After a few years, McKinsey growth seemed to stall. But what really contributed to the problem?
Commission on Firm Aims & GoalsIn 1971, the commission on Firm Aims & Goals concluded that the company has been growing too fast▪McKinsey focus on expansion and neglecting development on technical and professional skills.Solutions:▪Associate to MGM ratio to be reduced from 7:1 to5~6:1▪Emphasis to be placed on the “T-Shaped” consultants ▫Who supplemented a broad generalist perspective with an in-depth industry or 12
Practice Development InitiativeIn 1976, Ron Daniel was elected as Managing Director – the fourth MD since Brewer stepped down in 1967.▪BCG focused on “thought leadership” vs McKinsey’s “client relationship”▪BCG use experience curves and developed their growth-share matrix (BCG matrix)▪McKinsey began losing clients and recruits to BCG13
Ron DanielAs head of New York office since 1970, Daniel had experienced rising clients expectation and aggressive competitors such as BCG.▪He thinks McKinsey can’t no longer pursue its generalistmodel but more specialist▪Updated firm’s long standing mission to also developing its consultants▪Developed industry-based Clientele Sectors14??-Consumer Products-Industrial Goods-Etc.-Insurance-Banking
3. Revival and RenewalA cautious optimism returned as growth resumes15
Frederick GluckGluck was the New York office’s director▪He always helped Daniel in leveraging the firm’s functional expertise▪Always wanted to bring stimulating intellectual environment to McKinsey1980– Joined central small group that focus on the knowledge building agenda1987– Launched knowledge management project1988– Elected MD, succeeding Ron 16??
Centers of Competence▪Gluck believe that knowledge development had to be a core activity, ongoing and institutionalized, and be the responsibility of everyone▪Gluck created 15 Centers of Competence (virtual centers)▫Built around existing areas of management expertise or known as 11 Sectors▫1982memo – the role is to 1. Help develop consultants & 2. Ensure renewal intellectual resources▪Changed internal status hierarchy – based on one’s client portfolio▪Everyone needs to learn practice development 17
Building a Knowledge Infrastructure▪Firm refocused on individual consultant training ▪Clientele Sectors and Centers of Competence began generating new insights, and many began to feel the need to capture and leverage learning ▪In 1978, McKinsey launched the Staf Paper series▫While the firm actively encourage consultants to publish their key findings, only small number made effort to write 18
Knowledge Management ProjectFirst,The firm had to make a major commitment to build common database or knowledge accumulated from client work Second,To ensure databases were maintained and used. By hiring a full-time practices coordinator as an “intelligent switch”-Monitor quality-Help access Third,Firm expand its hiring practices and promotions policies to create a career path for deep functional specialist – make an “I” rather “T” shaped20In 1987, Fred Gluck launched a Knowledge Management ProjectThe team made 3 recommendations:
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