Building Knowledge Management Capabilities

CONFIDENTIAL

August 2001

Building Knowledge Management Capabilities

McKinsey Nonprofit Practice

1CONTENTS

Why knowledge management (KM) is important

Framework for knowledge management

McKinsey Nonprofit Practice example

2McKINSEY CORE BELIEFS ON KNOWLEDGE-BASED STRATEGIES

Source: "Strategy as if Knowledge Mattered" Brooke Manville and Nathaniel Foote, May 1996

1. Knowledge-based strategies begin with strategy, not knowledge

2. Knowledge-based strategies are not strategies unless you link them to measures of performance

3. Executing a knowledge-based strategy is not about managing knowledge, it is about nurturing people with knowledge

4. Organizations leverage knowledge through networks of people who collaborate, not through networks of technology that interconnect

5. People networks leverage knowledge through organizational pull, rather than centralised information push

3Learning culture and orientation

Facts and informationare availableand used

Key lessons are captured and leveraged

Best practice is shared widely across the business

New leading edge thinking is created and shared

Possible performance impact

Use of learning

STAGES OF KM AND PERFORMANCE

4COMMON SYMPTOMS OF KNOWLEDGE COMMON SYMPTOMS OF KNOWLEDGE COMMON SYMPTOMS OF KNOWLEDGE COMMON SYMPTOMS OF KNOWLEDGE MANAGEMENT PROBLEMSMANAGEMENT PROBLEMSMANAGEMENT PROBLEMSMANAGEMENT PROBLEMS

Symptom Consequences

Emphasis on gut feel in decision making

Over-reliance on a few key experts

Frequent "reinvention of the wheel"

Failure to generate new ideas and insights

Failure to attract/retain outstanding people

Insularity and inward-looking focus

Key decisions often turn out to be wrong Little transfer of knowledge between individuals

Potential bottlenecks in accessing existing knowledge Loss of institutional knowledge/memory when they leave

Same mistakes repeated; no learning from past experience Slow to roll out successful innovation

Erosion of existing core competencies Failure to generate new competencies, intellectual assets

Vicious circle of poorer performance leading to declining reputation, attracting weaker talent, and hence generating poorer performance

Failure to leverage external expertise Tendency towards organizational inertia and

intellectual sterility

5Barriers to effective

use of knowledge

BARRIERS TO EFFECTIVE KM

IncentivesNo incentives to encourage knowledge building and sharingFocus on unit, not collective performanceFocus on short-term results

Knowledge infrastructure Lack of clear leadership

Patchy availability of IT tools

Networks not broadened/ deepened over time

Information cultureInadequate codification of knowledgeImportance of sharing not recognized

Problem solving cultureLack of standardization (where useful)Lack of problem solving discipline

People Lack of time to codify and share learning Rapid job rotations or high turnover Loss of institutional memory Little encouragement of specialist expertise

6CONTENTS




7Acquire/ create Codify

Share

KM HAS 3 KEY COMPONENTS

Clearly define knowledge needs and agendaDesign data input channel and forums for ease of useIncent contribution of knowledgeTie knowledge contributions to performance management

Create community of experts and identify First AlertsCreate knowledge based on todays learnings for use in future situationsDevelop process for updating and maintaining information and organization

Provide access to knowledge through multiple channelsOrganize information via easily understood taxonomy

Agree on what you need to know and incent contribution of knowledge

Ensure knowledge is up to date on what you know and who knows what

Establish wide access to people and databases and encourage wide use

8KEY DRIVERS OF EFFECTIVE KNOWLEDGE CREATION

Maximize ease of inputLeverage existing collection mechanisms

Channels

Incentives

Establish minimum standards for expected contributionOffer rewards and/or recognition for outstanding efforts (e.g., most downloaded document)Provide quick, easy access to submitted knowledge as a tangible result of efforts

Performance management

Formally integrate knowledge contributions into the evaluation process, with clear metrics outlined and communicated

Acquire/ create Codify

Share

9EXAMPLES OF EFFECTIVE KNOWLEDGE CREATION TOOLS

McKinsey: Practice Olympics motivates knowledge contribution through competition by offering consulting teams the opportunity to showcase key learnings

Channels

Source: McKinsey Organization Practice

Performance management

Buckman Laboratories: job descriptions and performance reviews are explicit about contributing knowledge

McKinsey: knowledge development helps establish the individual as an expert, which is formally integrated into the evaluation process for partner election

Incentives Buckman Laboratories: top knowledge sharers are recognized at

special company event

General Electric: established culture that discourages hoarding of knowledge; individual performance reviews stress skills that contribute to culture

10

KEY DRIVERS OF EFFECTIVE KNOWLEDGE CODIFICATION

Institute a codification effort to categorize/prioritize/distribute information to make access as easy and fast as possible

Incorporate codification efforts into existing processes (vs. creating new work)

Perform periodic purges to prune outdated or superceded documents

Information Codification

People Network

Formalize the community of experts through a First alert or similar mechanism to leverage organizational knowledge

Integrate document and people network by providing a contact mechanism to link useful documents to their authors


Share

11

CODIFICATION: INTEGRATING INFORMATION AND PEOPLE

Texas Instruments: created a facilitator network of 200 people worldwide who spend part of their time helping collect best practices, populate databases, and codify knowledge

McKinsey Parsed knowledge into functional and industry practices Designated Practice members to coordinate knowledge efforts

Data Codification

People Network


HP: established a knowledge management group which gathers and filters information, catalogs documents, and sets up best Practice databases

Chevron: maintains a Best Practices Resource Map organized by business process and explicitly delineates where expertise resides within the organization

12

KEY DRIVERS OF KNOWLEDGE SHARING

Emphasize use of the knowledge management tools during training

Regularly audit training program to ensure use of latest knowledge

Training

Communities of practice

Institute regular events to encourage cross-organizational knowledge sharing

Emphasize sharing through support of informal communities

Maximize ease of accessing information or contacts when needed by establishing multiple channels (e.g., website, first alerts, knowledge-sharing meetings)

Channels


Share

13

SHARING: TRAINING AND COMMUNITIES OF PRACTICE

Intel Invests $75 million per year on training Established Intel University to serve as an opportunity to partner with

external experts as well as disseminate knowledge

McKinsey Provides training sequence for consultants (Basic Consulting

Readiness, Introductory Leadership Workshop, Engagement Leadership Workshop, Communications Leadership Workshop)

Selected topics are presented at regular knowledge-sharing meetings developed at the Practice, office, or firm-wide level

Training


Communities of practice

ABB Maintains local peer review boards for its 5,000 profit centers, bringing

together experience and expertise relevant to the local companyChevron Nurtures informal networks through communities of practice and formal

regular conferences for best practice exchange

McKinsey Created the internal McKinsey intranet to provide easy and continuous

access to a database of sanitized cases and key insights

Channels

14

CONTENTS




15

THE PRACTICES PLAY A CRUCIAL ROLE IN KM AT McKINSEYPractices (>70) Role of practices Practice staff members

Practice review committee

For example:Nonprofit MarketingPharmaceuticalsBanking and securitiesOrganization

Capture information from teamsFind new knowledge from external sourcesHouse experts and R&I specialists who consult to teamsMaintain databases of documents and peopleOrganize information in Practice databases and on intranet websitesProvide first contact for teams to get up to speedReview knowledge, initiate efforts to improve in weak areasOrganize conferences/training sessions

Practice leaderPractice managersKnowledge experts/specialistsResearch and information specialists/analystsProfessional development coordinatorsAdministrative support

Composed of McKinsey partners and directorsReviews the work of the Practices (on an individual and collective basis)

Support infrastructure

Firmwide intranet, with customized Practice websitesDatabases to track engagements, people and expertise, internal and external knowledge/documents

16

CASE STUDY: McKINSEYS NONPROFIT PRACTICE

Acquire/create

Codify

Share

Define knowledge gaps based on analysis of requests

Conduct new research and/or reach out to teams working in that area

By subsector, define knowledge agenda and assign people to develop new ideas

Send out team debrief survey that encourages knowledge codification

Collect team documents, sanitize key information, and build knowledge documents (if team does not codify themselves)

By subsector, periodically reach out to recent teams and synthesize learnings across engagements (leveraging practice Fellows)

Overall

Sent out bimonthly newsletter

Convene subsector knowledge-sharing days

Send short weekly updates on new engagements, resources, requests

Team specific

Answer research requests by providing existing resources or conducting new research

Provide CD with relevant expertise to support teams

17

CASE EXAMPLE: CAPITAL CAMPAIGNS

New teams read PD and other internal and external resources sent by Practice

Teams call Practice-identified experts (e.g., members of Team 1)

Teams conduct new research and analysis

Teams develop hypotheses and recommendations for their clients

Teams add new client case studies and other tools to supplement Practice collection

Team 1 worked with client to develop a strategy for successful capital campaign, calling on practice for research support Practice debrief process

reached out to team post-engagement to ask about potential PD

Team worked with Practice to sanitize/ codify learnings

Several teams have since called Practice for help (or visited Web site) on capital campaigns and received new document

Learn

Apply/ build

Feed back

Acquire/create

Share

Codify

18

LESSONS LEARNED ABOUT KNOWLEDGE MANAGEMENT

Defining objectives of the knowledge management systems in a clear and operational way is key; continually redefining knowledge gaps and proactively doing research to fill them enables Practice to be more valuable to teams over time

Physical systems and processes are critical; organizing and cross-referencing information is the other half the infrastructure battle

Connecting people to people is a major role personal networks are very important

Providing incentives for knowledge codification (and being persistent) is critical to building the knowledge base; success is much higher with teams who had already benefited from Practice support

Timeliness is key likelihood of codification declines steeply as time passes after an engagement or experience ends

19

QUESTIONS TO ADDRESS WHEN BUILDING KM CAPABILITY

Why do you want to capture knowledge?

What knowledge is most important to capture and share?

How (i.e., with what systems) will knowledge be captured and shared?

Who will be responsible for capturing/managing knowledge?

How will knowledge management roles be established and rewarded?

Building Knowledge Management Capabilities

Documents

Transcript of Building Knowledge Management Capabilities