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MCKINSEY AND COMPANY: MANAGING KNOWLEDGE AND LEARNING

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Introduction

McKinsey and company was founded by James O. McKinsey in 1926 (Christopher and colleagues, 2013). Seventy-five years later the firm had grown into a global partnership. The company was made up management engineers. Their main job activities were to rescue sick companies and they also helped the healthy companies to flourish and grow. They have trusted advisors to many of the influential businesses and institutions. The company had branches all over the world and had staff that had diverse experience and diverse expertise. The consultants helped solve many businesses problems excellently.

1. McKinsey and Company Growth

There are many reasons that one can identify as the source of the company’s growth. This includes their commitment to consultant training, their development of professionalism, their recognition in top-management consulting, their focus on general management consulting, their strategies and organization, their wise recruitment of minds and the power of “one firm culture” (Srinivas, 2013). The most important source of their growth can be attributed to the “one firm culture”.

It is very clear from the graph in the exhibit section that the company was growing. This is because the firm’s active engagements increased during that period as well as the company’s office locations.

This culture was at the heart of their every day to day operating practices. This concept was put in place by Bower. It was their source of competitive advantage. McKinsey was able to build a culture where the whole firm was integrated. This made the company build a strong internal capability. This is very different from other companies that build their firms in offices and type of service that led to internal wrangles within the company. All McKinsey’s managers participated in the development of the strategic plan, goals and objectives of the firm. This had a positive effect on management by objectives.

The company transferred knowledge and expertise to its new consultants as a byproduct of its culture. The expertise was mainly on the company’s approach to problem solving and framing issues. The company also transferred their strongly held values to all their consultants. In every task that the company had, it treated it with commitment and helped solve problems for their clientele.

2. Ron Daniel Efforts in Responding to Challenges.

The system was however found flawed as the old client relationship was in turmoil. Their generalist approach in problem solving had become a problem. The change in the company was initiated by Ron Daniel five years after the report was tabled. Daniel made various changes in the company. He appointed one of the senior directors who had been in the company for a long time to head internal training. The internal training had a strong impact on the company.

Daniel also made some structural changes that created industry and functional based groups. The groups tried to develop their knowledge according to the group they were in. Daniel also redefined the company’s goals to not only provide client service but also the building of a great firm (Christopher and colleagues, 2013). The firm recruited, developed and retained exceptional consultants and staff in accordance with their new goal. The intellectual capacity of the company grew as a result.

Fred Gluck started a Knowledge Management Project. This project helped in developing a series of information systems. This includes the FPIS and PD net systems. FPIS system was a database of the client’s engagements while PD Net was a system whereby the consultant’s ideas and concepts would be stored. The systems facilitated in capturing the knowledge within the firm and facilitated the transfer and application of the knowledge within the other parts of the firm.

Their computer-based system can be viewed as one of the firm’s competitive advantage. Gluck also contributed by developing the 15 centers of competence. This helped consultants and ensured that there was a renewal of the intellectual resources that the firm had to offer. He also created a client impact committee that helped in focusing on clients’ needs.

3. Company effectiveness in the two decades Change Process.

Each of the three cases revealed the strengths and weaknesses of the structures and systems that the company leaders had created. The company had managed to get high-level knowledge in various fields, experience and capabilities from all over the world that enabled them to solve their clients problems irrespective of which part of the world they came from. The consultants also were highly educated (Srinivas, 2013) and had a lot of experience and were, therefore, capable of solving their clientele problems. The training of the new employees gave them more opportunities to practice in daily operation.

The change process could be termed as successful taking into consideration the figures in the exhibit below (Exhibit 1). The firm opened up more firms all over the world during the 20 years change process. The firm had 24 office locations at the beginning of change process and after the twenty years the firm had 69 office locations. The firm’s active engagements had increased tremendously from 661 to 3559 at the end of the change process. The increase in active engagements and office locations is a true indicator that the company had become more effective over the twenty years.

A debate can, however, be raised on the effectiveness of their knowledge based organization. Example include the Sydney office project where the project was staffed with junior and inexperienced consultants who were supervised by a manager who did not arrive at the office until the junior consultants had carried out most of the analysis. The team did not come up with a breakthrough. The team can be viewed as if it was abandoned and that was the reason it did not produce the expected results. This idea of abandonment can, however, can be countered by the fact the team had access to the PD Net that allowed them to be educated on the firm expertise, the directors could also give them advise on call and 60 associates were also ready to answer any questions that they had. This then enabled the junior consultants to deliver the firm’s knowledge and expertise to the clients. John Stuckey was, however, concerned that the team that was in Sydney only looked for knowledge and expertise within the firm.

Another example is the European telecom project (Consulting Parlour, 2005). The company transferred and leveraging specialist knowledge of Bray from the headquarters to Europe. The firm also transferred their documented learning in the PD Net, it also transferred the company’s network and implanted knowledge in their new staff in Europe. The Europe group can also be criticized in that they only looked for knowledge and expertise within the telecom practice. This can be seen as a way in which the firm telecom intranet was not opening up in information technology (Consulting Parlour, 2005).

Dull’s business to business project that he joined in order to get himself the credentials needed for people to vote for him was a redirection of the firm’s resources. The business to business documents that he listed on the PD Net was a way in which he generated valuable knowledge. The business to business documents gave Dull a chance to generate a network of people who were interested in his work and thus doing his work was developed in solving the clientele problems.

The high need that Dull had for promotion could be seen as a way that McKinsey and Company failed in solving the problem of a specialist. Dull’s initiative to write a book on Business to business was a way to develop his brand image.

4. Rajat Gupta’s four-pronged approach to knowledge development.

Rajat Gupta was the Managing director of McKinsey and Company after Fred Gluck stepped down. There was a continuing debate within the firm on which knowledge development approach was most effective. Gupta saw that the debates were consuming energy that should have been used on the project and concluded that the firm would pursue all the options. He came up with the four-pronged approach (Christopher and colleagues, 2013).

His first approach was to capitalize on the firm’s long-term investment in practice development. He wanted to create some new channels, forums, and mechanisms, in addition to the old ones, that would help in knowledge development and organizational learning. The next approach was to the building of an experiment which was begun in the German office. He embraced an approach called the Practice Olympics. Teams of two to six persons were formed and they were encouraged to develop new ideas that grew out of recent client engagements. The teams then competed at regional levels where the senior partners and clients acted as judges. The twenty best regional teams then competed at firm-wide level (Christopher and colleagues, 2013).

In his third approach, he initiated the six special multilayer internal assignments. It focused on the issues that were of importance to the C.E.Os. The initiative help in tapping all the expertise within and out of the firm in the formulating state of the art solutions to the issues. The initiative helped in allowing the firm in doing bigger long-term commitments and developments. The last initiative involved the expansion of the firm’s research center. Most of the initiatives he took had left no impact on the firm yet he was convinced the firm was headed in the right direction (Christopher and colleagues, 2013).

Gupta's initiatives helped in the growth of the firm. They, however, did not link the knowledge and expertise of the organization. The initiative was costly to the firm. Care must be taken to ensure that the company did not lose its focus by overlooking the clients and market. The firm should, however, using the traditional methods in to communicate to the employees and in the process motivate them and develop a personal relationship with them.

EXHIBITS

CSR – Client Serving Staff (All Professional Consulting Staff)

MGM - Management Group Members (Partners and Directors)

References

Srinivas, K., (2013). Mckinsey Case. Retrieved from

http://www.scribd.com/doc/119613942/Mckinsey-Case on March 5, 2016.

Consulting Parlour, (2005). Mckinsey & Co.-Managing Knowledge & Learning. Retrieved from

http://consultingparlour.blogspot.co.ke/2005_04_01_archive.html on March 5, 2016.

Christopher A. Bartlett and Paul Beamish, Transnational Management: Text, Cases, and Readings in Cross Border Management, McGraw Hill-Irwin, Seventh Edition, 2013.

_1518873932.xls

Chart1

Year	Year	Year	Year
1975	1975	1975	1975
1980	1980	1980	1980
1985	1985	1985	1985
1990	1990	1990	1990
1991	1991	1991	1991
1992	1992	1992	1992
1993	1993	1993	1993
1994	1994	1994	1994

Office Locations

Active Engagements

Number of CCS

Number of MGM

Year

McKinsey & Co.: 20 Year Growth Indicators

24

661

529

0

31

771

744

0

36

1823

1248

0

47

2789

2465

348

51

2875

2653

395

55

2917

2875

399

60

3142

3122

422

64

3398

3334

440

69

3559

3817

472

Sheet1

McKinsey & Co.: 20 Year Growth Indicators
Year	Office Locations	Active Engagements	Number of CCS	Number of MGM
1975	24	661	529	0
1980	31	771	744	0
1985	36	1823	1248	0
1990	47	2789	2465	348
1991	51	2875	2653	395
1992	55	2917	2875	399
1993	60	3142	3122	422
1994	64	3398	3334	440
1995	69	3559	3817	472

Sheet1

Office Locations

Active Engagements

Number of CCS

Number of MGM

Year

McKinsey & Co.: 20 Year Growth Indicators