Investing in Knowledge

Does your firm invest in knowledge?  Does it have an effective knowledge development strategy? Or is it simply paying lip service to the notion of being in “the knowledge business”?  Even if you believe that your firm has a strong commitment to investing in its knowledge, I’d invite you to keep reading.

Yesterday I had the good fortune to receive from Oz Benamram an interesting Harvard Business School case study entitled, McKinsey & Company: Managing Knowledge and Learning.  The case study recounts McKinsey’s journey from 1926 to 1996, viewed through the lens of McKinsey’s growing understanding of the value of investing in the knowledge of the firm. McKinsey is famous for its emphasis on internal training and knowledge sharing.  In fact, Rajat Gupta (the managing director of the firm at the time the case study was written) has been quoted as saying that “knowledge is the lifeblood of McKinsey.” This case study gives us a glimpse of how much consistent effort has been required on the part of members of the firm at all levels to create and sustain this reputation for knowledge investment and excellence. The case study portrays a firm that seems to be seeking constantly to improve the ways in which it helps its people grow professionally. It’s also clearly committed to maintaining its position as a thought leader. In reading the study, I was struck by several things:

  • When McKinsey created the position of full-time director of training, the person appointed to the position was one of the firm’s most senior and productive partners.  This sent a clear signal that the role was strategically important for the firm.
  • Fred Gluck (another former managing director of the firm) strove to create a more stimulating intellectual environment within the firm.  Accordingly, he “set out to convert his partners to his strongly held beliefs—that knowledge development had to be a core, not a peripheral firm activity; that it needed to be ongoing and institutionalized, not temporary and project based; and that it had to be the responsibility of everyone, not just a few.”
  • Professional development and knowledge management activities were natural outgrowths of each other:  “As the firm’s new emphasis on individual consultant training took hold and the Clientele Sectors and Centers of Competence began to generate new insights, many began to feel the need to capture and leverage the learning.”
  • Even before McKinsey had a formal knowledge management effort, the firm tried to lower internal barriers to knowledge sharing.  One of their first efforts was to encourage consultants to prepare two-page briefings that could be distributed firmwide.  These practice bulletins were used to spread ideas and helped elevate within the firm the reputations of the authors of these briefings.
  • McKinsey’s first formal KM project was  to develop a common database of knowledge gleaned from various client engagements and then developed within specific practice areas (the Practice Development Network).  Interestingly, they also undertook an informal project that initially proved to be much more popular than the electronic database:  a printed index of subject matter experts and core documents critical to each practice area (the Knowledge Resource Directory, aka the McKinsey Yellow Pages). While the case study does not state why this second effort was so popular, its rapid adoption might be due to the fact that the resource was concise, focused and highly portable.
  • Their approach to KM changed as the firm better understood how it needed to use the knowledge it was trying to manage:  “By the early 1990s, too many people were seeing practice development as the creation of experts and the generation of documents in order to build our reputation. But knowledge is only valuable when it is between the ears of consultants and applied to clients’ problems.  Because it is less effectively developed through the disciplined work of a few than through the spontaneous interaction of many,  we had to change the more structured `discover-codify-disseminate‘ model to a looser and more inclusive `engage-explore-apply-share‘ approach.  In other words, we shifted our focus from developing knowledge to building individual and team capability.”
  • KM is not just about size — a bigger database is not necessarily better.  The knowledge has to be managed for some useful purpose. At McKinsey, Fred Gluck “created a Client Impact Committee, and asked it to explore the ways in which the firm could ensure that the expertise it was developing created positive measurable results in each client engagement.”
  • While there has been vigorous debate about the single best knowledge development strategy, Rajat Gupta was of the view that it was better to try a variety of methods rather than spending firm resources simply discussing the issue.  This has led to a continued significant investment in knowledge development.  According to Gupta,  “We have easily doubled our investment in knowledge over these past couple of years.  There are lots more people involved in many more initiatives.  If that means we do 5-10% less client work today, we are willing to pay that price to invest in the future.  Since Marvin Bower, every leadership group has had a commitment to leave the firm stronger than it found it.  It’s a fundamental value of McKinsey to invest for the future of the firm.”

[emphasis added]

So now that you’ve learned a bit more about McKinsey’s efforts, let me ask if your firm’s commitment to knowledge and learning is comparable to that of McKinsey?  If not, why not?

[Photo Credit: Nilram]

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