CONFIDENTIAL

Building Knowledge
Management Capabilities
McKinsey Nonprofit Practice
August 2001

CONTENTS

Why knowledge management (KM) is

important
Framework for knowledge management
McKinsey Nonprofit Practice example

McKINSEY CORE BELIEFS ON

KNOWLEDGE-BASED STRATEGIES
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

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

STAGES OF KM AND PERFORMANCE

Possible
performance
impact

Facts and
information
are
available
and used

Key
lessons
are
captured
and
leveraged

Best
practice is
shared
widely
across the
business

New
leading
edge
thinking
is created
and
shared

Use of
learning

Learning culture and orientation

3

COMMON SYMPTOMS OF KNOWLEDGE

MANAGEMENT PROBLEMS
Symptom

Consequences

Frequent "reinvention
of the wheel"

Same mistakes repeated; no learning from past experience

Slow to roll out successful innovation

Failure to
generate new ideas
and insights

Erosion of existing core competencies

Failure to generate new competencies, intellectual assets

Failure to
attract/retain
outstanding people

Vicious circle of poorer performance leading to declining

reputation, attracting weaker talent, and hence generating
poorer performance

Insularity and inwardlooking focus

Failure to leverage external expertise

Tendency towards organizational inertia and
intellectual sterility

Emphasis on gut feel

in decision making

Key decisions often turn out to be wrong

Little transfer of knowledge between individuals

Over-reliance on a
few key experts

Potential bottlenecks in accessing existing knowledge

Loss of institutional knowledge/memory when they leave
4

BARRIERS TO EFFECTIVE KM
People
Lack of time to codify and share learning
Rapid job rotations or high turnover
Loss of institutional memory
Little encouragement of specialist expertise
Incentives
No incentives to
encourage knowledge
building and sharing
Focus on unit, not
collective performance
Focus on short-term
results

Problem solving culture

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

Barriers to
effective
use of
knowledge

Knowledge
infrastructure
Lack of clear leadership
Patchy availability of IT
tools
Networks not
broadened/ deepened
over time

Information culture
Inadequate codification
of knowledge
Importance of sharing
not recognized
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CONTENTS
Why knowledge management (KM) is
important
Framework for knowledge management
McKinsey Nonprofit Practice example

KM HAS 3 KEY COMPONENTS

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

Acquire/
create

Codify

Clearly define
knowledge needs and
agenda
Design data input
channel and forums for
ease of use
Share
Incent contribution
of knowledge
Tie knowledge
Establish wide access to people and
contributions to
databases and encourage wide use
performance
management
Provide access to knowledge through
multiple channels
Organize information via easily understood
taxonomy

Ensure knowledge is
up to date on what
you know and who
knows what
Create community of
experts and identify First
Alerts
Create knowledge based
on todays learnings for
use in future situations
Develop process for
updating and maintaining
information and
organization

KEY DRIVERS OF EFFECTIVE

KNOWLEDGE CREATION
Channels
Maximize ease of input
Leverage existing collection mechanisms

Acquire/
create

Codify

Incentives
Establish minimum standards for
expected contribution
Offer 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

Share

Performance management
Formally integrate knowledge contributions
into the evaluation process, with clear
metrics outlined and communicated
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EXAMPLES OF EFFECTIVE
KNOWLEDGE CREATION TOOLS
Channels

McKinsey:

Practice Olympics motivates knowledge contribution

through competition by offering consulting teams the opportunity to
showcase key learnings

Buckman Laboratories: top knowledge sharers are recognized at

Incentives

Performance
management

special company event

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

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

Source: McKinsey Organization Practice

KEY DRIVERS OF EFFECTIVE

KNOWLEDGE CODIFICATION
Information 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
People Network

Acquire/
create

Codify

Share

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
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CODIFICATION: INTEGRATING
INFORMATION AND PEOPLE
Data Codification

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

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

Source: McKinsey Organization Practice

11

KEY DRIVERS OF KNOWLEDGE

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

Acquire/
create

Codify

Training
Emphasize use of the knowledge
management tools during training
Regularly audit training program to
ensure use of latest knowledge

Share

Communities of practice
Institute regular events to encourage
cross-organizational knowledge sharing
Emphasize sharing through support of
informal communities
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SHARING: TRAINING AND

COMMUNITIES OF PRACTICE
Channels

Training

Communities
of practice

McKinsey
Created the internal McKinsey intranet to provide easy and continuous
access to a database of sanitized cases and key insights
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
ABB
Maintains local peer review boards for its 5,000 profit centers, bringing
together experience and expertise relevant to the local company
Chevron
Nurtures informal networks through communities of practice and formal
regular conferences for best practice exchange

Source: McKinsey Organization Practice

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CONTENTS
Why knowledge management (KM) is
important
Framework for knowledge management
McKinsey Nonprofit Practice example

14

THE PRACTICES PLAY A CRUCIAL ROLE

IN KM AT McKINSEY
Practices (>70)

Role of practices

For example:
Nonprofit
Marketing
Pharmaceuticals
Banking and
securities
Organization

Capture information from

teams
Find new knowledge from
external sources
House experts and R&I
specialists who consult to
teams
Maintain databases of
documents and people
Organize information in
Practice databases and on
intranet websites
Provide first contact for
teams to get up to speed
Review knowledge, initiate
efforts to improve in
weak areas
Organize conferences/
training sessions

Practice staff members

Practice leader
Practice managers
Knowledge
experts/specialists
Research and
information
specialists/analysts
Professional
development
coordinators
Administrative
support

Practice review
committee

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

Support infrastructure
Firmwide intranet, with customized
Practice websites
Databases to track engagements, people
and expertise, internal and external
knowledge/documents
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CASE STUDY: McKINSEYS NONPROFIT

PRACTICE
Send out team debrief
Define knowledge gaps
based on analysis of
requests
Conduct new research
and/or reach out to teams
working in that area

survey that encourages

knowledge codification
Acquire/
create

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

Codify

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)

Share

Overall

Team specific

Sent out bimonthly newsletter

Convene subsector knowledgesharing days

Answer research requests by

providing existing resources or
conducting new research

Send short weekly updates on new

engagements, resources, requests

Provide CD with relevant expertise

to support teams
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CASE EXAMPLE: CAPITAL CAMPAIGNS

Team 1 worked with client to
develop a strategy for
successful capital campaign,
calling on practice for research
support
Teams add new
client case studies
and other tools to
supplement
Practice collection

Practice debrief process

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

Acquire/
create

Codify

Feed
back

Team worked with

Practice to sanitize/
codify learnings

Share

Teams develop
hypotheses and
recommendations for
their clients

Apply/
build

Learn

Several teams have since called

Practice for help (or visited Web
site) on capital campaigns and
received new document

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

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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 crossreferencing 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

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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?

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