White Paper     A STRUCTURE AND MODEL FOR HOW TO                   BUILD IC IN A MANAGEMENT                               ...
STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRMTABLE OF CONTENTS(EDVINSSON, 1997)1. INTRODUCTION  ...
STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM4.6.2. Principles #2 It is not easy to copy being t...
STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM1. INTRODUCTIONThis internal report aimstotransfer ...
STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRMin the same situation:a partner gets frustrated and...
STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRMDealing with structural capital, the memory and the...
STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM2. GENERAL THEORYNonaka & Takeuchi (1995) point out...
STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRMindividuals and organisations are called mental mod...
STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRMindividual level and the collective level. Consulta...
STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM―It was clear to us that we did what we were suppos...
STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM―SharePoint contributed most for the sales force. I...
STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM2.4. Typical failures and pitfallsTypical failures ...
STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM                             ―I hear and I forget. ...
STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM2.5.3. The learning process of KolbDavid A. Kolb‘s ...
STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM2.5.6. Abstract thinkingThe abstract thinker relies...
STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM          Comprehension: A concrete experience from...
STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM2.5.11.         Learning styleWhen perceptions and ...
STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRMThe activist combines concrete experience and activ...
STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM3. THE FRAMEWORK FOR DRIVING IC WITHIN A CONSULTANC...
STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM          •Capturing and documenting tacit and expl...
STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM entities are Case Stories and Project Documentatio...
STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRMCost                   Repeatable and            Ba...
STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM4. EXECUTION4.1. Set the visionIt is fundamental to...
STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM4.3. Building the capability: talent managementThe ...
STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM4.3.3. Career paths and reward systemsThe career pa...
STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRMCurrent projects: A place with project management a...
STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM   that developed the material. This means that if ...
STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM4.6. Ten principles for successful implementation o...
STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM4.6.6. Principles #6 The team firstCreate a culture...
STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRMAPPENDIX A: ELEVEN COMMON EXCUSES NOT TO WORK WITH ...
STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM5. REFERENCESEdvinsson, L. (1997). Intellectual Cap...
STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM                         32
STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM―…because the execution of an idea is always more i...
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A structure and model for how to build intellectual capital in a management consulting company 2011 official version

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This internal report aims to transfer my (the author’s) structural capital and tangible knowhow in building intellectual capital within a consultancy business. The report is based upon 15+ years of experience in building intellectual capital in a number of international consultancy businesses. The roles I have had in the different organisations have been as CEO, Chairman, VP of Training, advisor and external consultant. The definition of Intellectual Capital used in the report is based upon Leif Edvinsson and the work of Intellectual Capital of Sweden AB. Professor Leif Edvinsson divided Intellectual Capital into three main categories plus the business idea: relational capital, structural capital and human capital. The difficult thing with consultancy firms, especially management consultants operating in a premium market, is capturing, sharing, diffusing, refining and generating new explicit knowhow. However, tacit knowhow is even harder to capture, share, diffuse, refine and generate within an organisation with individualistic knowledge workers, and is thus dependent upon the social capital of the firm.

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A structure and model for how to build intellectual capital in a management consulting company 2011 official version

  1. 1. White Paper A STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM Magnus Penker, August 2011 magnus.penker@bearing-consulting.comUnited Kingdom Sweden Spain Switzerland South Africa th nd5 floor, Imperial Jakobs Torg 3, 1tr Paseo de Gracia 44, 11 Rue du Port 2 Floor, 1 SandtonHouse 111 52 Stockholm 8C 1204 Genève Drive15–19 Kingsway Sweden 08007 Barcelona Switzerland Sandton 2196London WC2B 6UN Ph: +46 84 11 87 10 Spain Ph: +41 22 575 2023 JohannesburgUnited Kingdom Fax: +46 85 010 Ph: +34 66 005 6419 Fax: +41 22 594 South AfricaPh: +44 208 133 3125 9637 Fax: +34 93 396 1973 8005 Ph: +27 11 327 8705Fax: +44 845 280 3818 Fax: +27 86 685 8444 1
  2. 2. STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRMTABLE OF CONTENTS(EDVINSSON, 1997)1. INTRODUCTION 42. GENERAL THEORY 72.1. Organisational Learning 72.2. Professional Service Firms 82.3. Potential negative limiting loop 112.4. Typical failures and pitfalls 122.5. The learning process of professionals 122.5.1. Learning is an ongoing process 132.5.2. Lifelong learning 132.5.3. The learning process of Kolb 142.5.4. Concrete experience 142.5.5. Reflective observation 142.5.6. Abstract thinking 152.5.7. Active experimentation 152.5.8. Learning – a conflict-ridden process 152.5.9. Comprehension and insight 152.5.10. Intention and extension 162.5.11. Learning style 173. THE FRAMEWORK FOR DRIVING IC WITHIN A CONSULTANCY COMPANY 193.1. The process 193.2. The model 203.3. Quality assurance 214. EXECUTION 234.1. Set the vision 234.2. Process and KPIs 234.3. Building the capability: talent management 244.3.1. Employer branding and on-boarding 244.3.2. Learning: individual and collective 244.3.3. Career paths and reward systems 254.3.4. Leadership and culture 254.4. Tools 254.5. Financing and ownership 264.6. Ten principles for successful implementation of structural capital within Professional Service Firms 284.6.1. Principles #1 The structural capital is the proof and the means 28 2
  3. 3. STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM4.6.2. Principles #2 It is not easy to copy being the leader 284.6.3. Principles #3 Include, not exclude 284.6.4. Principles #4 Build sustainable psychology contract 284.6.5. Principles #5 Clients shall pay for the lunch 284.6.6. Principles #6 The team first 294.6.7. Principles #7 Documenting the general, relating to the specific 294.6.8. Principles #8 What is not possible to measure shall not be done 294.6.9. Principles #9 Go for low-hanging fruits 294.6.10. Principles #10 Tell stories 29APPENDIX A: ELEVEN COMMON EXCUSES NOT TO WORK WITH STRUCTURAL CAPITAL FROM AN EMPLOYEE PERSPECTIVE 305. REFERENCES 31 3
  4. 4. STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM1. INTRODUCTIONThis internal report aimstotransfer my (the author‘s) structural capital and tangible knowhowin building intellectual capital within a consultancy business. The report is based upon 15+years of experience in building intellectual capital in a number of international consultancybusinesses. The roles I have had in the different organisations have been as CEO, Chairman,VP of Training, advisor and external consultant. The definition of Intellectual Capital used inthe report is based upon Leif Edvinsson and the work of Intellectual Capital of Sweden AB.Professor Leif Edvinsson divided Intellectual Capital into three main categories plus thebusiness idea: relational capital, structural capital and human capital. The difficult thing withconsultancy firms, especially management consultants operatingin a premium market, iscapturing, sharing, diffusing, refining and generating new explicit knowhow. However, tacitknowhow is even harder to capture, share, diffuse, refine and generate within an organisationwith individualistic knowledge workers, and is thus dependent upon the social capital of thefirm. This has also been pointed out by researchers such as Nonaka & Takeuchi (1995) andMcKenzie (2006).The reasons for focusing on IC within a consultancy company are that IC is the major asset ofwhich the structural capital part is the only thing that does not go home every day. Thestrategic advantages of a working IC model within a consultancy company are: 1. Easier to scale and fit the organisation to the market conditions over time 2. Impacts the talent market positively, as it will attract, retain and develop global talents;younger practitioners as well as senior advisors 3. Decreases the cost of human capital, as it will be less expensive to attract, retain and develop 4. Possible positive impact on price strategy, as it is possible to argue for more value 5. Increased internal efficiency, as it avoids ‗reinventing the wheel‘ 6. Less risk, as the most valuable assets are legally and morally linked to the brand and the firmThe most crucial part of getting IC to work within a consultancy company is the link betweenthe formal documentation and the human behaviour: the transfer mechanisms. I have, in thepast, experienced how large law firms employ someone to build their structural capital,consisting of word templates and standard documents, but in just a few months it hasdiverged into many versions without instructions and the background information has endedup at a lower quality,withmore time spenton the drafting of legal agreements and PMs. Thesame pattern can also be found in many management consultancy firms, where people arehired, temporarily or permanently, to compensate for a lack of organisational insights intowhy, how and what to capture, share, transfer and refine. It always, in my experience, ends up 4
  5. 5. STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRMin the same situation:a partner gets frustrated and fixes it by her-/himself, and even moreversions are created and no-one knows what standard to follow, and then another partnerdoes the same thing and the situation gets even worse. This is also pretty much in line withPeter Senges Systems Archetypes (which will be explored later on in the report). . 5
  6. 6. STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRMDealing with structural capital, the memory and the sustainability of the IC is a complicatedtask, and many managerial dilemmas need to be handled: Simplicity vs complexity Decentralisation vs centralisation Top-down vs bottom-up management Theory vspractice Control vs engagement Collectivism vs individualism Introversion vs extroversion Stability vs changeThe approach used in this report is a holistic and qualitative one based on my experience, aswell as the insight from the thought leaders within the area. 6
  7. 7. STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM2. GENERAL THEORYNonaka & Takeuchi (1995) point out that there are four possible transformations betweentacit and explicit knowledge;seeFigure 1.The Nonaka & Takeuchi framework is used in Figure1to map the different ways of transferring knowledge between the tacit and the explicit level. Individual learning • Case stories • Best Practice Research From explicit • Manuals • White Papers • Methods • Articles • Processes • Books • Business Case Publications Group Learning From tacit • Case stories • Coaching • Best Practice • Collaboration • Business online and in Case classroom • Lecturing To tacit To explicit Figure 1Adopted from Nonaka & Takeuchi (1995), a model used to map the different aspects of transferring knowledge between the tacit and the explicit level.It is imperative to understand how tacit knowledge is transferred (otherwise known asdiffusion), as this is one of the hardest tasks. By improving the transfer of tacit knowledge,the speed and quality of the diffusion will increase, as well as stimulating the refinement andgeneration of new structural capital.2.1. Organisational LearningPeter Senge, one of the thought leaders within the area of Organisational Learning, pointsout in Senge (1990) that a learning organisation exhibits five main characteristics: systemsthinking, personal mastery, mental models, a shared vision, and team learning.According to Wikipedia (2011a), systems thinking is essential to understand how structuralcapital is both captured as well as diffused within the organisation; the personal mastery isthe commitment by an individual to the process of learning. The assumptions held by 7
  8. 8. STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRMindividuals and organisations are called mental models. To become a learning organisation,these models must be challenged. Individuals tend to espouse theories, which are what theyintend to follow, and theories-in-use, which are what they actually do. Similarly, organisationstend to have ‗memories‘ which preserve certain behaviours, norms and values. In creating alearning environment it is important to replace confrontational attitudes with an open culturethat promotes inquiry and trust. To achieve this, the learning organisation needs mechanismsfor locating and assessing organisational theories of action. Unwanted values need to bediscarded in a process called ‗unlearning‘. The development of a shared vision is important inmotivating the staff to learn, as it creates a common identity that provides focus and energyfor learning. The most successful visions build on the individual visions of the employees atall levels of the organisation, thus the creation of a shared vision can be hindered bytraditional structures where the company vision is imposed from above. Therefore, learningorganisations tend to have flat, decentralised organisational structures. The shared vision isoften to succeed against a competitor. The accumulation of individual learning constitutesteam learning.The benefit of team, or shared, learning is that staff grow more quickly and theproblem-solving capacity of the organisation is improved through better access toknowledge and expertise. Learning organisations have structures that facilitate team learning,with features such as boundary crossing and openness. Team learning requires individuals toengage in dialogue and discussion; therefore, team members must develop opencommunication, shared meaning and shared understanding.According to McKenzie (2006),there are three dimensions of social capital that impact the useof knowledge to create business value: 1. Structure:loose ties are easy to manage; close ties carry tacit knowledge better (on the other hand,close tiescan reduce the possibility of thinking new thoughts) 2. Cognitive compatibility:they way we see the world and the degree of common perspective 3. Quality of relationship:the level of trustMcKenzie (2006) also states that there are four key factors involved in using theorganisation‘s knowledge to create business value: 1. The number of ideas and opportunities an organisation has access to 2. The capacity, on organisational and personal level, to transform ideas into innovations 3. The insights of the value possible to create from knowledge sharing 4. The possibility of generating mutual benefits2.2. Professional Service FirmsAccording toLøwendahl, Revang & Fosstenløkken (2001), successful Professional ServiceFirms (PSF) create value fortheir clients and their members, and it is done on two levels:the 8
  9. 9. STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRMindividual level and the collective level. Consultants are also motivated by intrinsic as well asextrinsic factors, whereas many consultancy companies focus on the extrinsic rewards such asremuneration, bonus and pension packages. However, many consultants are driven byintrinsic factors such as curiosity, status, reputation and work–life balance.According to Mullins (2006),the link between job satisfaction and performance has becomemore and more evident. Mullins (2006) states that there are five contractual levels affectingjob satisfaction: The knowledge contract. Through increased knowledge involvement and measurement the knowledge contact will be strengthened, meaning that the company will be clearer about what is required and the employee‘s skills and knowledge will be better used and appreciated. The psychology contract. This is about the relationship between the employee and the organisation. The efficiency/rewards contract. How equal and acceptable the rewards are to the employees, and how manageable they are to the company. The ethical contract. How the values are perceived and what the values actually are. This is also linked to the employer brand, i.e. the talent market perception of the company‘s values. The task structure contract. This is about specialisation and work description, and is also linked to how and when to build structural capital.By adding the knowledge involvement, the human capital is more explicitly addressed. In thereport,What Makes the Most Admired Companies Great, published by Hay Group (2009), it isstated that the most admired companies use performance measurement to focus on: Growth Profitability Operational excellence Building customer loyalty Building human capitalTo analyse the internal factors, fromthe perspective of IC creation, the McKinsey7S model canbe used; see Figure 2. Typical of the comments I have received over the years is this: 9
  10. 10. STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM―It was clear to us that we did what we were supposed to do to contribute in the alignment ofthe business, but fromour point of view that was not the case with the other business areas. Itseemed as though the management of other business areas did not share the vision andobjectives.‖ ―Vice PresidentMistrust between the management of business units is common rather than rare. Anothercomment from a group where I implemented SharePoint was:―Initially, during the implementation phase of the SharePoint platform, we were hesitant toshare all of our model and processes with the other companies, and co-workers, in theGroup. Since all the companies worked in adjacent areas, and each had extremely competentand ambitious people with a goal of maximising their business, it became a competitivesituation. You could sense a we can do what they can do attitude from some parts of theGroup; an attitude leading people to refrain from uploading certain documents.‖ ―Managing Director Structure Strategy Systems Shared Values Skills Style Staff Figure 2 The McKinsey7S modelIn another interview with a consultant in one of the companies I worked with, he stated: 10
  11. 11. STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM―SharePoint contributed most for the sales force. It allows them to collect offers, contracts,presentations, pitches, and support agreements. SharePoint was never really adopted by theconsultants, and therefore has never fully been adopted by 100% of the company –thismeans that it is not working as a tool that helps in every project, on a daily basis.‖ ―Consultant2.3. Potential negative limiting loopAnother aspect occurs when investments are needed, in systems or employees working withthe structural capital in capturing, sharing, diffusing, refining and generating. Many times, it isbased upon voluntary work as well as investments, and there will always be a bill to pay to beable to run the show. The more the system will be used, the more resources will be needed tofound it, and the fee will most likely constantly increase. Managers, and/or individualconsultants (depending on the setup of the consultancy business), will, if they cannot seeimmediate effects on the investment, tend to refuse it. The increasing fee for handling theincreased usage of the system can, and often does, cause counterproductive feedback,degenerating the perceived success of the knowledge process. The situation is called limits togrowth. Limits to growth occur when a reinforcing positive feedback process is installed toproduce a desirable result (a positive growth loop) but inadvertently creates secondaryeffects (a negative limiting loop) that put a stop to the growth (Senge, 1990). 11
  12. 12. STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM2.4. Typical failures and pitfallsTypical failures and obstacles, that can be analysed and potentially prevented by using theMcKinsey 7S model when doing an IC cultural analysis, are: 1. The visions and objectives are not fully shared and aligned 2. Mistrust between the business areas, and a perceived competitive situation 3. The management style is more focused on protectingits own interests thanon contributing to the group 4. No low-hanging fruit visible 5. Lack of communication and involvementDuring the work-aligning strategy and in the culture there will be resistance and misinterpretations,such as: I become interchangeable. Comment: On the contrary –you show everyone what you know, what you can do and position yourself.That is the kind of personwe want. I become a machine. Comment: No, you get a chance to create value instead of reinventing the wheel. Other people will steal my ideas. Comment: They will steal them either way.In Appendix A, my whole list of 11 excuses with comments is presented.Alignment between staff values and organisational values has been shown to increase staffcommitment, which can be both an advantage as well as a disadvantage, especially when itcomes to consultants and managers who are credited with past successes and who arenormally more powerful and influential. At the same time, it is important to avoidtotalitarianism in which diversity is stifled in favour of a dominant value set, causing lessagility and innovative capability.During the process of aligning the knowledge process and defining the system, several dilemmas willoccur. It is crucial to have trust in the organisation and be very clear about the purpose and goals.2.5. The learning process of professionalsIn 1984, the American researcher David A. Kolb published his book,Experiential Learning –Experience as the Source of Learning and Development(Kolb, 1983). His work had a greatimpact in the education and learning field, and his ideas and theories have had greatinfluence on the development of models for lifelong learning.The concept of experience-based learning was already formulated in 500BC by Confucius, who described it like this: 12
  13. 13. STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM ―I hear and I forget. I see and I remember. I do and I understand.‖David A. Kolb‘s theory of experiential learning differs from cognitive and behavioural theories(behavioural learning) primarily by emphasising the central role that experience has in thelearning process. The theory aims to provide a holistic perspective on learning and combinesexperience, perception, cognition and behaviour.The theory has its intellectual origins inJohn Dewey, whoemphasises the need for newknowledge to be created out of experience, Kurt Lewin, whose research emphasises theimportance of a person‘s active participation in a learning situation, and Jean Piaget, whosees intelligence as the result of a person‘s interaction with their environment. These threeapproaches to learning and development have many common nodes, which form the basis ofKolb‘s theory.2.5.1. Learning is an ongoing processThe theory of experiential learning assumes that our minds, our ideas and our thoughts areconstantly shaped – and reshaped – through our experiences. We almost always have apicture of how a situation we are in should be developed. Often, however, our experiencediffers from our expectations. We therefore have to adapt, learn to handle the unexpectedsituation and thus change slightly. We have just learnt something. The purpose of educationand learning becomes more a matter of stimulating people‘s curiosity and willingness toexplore new areas, not to memorise facts.To see learning as an ongoing process means that all learning involves ―learning about‖; thatin a teaching situation, to see a student‘s mind as a ―blank sheet‖ is thus impossible. We allhave a more or less defined idea about the topic we will learn more about;a teacher‘s role istherefore to modify a student‘s old ideas, rather than to inculcate brand new ideas. Thelearning process is facilitated considerably if a training procedure begins by first engagingwith the student‘s personal beliefs and theories about the topic.2.5.2. Lifelong learningMost learning in our lives takes place spontaneously, naturally and in real life. Only a smallpart of our knowledge is the result of teaching and learning. For example, dealing with asituation that‘s new and unknown to us gives us new knowledge. This changes us a little, andwe are somewhat richer in our knowledge as we move on in life. Learning can thus be seen asa lifelong and ongoing process, where experience becomes an instrument that helps us tounderstand and deal with new situations in life. 13
  14. 14. STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM2.5.3. The learning process of KolbDavid A. Kolb‘s model of experiential learning is the best known and established in the area.The model is based on four steps, or four ways in which learning can take place. concrete experience observation testing the of and new reflection on concepts that experience formation of abstract concepts based upon the reflection Figure 3Kolb’s model for experiential learning2.5.4. Concrete experienceThose who learn through concrete experience gain a feeling of control: theirlearning is basedon experiences that are controlled through emotionally based assessments. If you have thislearning style, the way you learn best is through concrete examples that engage you.Theoretical reasoning does not usually work as well. You tend to treat every situation as aunique case, instead of generalising and creating theories. Group work, in an environmentwhere the teacher acts as coach and lets the students engage in independent learning,usually works well. A concrete-experiencing person is often a creative problem-solver whomakes intuitive decisions, which is why they often tend to do well in unstructured situations.2.5.5. Reflective observationIf you are a reflective observer, you learn by seeing and hearing. You prefer to rely on carefulobservation before making a decision. You may have somewhat inward-looking traits andmay be introverted and quiet in class discussions. An ideal learning situation is lectures thatpermit objective observation. The teacher should ideally have the role of expert in the topic.Working under supervision or following instructions suits you well. 14
  15. 15. STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM2.5.6. Abstract thinkingThe abstract thinker relies on logical thinking and a rational approach. You prefer situationsthat emphasise theoretical arguments and place the emphasis on understanding rather thanon practical application. You are good at seeing things from different perspectives andappreciates patience, impartiality and thoughtful review. You learn most easily in a relativelycontrolled context, focusing on theory, systematic analysis and case studies. You rarely getanything out of unstructured ―exploratory learning‖ such as simulation exercises.2.5.7. Active experimentationIf you learn best through active experimentation, you focus on using logic, ideas andconcepts, and prefer thinking to sensing. In problem-solving you generally act on theoriesrather than rely on creativity. You appreciate precision, systematic planning and careful anddisciplined analysis. In a training situation, you learn most easily through project work,homework or group discussions. You dislike passive learning situations such as lectures. Afocus on activeparticipationmeans that problem-solving tasks and games are good for thistype of student. The ―trial and error‖ approach is just right, as it allows you to try things out inan active way, which you appreciate.2.5.8. Learning – a conflict-ridden processWhen attempting to absorb new knowledge effectively, it is good to use all four steps of theKolb learning model. However, it is often difficult to use all the steps in one learning situation,because learning is a conflictual process. New knowledge, new skills and new attitudes areacquired by confrontation between different ways of dealing with new impressions. Is it, forexample, possible to act and reflect at the same time? Is it possible to be practical while stillbeing theoretical?These different ways of acting are apparently diametrically opposed. Learning simply requiresabilities that are opposites. Therefore, we must continually choose which mode of learningwe want to focus on in each specific learning situation. These choices mean conflict betweenopposite poles. How conflicts are resolved will determine the level of our learning. If suchconflicts as resolved by the suppression of one pole and/or domination of others, learningtends to specialise around that pole.2.5.9. Comprehension and insightThe Learning Model has its origins in the practical experience of an individual. Kolb adoptstwo different ways of understanding – or perceiving– the experiencespf our lives. In themodel, we find comprehension (apprehension) at one end of the perceptionsdimension andunderstanding (comprehension) at the other. 15
  16. 16. STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM Comprehension: A concrete experience from the surroundings via our senses;a direct and tangible tactile experience. Insight: A comprehension which is about an abstract understanding of something;a conceptual and symbolic interpretation.Comprehension is a more emotive way to bring in the outside world. There is a stream ofimpressions that we are not always aware of. The impressions are rarely constant, but rathervolatile. To bring order into this flow of emotional impressions, we use the idea throughinsight. Otherwise, we would get stuck in an endless stream of unpredictable impression.Through comprehension we can communicate and put words to our experience as it is anactive alert to new impressions.If you leave a room, our understanding through comprehension of the situation is that theroom fades away, to be replaced by new impressions. My understanding through insightgives me, by contrast, a model of the situation which it is possible to communicate to others.By strengthening this ability, we perceive that event B follows event A, but nothing gives theimpression that event A causes event B. This assessment of cause and effect is instead therealisation of the two events. These two ways of taking in the reality we live in arediametrically opposed to each other.2.5.10. Intention and extensionThe second fundamental dimension, conversion, is the learning that occurs when theindividual performs actions based on the experience he/she learned through the perceptionsdimension. There are two ways to transform what one understands by experience. In themodel, we find the intent at one end of the degradation dimension and extension at theother. Intention: An internally directed action; internal reflection. Extension: The externally directed action, which has a social or physical impact on the environment.The conversion dimension is perhaps best described in Carl Jung‘s psychological personalitytheory. Carl Jung developed a typology based on the observation that humans tend toexhibit different types of settings; introversion (inward direction) and extraversion (outwarddirection). Jung also described human behaviour based on a combination of four types ofpsychological functioning: thought/feelings and intuition/sensation.Jung‘s typology model tries to find connections and differences between how we perceivesomething and how we then evaluate and interpret what we have perceived:something thathas a great influence on our behaviour and can give rise to misunderstandings and conflictsbetween people. 16
  17. 17. STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM2.5.11. Learning styleWhen perceptions and the transformation dimension intersect – as in the model – you getthe four more complex learning styles: activist (accomodator), the reflective (divergent),pragmatist (convergent) and theorist (assimilator).TheoristThis learning style perceives an experience by understanding and transforms it by intention.The focus of the model lies in the region between reflection and analysis, in combination withabstract concepts and conceptual models.Theorists prefer learning that combines abstract thought with reflective observation. He/shewants to know how things relate to each other and is good at creating theoretical modelsand abstract concepts. When it comes to learning, theorists prefer a case study, reading,thinking and reasoning on their own.In the workplace you will find theorists, often in areas such as research and planning, workinghard to collect data and then do analysis. This learning style is characterised in terms of theresult – basic science and mathematics rather than applied science.PragmatistThe pragmatic learning style perceives experience by understanding and transforms it byextension. In the model, this means an emphasis on the abstraction of concepts and activechallenging of them.The pragmatist combines abstract thinking with active experimentation and asks,―How can Iapply this knowledge in practice?‖ His/her greatest strength is the practical application of anidea, and pragmatists often prefer to deal with things rather than people. A pragmatist likesto have narrow technical interests, and often chooses to specialise in areas such as physicalscience.When it comes to learning, they prefer a teacher who works as a coach, they appreciateactivities that require skill and they like to manage their own learningindependently.Pragmatists tend to be found in the technical professions where the focus is on problem-solving.ActivistThis learning style perceives experience through the comprehension and converts it byextension. The focus of the model lies between concrete experience and experimentalconfirmation. 17
  18. 18. STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRMThe activist combines concrete experience and active experimentation. This learning style isfocused on doing things. Activists carry out planned tasks and involve themselves happily innew experiences. They deal, take risks andlook for opportunities. Their way of solvingproblems is often based on an intuitive ‗trial and error‘ method. They rely happily on othersproviding facts and information, rather than using their own analytical skills. An activist oftenworks with management, marketing and sales, and socialises easily with other people.Sometimes the tendency, however, is for him/her to be seen as impatient and pushy.The reflectiveThis learning style perceives an experience through comprehension and converts it byintention. The focus of the model lies in the area between concrete experience andobservational reflection.The reflective learning style uses reflective observation and concrete experience in learning.This type of person seems to think about a topic. The ideal learning situation includeslectures, with plenty of time to think through what has been said, and a teacher who is anexpert on the subject. The reflective‘s strength lies in his/her creativity and imagination, andthe ability to see things from many different perspectives. They are generally interested inpeople and emotional elements. People with this learning style often work as consultants,experts in organisational development or as human resource managers. They have broadcultural interests and often humanistic backgrounds. 18
  19. 19. STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM3. THE FRAMEWORK FOR DRIVING IC WITHIN A CONSULTANCY COMPANY3.1. The processThe process I have evolved over time is based upon fundamental organisational aspects suchas culture, leadership, values and beliefs, and is linked to visionary thinking and executing(see chapter 4, Execution). The first step aims at capturing and documenting tacit and explicitknowledge within entities by motivating, leading by example and rewarding. The entities arethe smallest meaningful pieces of information stored and accessed through an ITSystem. TheKPI for this step is typically the number of KPIs necessary to get a critical mass to work with.The second step is to systematically share tacit and explicit knowledge by deploying superiorinfrastructural initiatives, and the typical KPI is the number of accessed entitiesthat indicateactivities. The diffusion is about creating knowledge pull and push within the organisationusing the shared knowledge. It is often measured by the number of entities used. To beeffective, it is important that there are transfer mechanisms in place, like systems and aproactive culture, ultimately with osmosis characteristics1. The refinement part is constantimprovements and alignments,and can be judged and measured by the number of improvedentities.The generation step is ultimately the synthesis process, where meta-knowledge andmeta-structures are developed and implemented within the firms DNA,deploying thecreation of capabilities needed at the present time and for future alignment of strategicinitiatives. Typically, it is measured by the number of new kinds of entities produced.1 ‗Osmosis is the movement of solvent molecules through a selectively permeable membraneinto a region of higher solute concentration, aiming to equalise the solute concentrations onthe two sides. It may also be used to describe a physical process in which any solvent moves,without input of energy, across a semipermeable membrane (permeable to the solvent, butnot the solute) separating two solutions of different concentrations. Although osmosis doesnot create energy, it does release kinetic energy and can be made to do work, but is a passiveprocess, like diffusion.‘ (Wikipedia, 2011b) 19
  20. 20. STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM •Capturing and documenting tacit and explicit knowledge within entities by motivating, leading by example and rewardingCapturing •KPI: Number of entities •Systematically share tacit and explicit knowledge by deploying superior infrastructural initiatives •KPI: Number of accessed entities Sharing •Create knowledge pull and push within the organisation using the shared knowledge •KPI: Number of used entities Diffuse •Constant improvements and alignments •KPI: Number of improved entities Refine •The synthesis process where meta-knowledge and meta-structures are developed and implemented within the firm’s DNAGenerate •KPI: Number of new kinds of entities Figure 4 Penker’s Structural Capital Process3.2. The modelThe basic model for explaining the structural capital synthesis process is shown inFigure 5. Current Projects The Structural Capital Synthesis Common Cases Knowlede (Specific) (Generic) Figure 5 Penker’s Structural Capital Synthesis Meta ModelThe common entities are typically Best Practices, Templates, Methods and Processes, all ofthem transferring explicit knowledge to explicit knowledge (see also Figure 1). The Case 20
  21. 21. STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM entities are Case Stories and Project Documentation;these are the transmission mechanisms of tacit knowledge to explicit knowledge. Current Projects helps to understand and transfer tacit knowledge to explicit and tacit knowledge. Moreover, user-driven ranking of documentation, comments and blog posts, as well as configuration management, facilitates the synthesis process in the same sense as open innovation challengeing existing thinking. The model is also in line with Professor David A. Kolb‘s model for experiential learning, a worldwide de facto standard for adult learning. Kolb‘s phases of Experience, Reflection, Generalisation and Experimentation are all covered in line with Kolb‘s theories of iterative and holistic learning (see 2.5). 3.3. Quality assurance As with all processes and models, there is a need for an integrated quality assurance system. Figure 6 shows a Quality Assurance Model for an integrated and holistic approach to structural capital. The matrix is populated with examples of what to look for, as this is situational. Process People Technology InformationQuality Capture, diffusion, Dedicated Accessibility Ability to capture refinement and creation sponsors and transfer tacit Usability of skills and knowledge knowledge Frequent through a well-defined Security coaching process Completeness Linkage to Keep the company reward system Customised culture aligned with the vision Involvement Project auditsSpeed The right number of Support from Updated and relevant The right number of entities at the right time the operation content entities at the right time Automated delivery and customisation of toolsDependability Well-defined Commitments Suppliers and external Potential problems onboarding process of from technical consultants with intellectual the new consultants rights and managementFlexibility How iterative and Potential Distance learning for Export possibilities incremental is the discipline explicit knowledge transfer, of documents, process without losing issues coaching and training for flexible ways of transparency and tacit knowledge consuming simplicity? information 21
  22. 22. STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRMCost Repeatable and Balance Proprietary system might What information continuous processes between be tempting but is also to enter, and why to keep costs down return and cost-inefficient, while enter it,are critical cost, short standard systems might be questions term and long cost-efficient from an term operational perspective but less efficient from a knowledge-sharing perspective Figure 6A Quality Assurance Model for an integrated and holistic approach to structural capital. The matrix is populated with examples of what to look for, as this is situational. 22
  23. 23. STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM4. EXECUTION4.1. Set the visionIt is fundamental to set and outline the vision of the strategic initiative to capture, share,diffuse, refine and generate new knowledge within an organisation. There will becontradictory forces, dilemmas and misalignments between functional strategies, lack ofsystem support and fuzzy reward systems, as well as potential breaksin the psychologicalcontract between the firm and the employees as a result. Introducing systematic work withintellectual capital demands active leadership, execution ability and an enrolled organisation.If or when an organisation is not fully committed, at least the key player has to be; otherwiseit will not succeed, and the vision of the work is imperative. In my experience, typically visionslike being thought leader, working less but charging more, or publishing the ultimate articleor book, serve as potential foundations for setting a vision of the initiative. However, having aclear financial purpose but a lack of vision is not good enough. I have seen many exampleswhere top management wanted to tap the knowledge workers and secure their assets(financial/legal perspective) but did not bother to enrol the people, and, not surprisingly,in allcases this ended up in a mess. There must be a rationale for the knowledge worker;something in line with their agenda. This is also the reason to align the five contractsbetween the knowledge works and the firm.As building and proving IC within a consultancy firm takes at least 3–5 years of hard work, itis crucial with low-hanging fruit:typically, having all internal material collected, such asprocesses, compliant rules, templates, common link lists, contact data, CRM system, projectmanagement, workflow support and configuration management, as well as ranking listand/or ‗Like‘ functions for the most appreciated stuff. In addition, internal blogs and monthlyupdates, as well as internal celebrations, are potential tools.4.2. Process and KPIsMeasuring the leading indicators – the key performance indicators – is necessary, as theprocess cannot be driven simply by focusing on output as it is too complex and abstract. Inthe process, described in chapter3.1, KPIs are suggested. A performance management systemis needed as well as a culture of measuring, coaching and improving the set goals everysingle day. Goals should be personal and all consultants should have clear goals, both in theirdelivery as well as in their own sales, and also when it comes to building IC. Linking thefulfilment of IC goals to career steps and remuneration, as well as creating a culture ofappreciating and telling stories and building myths about the top contributors, is helpful.Both intrinsic and extrinsic rewards, and a clear and mutual reward contract according toMullins (2006), need to be in place. 23
  24. 24. STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM4.3. Building the capability: talent managementThe firm‘s capability and external driving forces, both micro and macro, are the echo systemof a firm. By developing itscapabilities, linearly and disruptively, a firm can respond toopportunities and threats. The capability of a PSF is basically the human capital, but the leveris the structural capital – organisational and relational. More and more practitioners andacademics have come to the conclusion that competitive advantages are not sustainable, butrather volatile and dependent upon both the exiting capabilities and also what can be calledmeta-capabilities. Meta-capabilities are the capabilities that form the framework within whichcapabilities are created, destroyed and formed into new combinations in response toopportunities or threats. To be able to build the capabilities, and especially the meta-capabilities, the human capital needs to be aligned with the strategy of the firm, and that isthe link to talent management.4.3.1. Employer branding and on-boardingAn extensive structural capital means that you, as an individual, can gain skills faster, makemore money as a consultant and also climb upwards in the pyramid of Maslow. This is theway in which structural capital is essential in attracting talent, and a much cheaper way thanusing head-hunters and advertising. When a talent is brought onboard, my experience is thatyou have one week to win that soul to be a crusader of structural capital. If this does nothappen now, it might take years—if it happens at all. This has to do with group dynamics, asthere will always be persons within the organisation who are not fully committed, and theywill try to enrol all new people to gain their support. But this also worksin the opposite way: ifall new people become crusaders, old structures and behaviour will be challenged and finallyrejected.4.3.2. Learning: individual andcollectiveThe learning process within a PSF needs to be structured around the following dimensions: Individual learning – collective learning Tacit knowledge – explicit knowledge Specific learning – generic learning Learning entity generation – learning entity destruction and recreationMoreover, to secure efficiency and, on a deeper level, generate insights and eventually meta-knowledge, application of the David A. Kolb model is recommended. See chapter 2.5, thegeneral theory section about learning for professionals. 24
  25. 25. STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM4.3.3. Career paths and reward systemsThe career path, from being a talent on the market all the way to director roles andpartnership and potentially leaving the company, must be aligned with the overall strategy,including how to build capabilities and meta-capabilities, driven by demand and supply aswell as threats and opportunities. As mentioned earlier, IC is one of the most importantintrinsic motivation factors in attracting and retaining talents, and one of the most importantextrinsic motivation factors in developing talents. However, it is also a proof of excellence, abelonging factor, as well as something that cannot easily be copied. This also makes it worthlinking to alumni, as they will be reminded of the internal operational excellence and bepotential ambassadors, as well as clients wanting and needing to use the IC of the firm.The reward systems must be aligned with both extrinsic and intrinsic rewards and, as statedearlier, be transparent and understandable as well as being linked to measurable KPIs ofimportance. All knowledge works, as well as all people, shall have personal goal plans alignedand handshake access to the nearest superior.4.3.4. Leadership and cultureThe leadership must, as stated earlier, be prestige-less and encouraging, and at the sametime trustworthy and focused on what drives the long-term value of the firm:admitting fault,finding new ways, never being satisfied and always wanting and demanding superior internaland external deliveries.4.4. ToolsTo get short-term and long-term wins, it is important that all people within the organisationget something out of the system every day. Therefore, it is advised not to store onlycompleted projects or packaged offers, as these will be of too little short-term value.Everything of importance must be there, as well as social functions such as rankingpossibilities, top lists of used documents, recommendations, comments, blogs, presencefunctions, Google Analytics, Google Trends and Google Alerts, as well as adopted RSS flowsfor specific areas of interest. All these functions can be bought, relatively cheaply, throughthird party vendors and for most systems on the market, including SharePoint.Based on the process and model, as well as the learning process of Kolb, there need to bethree parts/aspects supported by the system in use:Cases: Stored, possible to rank and comment upon. But they must be linked to the originalproject data, as this will heavily increase the tacit knowledge transfer as well as providing alllearning types with a learning curve adapted to their individual style of learning. This is alsohow SharePoint is designed, and the intention of it from the beginning, even through manyfirms only use it as a static file server. 25
  26. 26. STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRMCurrent projects: A place with project management and/or workflow support. This is a wayof interacting in an efficient way, but it also eases the process of documenting case storieswith full details (internally, and externally with fewer details and after seeking the approval ofthe client). Moreover, it isabsolutely vital to learn, use and generate new models on a deeperlevel. This is also fully supported within SharePoint.Common knowledge: The common knowledge is the synthesis of cases, current projects andthe transformation and diffusion processes within the firm. Therefore, it is vital to have aworkplace where new standards and models are evolved and released – it can be closedworkgroups that release and train the organisation in each release. However, it must bepossible, and clear rules as to how to apply to such workgroups, as well as the ability tocomment on the releases,contribute to driving the synthesis as well as the process oftransferring tacit knowledge to explicit and/or tacit knowledge.Integrity and Intellectual Property rights are handled within employment agreements andshareholder agreements as well as in associate agreements and, where appropriate, in NDAs.If there are issues with defence or industry secrets, exceptions can be made by limitingaccess; however, this is highlycounterproductive, and I have made this mistake too manytimes. However, training and certification/assessments of all people with access is necessaryto make sure all people understand the issues. Moreover, there are of course restricted areasof all IC systems, such as management and board minutes – and this has to be accepted andexplained in the name of transparency in general.4.5. Financing and ownershipA potential execution problem, one on the drawing-board at the outset, is how to finance theinvestments needed. Normally, investment in systems is easy to solve, even if there might beissues related to licence fees etc. However, there is an issue with the time needed to producethe structural capital and other IC, which is something that normally hinders the fullimplementation. There are several ways of handling this issue; below is a compilation of myexperiences of what has worked for me (but of course everything isbecoming more complex): 1. By charging a management fee or equivalent setup, it is possible to make the technical investment and have staff ready to support the organisation. 2. By having a very clear understanding in the company that everything that is created during the firm‘s time, working as associate, partner and/or subcontractor or external advisor, is owned by the firm, and that all exceptionsare written and approved by the board or management team due to special circumstances;this makes it easier but does not solve all problems. Still, it will take time to produce high quality material supporting the organisation. A way of solving this is that when a method, process or a concept is made for a specific client, the client is owned by the team or consultants 26
  27. 27. STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM that developed the material. This means that if someone else is involved with this client, the originator of the material will own that account and thereby secure return on the time and effort invested. However, if the concept, process or method is used somewhere else, there are regulations but in reality the originator will – most of the time – be invited as mentor or thought leader. This is also very much about leadership and cultural values. An example is if you develop a training programme for a training company; then the original inventors will own that account, meaning that if other people in the organisation want to give classes through that training company, it will be considered as sales, and sales provision paid to the originator (of course, depending on the firm‘s setup of internal rules).3. Always let the client pay for developing structural capital; integrate this in all pricing.4. By linking carrier path, remuneration and bonuses to originators contributing. These can be linked to the suggested KPIs as well. This can be financed in the same way as the system, i.e. with a general management fee. Putting extra fees upon the usage of the system and content will only be counterproductive and is strongly recommended to avoid.5. By employing younger and hungry talents who, as a part of their own learning process, capture, structure, refine and eventually generate structural capital. This can be built in as a part of aninitiation ceremony. Hiring external resources to do this does not solve the problem, and will only be counterproductive in the long run. However, in certain cases, and initially, and after carful thinking, it might be a part of starting an IC project and getting the initial content. However, I have tried this several times and only succeeded once. 27
  28. 28. STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM4.6. Ten principles for successful implementation of structural capital within Professional Service FirmsThese ten principles are generic for PSF, based on my experience and the academic literatureon the topic, and are also my recommendation to be applied.4.6.1. Principles #1 The structural capital is the proof and the meansStructural Capital has two sides, like a coin. On one hand, it is a means to be moreproductive, but onthe other hand, it is a proof of internal as well as external excellence. Thisperspective helps in the process of introducing, executing and developing Intellectual Capitalof a firm. It can be compared with three new ‗P‘ in the formal 4P model extended to 7Ps. Thethree least ‗P‘s of the new model are:Physical proof, the Process and the People – all of them central concepts within the domainof Intellectual Capital.4.6.2. Principles #2 It is not easy to copy being the leaderBy being open-minded and transparent, always challenging and developing, by refinement aswell as destruction, it will be almost impossible to copy. Concepts and even capabilities canbe copied, but meta-capabilities and meta-knowledge are very hard to copy. This way, asustainable competitive advantage, being able to dynamically adjust the capabilities andvalue offers creating temporarily competitive advantages, can be reached.4.6.3. Principles #3 Include, not excludeBy including internally and externally, the organisation can nurture and create long-termloyalty.This is the foundation for leadership and culture of a PSF, and the very prerequisite oflong-term success. However, short-term, it might even be destructive, but to win the war youneed to win more than one battle, and one might actually lose one to reach a moreimportant goal.4.6.4. Principles #4 Build sustainable psychology contractBy applying perceived and transparent total reward systems, job design, job rotation, clearcareer paths(including alumni network)and an overall vision that‘s strong enough to enroland motivate, you will also succeed in getting a working IC in place.4.6.5. Principles #5 Clients shall pay for the lunchRemember, clients always pay the bill in consulting companies. By taking advantage ofthisthinking, it will also be easier to find fair remuneration and reward models for creating andworking with short-term and long-term sustainable IC. 28
  29. 29. STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM4.6.6. Principles #6 The team firstCreate a culture of putting the team and the firm first, but do it on commercial principles. Ifpeople do not deliver, this must be addressed, as everybody is dependent upon it. Everybodymust have a chance, but being a consultant and a team player is a hard combination, and notnatural for everyone.4.6.7. Principles #7 Documenting the general, relating to the specificBy thinking and acting specifically in projects, but documenting generally, you increase thepossibility of creating a legacy, applicable for a long time. But remember:keep a record of thedetails, because they explain the masterpiece!4.6.8. Principles #8 What is not possible to measure shall not be doneAlways link you activities to defined leading indicators: this is more important than focusingon the overallgoal, as it is very hard to link back to. Divide the leading indicators and goalsand distribute them, making the knowledge work responsible and committed to them, forthe success of the firm as well as personal satisfaction.4.6.9. Principles #9 Go for low-hanging fruitsAlways make sure that everybody gets a small victory now and then, as well as making thingseasier on daily basis. This will ensure the perseverance needed to achieve success.4.6.10. Principles #10 Tell storiesTelling stories, creating sagas, myths and legends, will explain and engagepeople intheadventure of building a world-class PSF based on a strong and sustainable foundation. 29
  30. 30. STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRMAPPENDIX A: ELEVEN COMMON EXCUSES NOT TO WORK WITH STRUCTURAL CAPITAL FROM AN EMPLOYEE PERSPECTIVE1. I become interchangeable.On the contrary – you show everyone what you know, what you can do and position yourself.That is the kind of personwe want.2. I become a machine.No, you get a chance to create value instead of reinventing the wheel.3. I have no time.You don’t have time to be structured?4. Shouldn’t I care about tomorrow’s delivery and prioritise the structural capital?Yes, if you have to choose. You can win the battle, but lose the war – which is better?5. Other people will steal my ideas.They will steal them either way.6. I have nothing to contribute.Then you should not work for a knowledge intensive company.7. Everyone already knows my areas of expertise; they can just ask me!All 300 co-workers know exactly what you can do? OK, great; can they call and ask you at11pmas well?8. I don’t want other people or departments within our company to disturb or recruitmyemployees, I prefer no-one to know what they can do.Then you should question your leadership. Try to empower people instead; they will beloyal toyou.9. I have to process; I can’t just write it down on command.Good, but it is more effective if you do it together with other people.10. I am a poor writer.OK, thanks for telling us – then we will help you. Schedule an appointment with a journalist oracopywriter.11. But my work tasks are different from person X’s; he/she can contribute more to thestructural capital and take advantage of it in a better way.Everyone can contribute and take advantage of it, and quality is more important than quantity. 30
  31. 31. STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM5. REFERENCESEdvinsson, L. (1997). Intellectual Capital: Realizing Your Companys True Value by Finding Its HiddenBrainpower. HarperBusiness.Group, H. (2009 йил 6-January). What Makes the Most Admired Companies Great: Reward ProgramEffectiveness. Fromhttp://www.haygroup.com/downloads/ww/Hay_Group_Most_Admired_for_HR_Presentation_-_2008-12-03.pdfKolb, D. A. (1983). Experiential Learning: Experience as the Source of Learning and Development. PrenticeHall.Løwendahl, B. R., Revang, Ø., & Fosstenløkken, S. M. (2001). Knowledge and value creation inprofessional service firms: a framework for analysis. Human Relations (54 (7)), pp. 911–931.McKenzie, J. (2006). Transformative ways of thinking. Henley Business School, UK.Mullins, L. J. (2006). Work motivation and rewards. In: Essentials of Organisational Behaviour. London:FT/Prentice Hall.Nonaka, I. I., & Takeuchi, H. (1995). The Knowledge Creating Company. New York: OxfordUniversity Press.Senge, P. (1990). The Fifth Discipline. Doubleday Business.Wikipedia. (2011a йил 28-07). From Wikipedia:http://en.wikipedia.org/wiki/Learning_organizationWikipedia. (2011b йил 30-07). From http://en.wikipedia.org/wiki/Osmosis 31
  32. 32. STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM 32
  33. 33. STRUCTURE AND MODEL FOR HOW TO BUILD IC IN A MANAGEMENT CONSULTING FIRM―…because the execution of an idea is always more important than the brilliance of the thought…‖ (Harvard Business Publishing – Morgan, Levitt & Maleck – INVEST model) 33

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