Managing Intellectual Capital 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 Superordinate Goal Client Services Knowledge Development Strategy Tailor solutions to top management of leading firms Develop and leverage specialized knowledge and expertise Staff Bright MBAs Partner: Associate =7 Experts/Specialists Client Relationships Thought Leadership Style Professionalism Integrity Collaboration Structure Self governance in local office Overlay of Industry Sectors, Competence Centers and CSTs Skills Training for generalists problem solving Generalists + Specialists spike (T Shape) Systems Performance evaluation on client development Firm-wide resource sharing Firm-wide info infrastructure Client impact metric

“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 Performance Measurement Client Impact Gluck’s Initiative Daniel’s Contribution Bower’s Foundation Team Based Organization Team-led sectors and Segments Client Service Teams Reinforcing Information Infrastructure FPIS, PDNet KRD, Bulletins Practice Coordinators Individual Consultant Development T-shaped consultants Overlaid Organizational Matrix Industry Sectors Competence Centers “One-Firm” Culture

Peters Sydney Office + Access to talent, expertise + One firm culture 5 consulting directors 60 associates 170 PD documents + One firm culture Norm of Helping Inexperienced associates Info transfer only – not a creative solution No external expertise

Bray/Telecom Europe + Bray’s mobility + Documented learning 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 networks Conference CD 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 Organizational Capital Customer Capital Innovation Capital Process Capital Intellectual Property Intangible Assets

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 Empowered employees are responsible for company’s Top managers ensures company’s competitiveness and employees’ security Employees implement top management strategy with loyalty and obedience Empowered employees are responsible for company’s competitiveness and their own development Top managers support personal development and initiatives and ensure 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