McKinsey and Company

Managing Knowledge and Learning

BACKGROUND

• Founded in 1926 by James McKinsey, a University of Chicago Professor

• Established as the firm of “Accounting and Engineering Advisors”

• Mission: “To help our clients make positive, lasting, and substantial improvements in their performance and to build a
great firm that is able to attract, develop, excite, and retain exceptional people”.

• Recruited experienced executives and trained them in the approach called “General Survey Outline”

• Led Consultants through sessions on “undeviating sequence” of analysis – Goals, Strategy, Policies, Organization,
Facilities, Procedures and Personnel” while still encouraging to synthesize data and think for themselves.
 Marvin
Bower

• Joined McKinsey in 1932, Lawyer with MBA from Harvard. Became Managing Director in 1950

• Outlined vision for the firm as one focused on issues of importance to Top Level Management, adhering to highest standards of integrity,
professional ethics, and technical excellence, able to attract and develop young men of outstanding qualifications and committed to
continuously raising its stature and influence.

• Strong advocate of One Firm Policy that required all consultants to be recruited and advanced on a firm-wide basis, clients to be treated
as McKinsey and Company responsibilities, and profits to be shared from a firm pool, not an office pool.

• Firmly believed that well trained, highly intelligent generalists can quickly grasp the issue, and through disciplined analysis find its
solution.

• Initiated series of changes that turned McKinsey into and elite consulting firm

• Extraordinary domestic growth in the 1950’s provided a basis for international expansion at accelerated rate in the 1960’s

• McKinsey was a well established and highly respected presence in Europe and North America by the time he stepped down in 1967.
 1960’s

• McKinsey growth stalled in the decade of 1960’s even though the leadership succession was well planned and executed.

• Reasons:

1. Economic turmoil of the Oil Crisis

2. Slowing down of the divisionalization process that fueled the European expansion

3. Growing sophistication of the Client management

4. Appearance of new focused competitors like Boston Consulting Group(BCG).

5. In contrast to McKinsey’s local office-based model of “client relationship”, BCG began competing on the basis of
“thought leadership” from a highly concentrated resource base in Boston.

6. McKinsey started losing both clients and recruits to BCG.

 1970’s

• The firm’s partners assigned a committee of their most respected peers to study the problem of slowing growth and
make recommendations.

• Findings:
1. Preoccupation with geographic expansion and new practice possibilities caused the neglect of development of technical
and professional skills
2. McKinsey was too willing to accept routine assignments from marginal clients
3. Quality of work done was uneven
4. Consultants were excellent generalist problem solvers, but lacked the deep industry knowledge or the specialized
expertise that clients were demanding

• Recommendations:
1. Recommit to the continuous development of the members
2. Reduce the associate to MGM ration from 7:1 to 5 or 6:1
3. Emphasis on the development of T-shaped consultants (those who supplemented a broad generalist perspective with
and in-depth industry or functional specialty.
 Ron Daniel

• Elected Managing Director in 1976. Daniel was convinced that McKinsey could no longer pursue generalist model.

• Major Steps taken:

1. Appointed one of the firm’s most reputed and productive senior partners as McKinsey’s full-time director of training.

2. Created industry-based Clientele Sectors in consumer products, banking, industrial goods, insurance

3. Encouraged more formal development of firm’s functional expertise in areas like Strategy, Organization and Operations –
where knowledge and experience were widely diffused and minimally codified.

4. Assembled Working groups to develop knowledge in two areas that were heart of McKinsey’s Practice – Strategy and
Organization.

5. Assigned Fred Gluck to head the Strategy Group and Bob Waterman & Jim Bennett to assemble a group that could
articulate firm’s existing knowledge in the Organization area.
 Fred Gluck

• 1987, Fred Gluck launched a Knowledge Management Project.

• 3 Recommendations:
1. Firm had to make a major commitment to build a common This is database of knowledge
a sample text. accumulated from client work and ensure
databases were maintained and used.
Enter your text here
2. Hire fulltime practice coordinator : Objective of replacing the leader-driven knowledge creation and dissemination process with a
“steward model” of self-governing practices focused on competence building.
3. Firm expand its hiring practices and promotion policies to create a career path for deep functional specialist “I” vs “T” shaped.
This is a sample text.
• Major Steps taken: Enter your text here
1. Created 15 Centers Of Competence built around specific management expertise for the
2. Focus on FPIS, Firm Practice Information System
3. Installed new systems and procedures to make data This is a sample
more complete, text.
accurate, and timely, not just an archival record
4. Practiced Development Network (PDNet) Enter your text here
5. 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.
6. Engagement Team : Assembled to deliver a three or four month assignment for a client; Highly efficient and Flexible unit; Focused
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on immediate task rather than long term need
7. Congruence Model Executive Leadership CompetenciesEnter your text
Component here
Tasks
Rajat Gupta