1. Managing Intellectual Capital
McKinsey and Company
Managing Intellectual Capital

2. 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

3. “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

4. “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.

5. “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)

6. 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

7. 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

8. 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

9. Dull/B-to-B + Dull’s alternative career track
+ Generating PD documents
Wide usuage
+ Building networks
Conference
CD to teams
Difficulties of specialists careers.

10. 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)

11. Building Blocks of Intellectual Capital
Organizational
Capital
Customer
Capital
Innovation
Capital
Process
Capital
Intellectual
Property
Intangible
Assets

12. 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

13. 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

14. 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