Waseem Sayegh

McKinsey & Company, the firm that governments and large companies consult when facing growing pains, is facing difficulties with handling its own rapid growth. The case “McKinsey & Company: Managing Knowledge and Learning” chronicles the evolution of McKinsey’s attempts to capture its associates knowledge to effectively apply it to clients’ problems. At the core of the case is a simple problem definition: How can McKinsey & Company develop, capture and leverage knowledge in service of its clients worldwide? After all, knowledge is the single most important asset McKinsey & Company has.
There are two components to this challenge:

1. Establishing a team structure to better leverage the captured knowledge in delivering better service to customers.
2. Capturing consultants’ knowledge in a system that allows them to learn from it.

Through every iteration or step in its knowledge system’s evolution McKinsey & Company faced resistance forces. Rajat Gupta, the managing director of McKinsey & Company, enumerated all the forces resisting McKinsey’s latest evolutionary step as: the sheer amount of information, higher client’s expectation and McKinsey’s distributed global presence. These forces may well be hurdles for change, though I believe that Mr. Rajat Gupta disregards the most important force: McKinsey’s inability to change its internal culture, and properly create a compensation structure that rewards specialists and information sharing.

The Specialists: McKinsey’s Second Class Citizens

McKinsey’s team structure has been evolving ever since its establishment. In 1971 McKinsey’s philosophy emphasized the need for “T-Shaped” consultants – those who supplemented a broad generalist perspective with an in-depth industry or functional specialty. This philosophy was later reviewed in 1987 when McKinsey realized the need for a new breed of consultants – the “Specialist”. Fast forward a decade later, one can clearly state that McKinsey did not successfully change its 1971 philosophy to address its needs as prescribed in 1987.
While the need for specialists was felt by McKinsey’s partnership, McKinsey’s consultants saw specialists as “second-class citizens.” This point of view is directly influenced by McKinsey’s culture which emphasizes “an internal status hierarchy based largely on the size and importance of one’s client base.” After all, McKinsey is an outward looking consulting firm that puts a lot of emphasis on helping and serving its clients. No wonder that with this mindset specialists who only interact with internal consultants are seen as “overhead.”
Furthermore, the partnership made matters worse since it did not have an effective and successful plan to evaluate, compensate or promote specialists. Specialist’s tasks and responsibilities were different than that of a “T-shaped” consultant, yet they were both evaluated in the same fashion.

Sharing is Caring. Sharing Knowledge at McKinsey: What’s in it for me?

A lot of “begging and cajoling” had to go into getting documents from McKinsey’s consultants to be stored in Practice Development Network. After all, writing documents and articles requires major time investments that very few consultants had. Besides, when it came time to promotion there was no emphasis put on the number of documents published by a consultants.
Furthermore with the establishment of client service team (CST), CSTs successfully focused on clients’ long-term need, though they failed to give back as they were more “insular, guarding proprietary concepts.” This isolation further harms McKinsey’s knowledge sharing process.
McKinsey put in a system that facilitated knowledge sharing, but overlooked having the right incentives to encourage knowledge sharing. If the incentives were right, no begging or cajoling would have been needed.

Making Things Work at McKinsey

Gupta put it best when he described knowledge as “the lifeblood of McKinsey.” The core existence of McKinsey relies heavily on capturing and utilizing knowledge to serve its customers.
As previously stated, both specialists and sharing information are an important components of knowledge management at McKinsey.
To bring about more specialists McKinsey needs to change its culture and elevate the importance of specialists in its associates’ perspective. Since McKinsey is an outward looking firm that prides itself on helping customers, specialists should also be given some customer facing responsibilities. Furthermore, McKinsey needs to develop the right incentives to award associates that effectively share their knowledge.