McKinsey and Company

Managing Intellectual Capital

McKinsey In Client Relationship Mode

Business Concept

Focus on important management issues First mover in strategy

and org consulting Serve top management

of prestigious clients Unique customized

solutions Not standardized tools,

formulas

Organizational Capability

Recruit and develop superior people Training in general

problem solving Professionalism, self-

governance Strong embedded “One

Firm” policies and culture Relates to clients,

consultants, profits

“7S Model” McKensey’s Thought Leadership

Client Relationships

ThoughtLeadership

Superordinate Goal• Client Services• Knowledge Development

Structure• Self governance in local office• Overlay of Industry Sectors, Competence Centers and CSTs

Strategy• Tailor solutions to top management of leading firms• Develop and leverage specialized knowledge and expertise

Skills• Training for generalists problem solving• Generalists + Specialists spike (T Shape)

Style• Professionalism• Integrity•Collaboration

Systems• Performance evaluation on client development•Firm-wide resource sharing• Firm-wide info infrastructure•Client impact metric

Staff• Bright MBAs•Partner: Associate =7•Experts/Specialists

“Discover-Codify-Disseminate”Model

A few experts at the core developing knowledge –recognized “gurus”

Practice areas fragmented, run as fiefdoms.

Focus on developing a network of sectors, centers, and offices to spread ideas

Industry and functional practices isolated from competing offices and engagement teams.

“Engage-Explore-Apply-Share”Model

Everyone responsible for knowledge development.

Teams of practice leaders in a “stewardship” role

Priority given to developing integrated client-service teams (CSTs)

Practices support and leverage integrated CSTs, (building on McKinsey’s distinctive competence in client services)

Development of Thought Leadership

“One-Firm” Culture

Individual ConsultantDevelopment

T-shaped consultants

Overlaid OrganizationalMatrix

Industry SectorsCompetence Centers

Team BasedOrganization

Team-led sectors andSegments

Client Service Teams

Reinforcing InformationInfrastructureFPIS, PDNet

KRD, BulletinsPractice Coordinators

Performance MeasurementClient Impact

Gluck’s Initiative

Daniel’sContribution

Bower’sFoundation

Peters Sydney Office

+ Access to talent, expertise5 consulting directors60 associates170 PD documents

+ One firm cultureNorm of Helping

- Inexperienced associates- Info transfer only – not a creative solution- No external expertise

Bray/Telecom Europe+ Bray’s mobility

Transfer expertise

+ Documented learning+ Building networks

Sulu as coordinator

+Team leadership of practice

- Insularity of telecom practice- Intranet- Internal expertise

- Superiority of industry sectors over competitive center

Dull/B-to-B+ Dull’s alternative career track+ Generating PD documents

Wide usuage

+ Building networksConferenceCD to teams

- Difficulties of specialists careers.

Knowledge Nuggets There are two strategies to manage intellectual capital:

Personalization –Experts share knowledge through face to face contact

Codification – Knowledge is stored in databases where employees can access and reuse it.

Codification should be utilized when: Mature offerings Dealing with similar problems over and over again Standardized products and services People rely on explicit (easily codified) knowledge ( software code

or market data) Personalization should be utilized when:

Product innovation is required Create value for customers by tacking unique problems with no

clear solution Same knowledge can’t be applied to across different sets of

problems People rely on tacit (not easily codified) knowledge (e.g. industry

insights, scientific expertise)

Building Blocks of Intellectual

Capital

Intellectual Capital

Intellectual Capital

Customer Capital

Organizational Capital

ProcessCapital

InnovationCapital

Intangible Assets

Intellectual Property

Intellectual Capital

Knowledge Nuggets

The proper culture, structures, incentives and management help firms build utilize knowledge assets

Intellectual Capital utilization requires a strong infrastructure to capture, store and disseminate information.

Knowledge firms require a new type of employment contract

Employment Contract

Top managers

ensurescompany’s

competitivenessand employees’ security

Employees implement topmanagement strategy with

loyalty and obedience

Empowered employees areresponsible for company’scompetitiveness and their

own development

Top managers supportpersonal

developmentand initiatives

andensure

employability

Traditional employment contract New employment contract

Knowledge Nuggets Leaders in knowledge firms must be agents

of change, models of appropriate behavior and coaches.

Implementing Intellectual capital initiatives take time & energy

Symbolic signals and signs help signal stakeholders that change is required

For change to endure, the organization’s culture and the reward structure must change