Change Face of Management - Assignment Example

Q1 Determine the Knowledge Management activities at McKinsey in this case. How could this lead to competitive advantage? Relate to the knowledge Management theory from the module The importance of knowledge management for firms internationally cannot be doubted. However, in order to understand the particular role of knowledge management in the development of organizational activities it is necessary to explain the context of knowledge within modern firms. Towards this direction, it has been accepted by Bollinger et al. (2001, 8) that ‘knowledge is a resource valuable to an organizations ability to innovate and compete’. Through a more analytical presentation of knowledge within organizational environment, Anand et al. (2003, 15) explained that ‘the knowledge possessed by an organization and its members can be classified as explicit or tacit; explicit knowledge can be codified and communicated without much difficulty while tacit knowledge--such as the manner of operating sensitive equipment or interpersonal skills--is not so easily articulated’. In other words, knowledge can have many forms and for this reason when used as a criterion of analysis of a particular corporate action, it should be carefully examined as of its appropriateness and its efficiency in accordance with the needs of the firm at the particular time period. The above assumption is supported by Bendler et al. (2001, 8) who noticed that ‘knowledge has become the pre-eminent production factor, and it needs as much careful, conscious management as its traditional counterparts’. Steyn (2004, 615) also highlighted the importance of knowledge for organization supporting that ‘knowledge management enables organisations to improve efficiency and effectiveness mainly by decoding tacit knowledge into explicit information’. Moreover, in accordance with Chatzkel (2003, 3) ‘knowledge is not detached from the people, processes, or infrastructure of an organization and its network’. Also, Buckley et al. (2004, 371) found that ‘our view of knowledge is that it is the converse of uncertainty; uncertainty inhibits the ability of firms to create value by limiting the scope and effectiveness of the activities they undertake’. In accordance with the above the appropriate ‘administration’ of knowledge is vital for the development of every firm worldwide. For this reason, in order for a firm to improve its competitiveness within its market, it is necessary to develop the appropriate knowledge management scheme. More specifically, as Wright (2001, 15) supported if firms around the world wish ‘to develop truly sustainable competitive advantage in the knowledge economy, they need to capture, catalog, transfer, and institutionalize knowledge that precludes peoples daily actions’. In other words, knowledge should be ‘administered’ appropriately taking into account both the needs of the company and the general social and political conditions of the market involved. In the case under examination (McKinsey & Company) the managing director, Rajat Gupta, created a series of initiatives that promote the use of appropriate use of knowledge within the organization. One of the most characteristics (and effective) examples of this effort is the Practice Olympics during which the firm’s managers propose indicative schemes towards the increase of the firm’s profitability and the improvement of its position towards its competitors. Other strategies that have been applied throughout the firm’s operations, like the One Firm Policy (in which consultants in the firm were all recruited on a firm-wide basis) and the client relationship consulting – that was applied later – are indicative examples of the firm’s initiatives in the knowledge management field since the firm’s appearance in the market. The practice development strategy was also introduced in order to promote the firm’s knowledge management initiatives. However, the most important steps towards the improvement of the firm’s knowledge management policies were made in the early 1990s. The specific effort involved mainly the replacement of ‘the leader – driven knowledge creation and dissemination process with a ‘stewardship model’ of self-governing practices focused on competence building’ (case study, page 324). All the above practices as they were gradually introduced and applied on the firm’s daily operational activities were proved to be significant for the improvement of the firm’s position towards its competitors. The development of knowledge management in the particular case – in accordance also with the findings of the literature that were previously presented – was appropriately structured protecting the firm from unexpected turbulences and leaving to employees the necessary time in order to get involved in the relevant procedures. Q2 Critically evaluate the management of McKinsey through its history, relating to theory from the module One of the priorities of McKinsey & Company has been traditionally the provision of the appropriate support to customers. Towards this direction a series of efforts had been made while the communication with the customer has been improved in order to increase the firm’s profitability both in the short and the long term. The role of communication in organizational initiatives has been highlighted by Moore (1995, 143) who supported that ‘what is strategic in the communication is not that it is designed to be manipulative, but instead that it is designed to advance particular policies or organizational strategies by making them comprehensible’. The particular aspect of organizational change (improvement of communication with customers) should be regarded as of high importance for the development of the firm’s performance in the long term. The main aspect of the firm’s management since its foundation in 1926 has been the promotion of the firm’s communication with its customers. Moreover, a series of schemes related with knowledge management – starting by the ‘undeviating sequence of analysis’ applied in the early days of the firm’s existence until the recent scheme of Practice Olympics prove that the firm has tried all appropriate efforts for its development; however the turbulences in the market have been proved a difficult and costly initiative. As for the firm’s development throughout its history, this is characterized by radical management changes and innovative efforts focusing on the improvement of communication with customer and the use of advanced knowledge management techniques. In the first years of the firm’s operation the main managerial technique used towards the increase of the firm’s profitability has been the One Firm policy which was introduced by Marvin Bower (who entered the firm in 1932) and which was based on the recruitment of all consultants on a firm-wide basis. The effectiveness of the managerial structure of the firm was proved to be significant and this fact led to the international expansion of the firm by 1960s. Through the years that followed several models of management were introduced in the firm in order to help the managers stabilize the firm’s performance in the long term. These models were indicatively, the ‘client-relationship’ model and the growth share matrix. Other schemes like the development of ‘specialists’ within the firm was also proved to be very effective towards the achievement of a high level of stability (organizational and financial) in the particular firm. By 1980s the use of the above techniques led to the firm’s growth and the achievement of the required stability. After the entrance of Gupta in the firm as a managing director in 1994 the managerial strategies followed especially in the area of knowledge management were slightly differentiated focusing on the actions instead of planning. The introduction of Practice Olympics is considered to be one of the most important knowledge management schemes introduced in the firm by Gupta. A series of other initiatives regarding the specific field were also applied in accordance with the needs of the firm and the potentials of the market. The practices followed by the firm’s leaders throughout his history were focused on the following four categories as highlighted by Kesler (2000, 26): ‘1. Finance, 2. Process, 3. Offering and 4. Delivery’. The development of knowledge management in order to serve the needs of the above sectors was achieved in each particular period of time through the introduction of innovative schemes and techniques that were ‘adapted’ to the market’s characteristics and the customers’ demands. Q3 Referring to theory from the module, critically evaluate the management of change within McKinsey in the case Change is necessary within all organizations. However, in most cases the relevant initiatives fail. The lack of appropriate strategies seems to be the main reason for this outcome. In accordance with the study of Bunker et al. (2005, 12) ‘75 percent of all change initiatives fail’. The above researchers have tried to identify the main reasons for the weakness of firms to change their practices and their policies even if these changes are necessary in order for the firm to survive within its market. Moreover, the study of Bunker et al. (2005, 12) showed that ‘much of that failure stems from not understanding how to manage the structural side of change and the human dynamic of transition’. On the other hand, Katzenbach (1996, 149) noticed that ‘change efforts are often conceived as waves of initiatives that sweep through an organization from the top down, or the bottom up, or both, and flow across functions’. In other words, change efforts within the organizational environment are not always welcomed by the firm’s employees (even by those who belong in the higher positions of the organizational hierarchy). This assumption is in accordance with the view of Greve (1998, 59) who supported that change within organization can be regarded as ‘an outcome jointly determined by motivation to change, opportunity to change, and capability to change’. From a theoretical perspective change within organization can be explained using a series of theoretical models. In this context, Fennell et al. (1993, 90) refers indicatively to the following ones: ‘a) the strategic choice model (which is the one based in the changes happened to particular variables like the board composition and structure, independent of the influence of managerial change, the ownership change and the major hospital reorganization), b) the population dynamics (which is influenced by the population level changes) and c) the change in technical and institutional environments (which are mainly refer to the regulatory change, the change in the medical profession and the change in the normative environment surrounding the medical sector’. It should be noticed that despite the importance of change for the improvement of the firm’s position in the market, the relevant procedure should be designed and completed very carefully in order to avoid any delay caused by unexpected problems or severe oppositions towards the changes attempted. Towards this direction, Huy (2002, 31) found that ‘fundamental change in personnel, strategy, organizational identity, or established work roles and interests often triggers intense emotions’. For this reason, it would be preferable for all organizational change initiatives to be introduced gradually after considering the view of the firm’s shareholders (as well as of its stakeholders) in order to ensure the successful of the whole effort. In McKinsey & Company, changes throughout the firm’s operation are introduced gradually while all persons involved can participate in the development of relevant scheme – even if indirectly through the explanation of their thoughts and views in the firm’s managing director. Current firm’s managing director, Rajat Gupta continued the strategy of his ‘former’ trying to develop the firm’s presence in the market even if in the interior the prospects do not seem very optimism. In fact, the ability of the firm’s managers to keep all change initiatives in the ‘internal’ without particular ‘publication’ has been proved valuable for the firm’s development in the long term. The importance of the customer’s problems for the firm (a scheme that was primary introduced in 1950s) has been proved to be one of the main reasons for the firm’s transformation into a powerful consulting firm. The results of organizational change in McKinsey can be evaluated through the assumption made by the Commission of First Aims and Goals, in 1971. In accordance with the above assumption the firm during that period was ‘growing too fast’ (case study, page 320) and for this reason specific measures should be applied in order to help the firm ‘recommit itself to the continuous development of its members’ (case study, page 320). The above assumption could be used as an indicator for the efforts made within the organization for the improvement of the firm’s position in the market. Q4 What future changes are there likely to be for McKinsey? Using theory from the module, suggest potential management solutions for Gupta Usually, the need for specific organizational changes is evaluated by the firm that are interested in changing its structure or its practices either in the short or the long term. Regarding this issue it has been supported by Poole (1998, 45) that ‘when change is needed in an organization it is likely the culture or identity of the organization will be targeted for change; the transformed organization, whether it be minor (first-order change) or major (second-order change), will not be the same as its predecessor’. On the other hand, Eoyang et al. (2001, 5) noticed that ‘many organization change initiatives start at the top and deal strongly with any resistance from system agents that blocks progress; common ways of responding to resistance include downsizing, restructuring, and re-engineering’. In other words, the need for specific organizational change is decided primarily by the firm’s managing director; however, the particular aspects of this change are usually formulated gradually taking into account the reaction of the environment, the position of the employees and the needs of the firm. If taking into account the managerial practices followed by Gupta in the long term we will come to the conclusion that Gupta is very careful regarding the administration of the firm’s resources (either monetary or not). However, this characteristic of Gupta may be considered as a factor of ‘delay’ in the firm’s growth. More specifically, despite the fact that Gupta has introduced many interesting projects towards the restructuring of knowledge management policies followed by the firm, his choices have been proved to be inadequate in the long term for the firm’s further development. More specifically, as a firm’s employee verifies (p. 331 of case study) the firm’s growth has been too slow the last years while the intervention of technology (p. 331 of case study) has alternated the firm’s operational framework which used to be customer focused instead of capital focused. For this reason, it would be necessary for Gupta to focus on strategies that are less demanding regarding their application in order for him to ‘accelerate’ the improvement of the firm’s performance (not just in the short term but mainly in the long term). References Anand, V., Clark, M., Bruhn-Zellmer, M. (2003). Team Knowledge Structures: Matching Task to Information Environment. Journal of Managerial Issues, 15(1): 15-23 Bendler, A., Elzenheimer, J., Hauschild, S., Heckert, U., Kluge, J., Kronig, J., Licht, T., Stein, W., Stoffels, A. (2001). Knowledge Unplugged: The Mckinsey & Company Global Survey on Knowledge Management. New York: Palgrave Bollinger, A., Smith, R. (2001). Managing organizational knowledge as a strategic asset. Journal of Knowledge Management, 5(1): 8-18 Buckley, P., Carter, M. (2004). A Formal Analysis of Knowledge Combination in Multinational Enterprises. Journal of International Business Studies, 35(5): 371-375 Bunker, K., Wakefield, M. (2005). Changing Workforce: Leading Effectively When Change Is the Norm Canadian Government Managers Discover How to Weather Draconian Layoffs and Budget Cuts by Turning Inward to Become More Authentic. The Public Manager, 34(4): 9-17 Chatzkel, J. (2003). Knowledge Capital: How Knowledge-Based Enterprises Really Get Built. New York: Oxford University Press Greve, H. (1998). Performance, Aspirations and Risky Organizational Change. Administrative Science Quarterly, 43(1): 58-63 Eoyang, G., Olson, E. (2001). Facilitating Organization Change: Lessons from Complexity Science. San Francisco: Jossey-Bass Fennell, M.L., Alexander, J.A. (1993) ‘Perspectives on organizational change in the US medical care sector’, Annual Review of Sociology, 19: 89-112 Huy, O. (2002). Emotional Balancing of Organizational Continuity and Radical Change: The Contribution of Middle Managers. Administrative Science Quarterly, 47(1): 31-66 Katzenbach, J. (1996). Real Change. The McKinsey Quarterly, 1: 148-153 Kesler, G. (2000). Four Steps to Building an HR Agenda for Growth: HR Strategy Revisited. Human Resource Planning, 23(3): 24-38 Moore, M. (1995). ‘Creating Public Value: Strategic Management in Government’. Harvard University Press. Cambridge, MA Poole, P. (1998). Words and Deeds of Organizational Change. Journal of Managerial Issues, 10(1): 45-47 Wright, D. (2001). Using technology to derive value from knowledge communities. KnowledgeNets, May 15-17: 1-5 Read More