Organizational Learning

and
Knowledge Management
Subject:

Organizational Design & Change

Professor:

Prof. A. K. Jain

Group 8:
Aditi Wahi
Keshav Bajaj
Pushkar Singh

15P066
15P080
15P100

Samaksh Chhabra
Sanjeet Mathur
Tanvin Singh

15P104
15P106
15P114

Agenda
I

Summary McKinsey & Company Case

II

Knowledge Management Theory

III

McKinsey & Company Knowledge Management

IV

Evaluation and Outlook

 McKinsey & Company was founded under the name James O.

McKinsey & Company in 1926 by James McKinsey, a professor of
accounting at the University of Chicago
Started out as an "accounting and management firm, later
became in to a global major in consulting
Commission on firm Aims and Goals:
A Decade of Doubt
Commission

Ron
Daniel
(1976)

Fred
Gluck
(1980-)

Ted Hall
(1991-)

Appointed McKinseys first full time director for training

Industry-based clientele sectors
Consumer products, banking, insurance etc.
Develop knowledge in two areas strategy and organization
Knowledge building agenda
Gluck joined in 1980
15 centers of competence
Need to capture and leverage learnings
Knowledge infrastructure
Document concepts McKinsey staff paper series in 1978

Ron
Daniel
(1976-)

Background
Arrived from Bell
Labs in 1967.
Wanted to bring an
equally stimulating
environment
Asked by Ron
Daniel to join a
small group
involved with
Knowledge building
agenda in 1980

Fred
Gluck
(1980-)

Ted Hall
(1991-)

Centers of
Competence

Knowledge
Infrastructure
Gluck launched a Knowledge
Management Project in 1987.

Created 15 centers (virtual) of

Competence.

Three recommendations:
1.

The role is two-fold. Help

develop consultants and ensure
continued renewal of firms
intellectual resources

Identified highly motivated and

recognized experts in each field
and named them Practice
Leaders

Common
database of
knowledge

2.

Databases were
maintained and
used
3. Develop I-shaped consultants

Bill Matassoni was made in charge

of implementing the
recommendations. He developed
and launched
PDNet (Practice Development
Network)

Ron
Daniel
(1976)

Fred
Gluck
(1980-)

Refining
Knowledge
Management
Hall took over leadership
of Clientele and
Professional Development
Committee (CPDC) in 1991
Original 11 sectors and 15
centers expanded to 72
islands of activity

CPDC began integrating

the diverse groups into
seven sectors and seven
functionality groups.
These were led by teams
of 5-7 partners

Ted Hall
(1991-)

Client Impact
Gluck now focused his
attentions on Client
Impact and made it a
central theme in his
early speeches. Also
created a Client Impact
Committee.
One of the initiatives
was to persuade the
partners to redefine
their consulting unit
from Engagement Team
(ET) to Client Service
Team (CST)

One Firm
Strategy
Jeff
Peters
and
Sydney Office

Invited to bid for a financial services growth strategy study for

one of Australias most respected companies.

Almost all with financial industry expertise had been conflicted

out

Jeff Peters, a Boston-based senior engagement partner was

identified after some lobbying and numerous phone calls

In spite of numerous constraints and limited availability, the project

was completed successfully, thanks to KRD and PDNet which had
12,000 documents

Heavy reliance on internal expertise prevented them to come up with a

radical breakthrough

Departmentaliz
ation
Warwick Bray & European Telecoms

Worked on engagements related to the impact on

deregulation on the Asia- Pacific telecom industry.

From his experience, Bray has written a PD document and

presented it at the firms annual telecom conference

Patsalos-Fox identified Brays knowledge and invited Bray

to work with him on a study.

The PDNet was crucial in

Bray being identified and
given a position that is
beneficial to both the
company and himself.
The knowledge repository was
not sufficiently addressing all
the concerns and thus a new
practice-specific intranet link
was developed. In addition to
the PDNet and KRD, it also had
external knowledge resources
and client base.

Balance between
Knowledge and
Client
StephenService
Dull &
Business Marketing
Competence Center
Dull focused on
developing his own
expertise , however he
acknowledged that he
did not pay enough
attention to
developing strong
client relations.
Interested in
developing B to B
initiative, which was
later declared a center
of
Thecompetence
firm within the

next 5-7 years want

to make 15-20% as
functional experts,
highlighting the
importance of domain
experts
His
lack of client service
restricted his promotion to
a principal as serving
clients is what really
mattered in the firm

A unique source of competitive advantage

The People!
McKinsey recruiting

and training strategy

Experiences executives
The general survey outline
Bower refined

and developed the One firm strategy

Recruiting into the firm, and not the office

Made knowledge transfer through the mobility of people
People and profits are firm wide resources and not specific to one specific
office of individual

Q1 7s FRAMEWORK

11

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6

STYLE
Since its inception McKinsey had several leaders but all of them focused on serving the clients very
well
James McKinsey focused on training as well synthesizing data & independent thinking
Marvin Bower brought up one form policy with focus on geographic expansion
Ron Daniel focused on thought leadership
Fred Gluck developed competence sectors
Rajat Gupta carried on with knowledge development.

STAFF
Mckinsey started with hiring experienced executives and training them in an integrated approach
It aimed at attracting young men of outstanding qualification to turn them into well trained ,highly
intelligent generalists who could quickly grasp the situation.
Till early 1970s the focus was on geographical expansion, due to which it was felt that development
of technical and professional skills had taken a backseat.
In early nineties there was emphasis laid on I- shaped consultant i.e. the specialists who had deep
technical expertise in various specialities such as market research etc.

SKILL

14

Pre-1960, highly intelligent generalists who quickly found solution through disciplined analysis
1970s Generalist consultants with one industry/functional specialty
1990s environment for deep functional specialists

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STRATEGY
In its early days Mckinsey had a vision to focus on issues of importance to top management while
adhering to highest standards of integrity ,professional ethics and technical excellence.
This entailed a generalist approach to client issues
Since 1970 under the leadership of Ron Daniel this model of client relationship was changed to
thought leadership which led to creation of industry based clientele sector as well the development
of practice sectors.
Moreover emphasis was laid on individual consultant training with a renewed focus on knowledge
development and organization learning

STRUCTURE
Mckinsey started with a One Firm Policy where it required all consultants to be recruited and
advanced on firm wide basis
The consultants could move across offices and collaborate with offices in other locations
Till 1970 the firm followed a client relationship model of consulting where emphasis was on local
office presence which allowed partner to have strong connection with business community
In 1976 Ron Daniel changed this structure where he created industry based clientele sectors cutting
across geographical offices
Further it led to development of 15 competence sector such as management,strategy,marketing
In nineties ,the consulting unit i.e. an engagement team was changed into client service team so as
to serve a client for a longer horizon.

SYSTEM
A practice development network was in place which held documents from that represented core
knowledge from each practice
A knowledge resource directory listing all firms experts with key documents titles was also published.
With assistance of an engagement director as well as leads from KRD, THE FPIS and the PDNet ,
new teams were built.
Norms were inplace which made it mandatory for colleagues to respond to requests

SHARED BELIEFS
The mission of serving the clients superbly well was one of the core beliefs of mckinsey while
adhering to profession standards
People development was another focus area so as to build a world class institution that is able to
attract ,develop and retain exceptional people
The emphasis to invest in for the future of the firm was another the fundamental value of the firm.

Q2 - UNIQUE SOURCE OF COMPETITIVE ADVANTAGE

Experienced executives trained in generalized way of analysis while providing creative solutions
Being very selective about the clients led to quick growth in stature and experience
The client relationship model of consulting gave it a distinctive advantage wherein the partners were
able to develop strong connections with the local business community .

Q3 EFFECTIVENESS OF CHANGE PROCESS

20

CASE I FINANCIAL INSTITUTION (SYDNEY):

Usage of personal networks to identify consultants with relevant experience
Sydney office had only generalists
Experts, specialists and advisors across the global Mckinsey offices worked on
the project
Over reliance on internal expertise and introversion with no scope for creativity

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Q3 EFFECTIVENESS OF CHANGE PROCESS

21

CASE II TELECOM INDUSTRY CENTRE:

Created new telecom intranet
PDNet proved insufficient to the requirements
Further deviated from One Firm policy
Knowledge transfer restricted within industry specific centres
Under utilization of functional groups

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Q3 EFFECTIVENESS OF CHANGE PROCESS

22

CASE III BUSINESS MARKETING CENTER OF COMPETENCE:

Specialists regarded as second-class citizens
No individual forthcoming to contribute to PDNet
Group of people took initiative to consolidate B2B marketing documents
Failure of codification of knowledge at all levels

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6

Q4 RAJAT GUPTAs APPROACH

23

Continue emphasis on knowledge development

Pursue all options of knowledge development approach
Capitalize on the firms long term investment supported by the Knowledge Infrastructure
Practice Olympics
Tap both internal and external expertise to develop state-of-the-art formulations
Create pools of dedicated resources and focus on long-term research agendas

- CODIFICATION

A
N
SO
R
PE
ION

T
A
Z
LI

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Q4 - RECOMMENDATIONS

24

Competitive Strategy must drive knowledge management strategy

Based on McKinseys high customization strategy, personalization strategy of knowledge
management is best suited
Attempted implementation of codification strategy through McKinseys history has been a failure for
the same reason of client-specific consulting
Sharing through technology should only remain a support tool
Maintain small teams with low ratio of associates to partners
Reward people for knowledge sharing with others

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6

Rajat Guptas Four Pronged approach

Capitalize on the firms investment in practice development driven by clientele
industry sectors and functional capability groups and supported by knowledge

To create new channels, forums and mechanisms for knowledge development and
organizational learning

Multi year internal assignments, focused on emerging issues that where of

importance to CEOs

McKinsey global institute, research center. A firm sponsored research center to

study implications of changes in the global economy on business

Analysis of the Approach

Information Sharing and Corporate Unity vs. Cost-Effectiveness

Despite its rapid growth, McKinsey & Company is attempting to maintain its One Firm policy

Though the company is divided into clientele sectors, centers of competence, and generalists and
specialists, the philosophy of unity ensures that knowledge resources are continually distributed
across these sectors.

Gupta should not pursue knowledge sharing without a thorough evaluation of its costs and
benefits

Information sharing though is of utmost importance, its a expensive practice. There must be
tangible benefits of the information sharing.
Gupta might also reexamine McKinseys commitment to unity in terms of cost-effectiveness.

As the centers of competence and clientele sectors develop, perhaps some would be more
efficiently run as autonomous sub-units or even spin-off companies.

With good strategy, these sub-units and spin-off companies might be able to optimize the
parent companys resources, including McKinseys impressive reputation and clientele base.

Customer and Other Stakeholder Focus

Guptas four-pronged plan may also be overlooking customer and market focus.

Though benefit to the customer is implicit in his plan for the advancement and sharing of
McKinseys information resources (i.e., better knowledge ultimately benefits the client), the
customer is not explicitly addressed in the agenda

Guptas plan might benefit from more comprehensive evaluation of customer needs.

needs of other stakeholders deserve consideration and inclusion in Guptas plan.

Company employees will want to see that Guptas plan opens opportunities for continuing
education and career

Those with equity in the company will want to see that Guptas emphasis on information sharing
enhances the firms bottom line

a clear career development and succession plan will give employees additional incentive to
participate in such initiatives as the Practice Olympics in which employees present innovative
ideas that have brought them success to a panel of senior executives.

Guptas Challenge and Way forward

To guarantee that his four-pronged plan brings success to his company, Rajat Gupta must be sure
that information sharing is always accompanied by tangible benefits.

This may necessitate some strategic separation of departments, a departure from McKinseys
One Firm policy

Gupta must ensure that knowledge sharing within the company takes place through a variety of
mediums, including traditional face-to-face interactions such as the Practice Olympics and the
practice development

Technology should also be used toward this endgroup support software systems, for
instance,
may provide a cost-effective and efficient way to share information across departments.

Questions