some feared that the company was getting away from this policy. Not only the employees itself but also the idea driven personal networks they build up throughout the company. Rutger van Wesel. The employees from McKinsey are also very important. McKinsey works with an “engage-explore-apply-share” model. In order to stimulate its employees. These are mainly built up when one department provides help to another. Martijn Telderman Fred van Veldhoven. If it does this effectively the others will come back which is the start of a network. • There were concerns that the growth might stretch the fabric of the place.McKinsey & Company Key Issues Manage knowledge and learning McKinsey is not alone in the market for consulting. which boosted the confidence of the employees. It has strong competition from for example the Boston Consultancy Group. Aishlinn van Nikkelen Kuijper 3 . which consists of the recruiting of employees on a world wide base. This is focused on the building of individual and team capability as opposed to a focus on the development of knowledge. the clients to be treated as McKinsey responsibilities and profit sharing from a firm pool as opposed to an office pool. Each of these problems is treated as unique and focused on building a client relationship. But there are also others. Daniel Sanders.

So teams shouldn’t stop meeting and practice conferences should not be held on discussion forums online. McKinsey increasingly encouraged its consultants to publish their key findings. but also in allowing partners to mentor more young associates. cajoling and challenging each practice to Lisa Trubia. They are very uncertain about their promotion prospects. Rutger van Wesel. the less time they spend thinking creatively about the problem. McKinsey launched the McKinsey Staff Paper series in an attempt to deal with the problem. Not only to support knowledge transfer. Support systems To handle the internal information much thought was given to building a knowledge infrastructure. In the late 1970s.McKinsey & Company • Manage knowledge and learning To support high growth rates McKinsey must be more aggressive in using technology. But in 1995 this MGM ratio was already 8 to 1 (Exhibit 1) • Some experts inside McKinsey seem to be uncertain about their future at the company. Daniel Sanders. accurate. not just an archival record. This FIPS needed to be updated with new systems and procedures to make the data more complete. the more time employees at McKinsey spend searching out the ideal framework or the best expert. The task of implementing focused first on the Firm Practice Information System (FIPS). and timely so that it could be accessed as a reliable information resource. After a lot of begging. • In addition. IT can sometimes lead to information overload. it can drive out communication and people start believing that e-mailing someone is the same thing as talking to them. This is a computerized data base of client engagements. More difficult was the task of capturing the knowledge that had accumulated in the practice areas since much of it had not been formalized and none of it had been prioritized or integrated. Aishlinn van Nikkelen Kuijper 4 . • One of the Commission’s central proposals (settled in 1971) was that the MGM ratio would be reduced from 7 to 1 back to 5 or 6 to 1. • There is also a dark side on technology. Martijn Telderman Fred van Veldhoven. The former reluctance to document concepts had long constrained the internal transfer of ideas and the vast majority of internally developed knowledge was never captured.

structured strategies. Martijn Telderman Fred van Veldhoven. A third and smart implementation was the Knowledge Resource Directory (KRD).McKinsey & Company Manage knowledge and learning develop and submit documents that represented their core knowledge. However McKinsey. McKinsey finally launched its Practice Development Network (PDNet). Aishlinn van Nikkelen Kuijper 5 . This has since been a great resource that found almost immediate enthusiastic acceptance. Rutger van Wesel. and made three recommendations: • • The term had to make a major commitment to build a common database of knowledge accumulated from client work and developed in the practice areas. Daniel Sanders. Lisa Trubia. a Knowledge Management Project was launched in 1987. • They suggested that the firm expand its hiring practices and promotion policies to create a career path for deep functional specialist who would become more Ishaped than the normal profile T-shaped consultant. Develop T-shaped into I-shaped consultants The basic concept of shaping T-consultants into I-consultants deals with the transformation of employee skills. In the past. increasingly believed that consultants should focus more on specialized knowledge development. To ensure that the data bases were maintained and used. the emphasis was on a broad based problem solving skills and client development orientation. Believing that the firm’s organizational infrastructure needed major overhaul. they proposed that each practice area hire a full time practice coordinator who could act as an “intelligent switch” responsible for monitoring the quality of data ad for helping consultants access the relevant information. were deeply embedded in the firm’s values. The KRD became known as the McKinsey Yellow pages. This would enable them to serve the customer better with more specialized. An assembly of all firm experts and key document titles by practice area published in a small book that fitted in every employee’s briefcase.

client impact.McKinsey & Company Client impact committee Manage knowledge and learning With responsibility for knowledge management. and Switzerland. International expansion The period immediately following World War II ushered in an era of internationalism. but it tended to focus on the immediate task rather than on the client’s long term need. Rutger van Wesel. Italy. the manager director began to focus on a new theme. Bolstered by the emergence of a more highly integrated world economy. the notion of a legitimate role as a consultant to teams had evolved to a need for specialists to be “engagement director capable”. McKinsey’s growth slowed and its competitors gained ground. Many of these budding multinationals sought McKinsey's advice on how to organize as conglomerates. Aishlinn van Nikkelen Kuijper 6 . McKinsey established its first international office in London in 1959. A troubled world economy and social unrest undermined confidence. When a South American oil company engaged McKinsey to assess its global operations. One of the most important initiatives of the committee was to persuade the partners to redefine the firm’s key consulting unit from the engagement team (ET) to the client service team (CTS). France. The CST concept was that the firm could add long-term value and increase effectiveness of individual engagements if it could unit a core of individuals. The globalization of corporations helped fuel demand for McKinsey’s services worldwide. This all took place during the 1960s. The traditional ET. Germany. Lisa Trubia. It established offices in the Netherlands. Tariff barriers tumbled in the European Common Market throughout the 1960s. it seized the opportunity to test the "one firm" approach in the laboratory of the world. Daniel Sanders. The 1970s proved to be our most challenging decade. delivered a three of four month assignment for a client. He also created a Client Impact Committee. and commit them to working with the client over an extended period. Who were linked across multiple ETs. Martijn Telderman Fred van Veldhoven. was a highly efficient and flexible unit. It also added Canada and Australia to their international network. spurring many major American and European companies to reach beyond national borders.

South Africa. McKinsey also expanded into nearly 20 additional countries. Martijn Telderman Fred van Veldhoven. and Southeast Asia and added new locations in Europe and in North and South America. The clients draw on this reservoir of knowledge as a source of competitive advantage. strategy. McKinsey fortified their commitment to excellence in client service through more rigorous selection and evaluation of its people. Aishlinn van Nikkelen Kuijper 7 . Korea. Lisa Trubia. and a sharper focus on the quality of their knowledge. continually extending the depth and reach of our knowledge. opening offices in Taiwan.500 and doubling that number by 1999.McKinsey & Company Manage knowledge and learning Realizing that a course correction was needed. Indonesia. McKinsey was called upon to restructure entire industries. McKinsey subjected the firm to the trademark McKinsey in-depth analysis. it had threatened a precious commodity: the client relationships. Daniel Sanders. A substantial investment in knowledge development – particularly in the key areas of expertise. It discovered that in growing too fast. among others. and Russia. McKinsey also invested heavily in codifying its knowledge and making it accessible through an infrastructure of more than 60 areas of specialized expertise. It also began to serve clients in Turkey. India. Rutger van Wesel. McKinsey flourished in the expanding economy. McKinsey also reinforced its practices through increased recruitment of both functional and industry experts. In the 1980s the globalization expanded and with that came the need for McKinsey to develop deeper and broader expertise. and organization – fueled the internal reinvention. entering the decade with a professional staff of nearly 2. The unprecedented globalization of the 1990s redefined the parameters of business. It expanded the scope of its recruiting to increase its diversity.

Daniel Sanders. All this enabled McKinsey to gain a unique competitive advantage. This biggest problem internally was how to manage the information that existed in the company and let the company benefit from it. But one of the most important issues remained. The change of the consultant himself was a matter that McKinsey recognized. Rutger van Wesel. Martijn Telderman Fred van Veldhoven. McKinsey was able to do this by focusing its company business on a one firm vision. Consultants were encouraged to publish their work. McKinsey goes on with this focus on sharing information throughout the company. Support systems like PDNet and FPIS were created. Lisa Trubia. which helps it to maintain its advantage and grow even further. This required efforts of people to communicate their findings.McKinsey & Company Case Conclusion Manage knowledge and learning The little firm of “accounting and engineering advisors” was able to grow into the world’s most prestigious consulting firm. Aishlinn van Nikkelen Kuijper 8 . In order to make the knowledge infrastructure work the consultant needed to change from a T-shaped into an I-shaped consultant. Nowadays. Working more specialized rather than on a broad company base.

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