McKinsey & Company: Managing Knowledge and Learning (HBS 396357)

KIM, KI BAEK 2013-12501

1. How has this obscure little firm of “accounting and engineering advisors”
been able to grow into a globally prestigious consulting firm fifty years later?

McKinsey developed a core capability with high profit-earning potentials. The knowledge
management system of the firm established a competitive advantage in the consulting industry.
Knowledge sharing was McKinsey’s unique capability because the firm accumulated data for
a long period, and data was based on its client work and research in practice areas. Obviously,
McKinsey could have sustained their competitive advantage because their knowledge
management system could not be easily replicated by competing firms. The firm also
facilitated the knowledge sharing process by making a computerized database of the
knowledge in the firm’s internal network. This ultimately allowed the firm to have more client
impact and customer satisfaction.
Acquiring such capability was possible as the firm had competent human resources. The
firm during its earlier years recruited experienced executives and young people with
outstanding qualifications. CEOs lead sessions by themselves to influence partners and
associates. Moreover, McKinsey provided environment for their associates to learn and grow.
The firm highlighted the importance of their consultant’s own professional development as
much as the firm’s intellectual development. Employees were appraised by how much time
they invested on practice and their own development. Also, there was a constant internal flow
of knowledge as it was a firm norm for employees to share their experience and knowledge
when employees requested. Cases in the article shows the employees’ effort on practice
development and knowledge sharing. Warwick Bray, an expert of deregulation, spread his
knowledge to other consultant teams by making a practice-specific intranet. Stephen Dull
became an expert in B to B initiatives and eventually made the practice a new Center of
Competence and attracted colleague’s interests.

2. What have been the contributions of the various CEOs over the years?

From the 1970s to present day, the Managing Directors struggled to develop the firm’s
knowledge management capability. They tried to change the firm’s core capability from
customer development to practice development. It would have been a difficult task as core
capabilities could also be core rigidities. Nevertheless, the MDs eventually made knowledge
sharing the firm’s core capability even though they faced tough resistance.
Ron Daniel made the initial strategic changes after perceiving the external obstacles of the
firm, and started building the rudiments of the knowledge management system. First, the
development of the firm’s own consultants became a firm mission. A capable senior partner
would train consultants’ skill and expertise. Second, he went through structural changes within
the firm by creating industry-based Clientele Sectors in various areas and encouraged the
development of the firm’s functional expertise. Despite his efforts, knowledge was only
considered as a product and the knowledge management system was rather fragmented.
Fred Gluck also had the belief that knowledge development had to be the firm’s core activity.
During the 1980s, even before he was MD, he tried to stimulate internal knowledge
communication of the firm and put structured efforts to store and codify the firm’s distinct
knowledge. This includes the creation of computerized databases such as FPIS and PDNet.
During the 1990s, he tried to make knowledge more valuable by applying it to clients’ problems
and developing individual and team capabilities. He emphasized client impact and lead client
service teams to focus on the client’s long term need. The changes during his term allowed
consultants to use knowledge management systems in diverse locations, to build consensus
among a number of teams efficiently, and to increase customer satisfaction.

3. What is your evaluation of Rajat Gupta’s “four-pronged” approach to

knowledge development and application within MCKinsey?

The gist of Rajat Gupta’s “four-pronged” approach seems to be too broad. Gupta proposed
the firm will go after all the opportunities that it discovers. However, focusing on developing a
particular capability could be a better alternative. Opening Practice Olympics could be
considered as an impetus of new and creative ideas. However, creating additional channels
for knowledge development, and adding six new centers could be considered unnecessary as
the firma already has numerous Functional Capability groups. Such approach may not only
inhibit the firm’s ability to manage knowledge effectively but also erode the firm’s culture.
Rather than working on a four-pronged approach, Gupta should tackle existing problems of
the firm which remains unsolved. The promotion criteria and career path of the specialists
must be clarified. Furthermore, even though the firm holds computerized databases, certain
employees mention that the knowledge management process of the firm depends on personal
networks. Unfortunately, there are voices of concerns that the firm is becoming
compartmentalized and thus, hindering the linking and synergy of different knowledges. The
firm should rather put systematic effort on the integration of their diverse level of knowledge
and expertise.