John Stuckey has his brain picked several times a day. The managing partner of McKinsey & Company in Australia fields phone calls and e-mails from McKinsey consultants around the world, asking for advice on a particular industry or client problem. From the most junior business analysts to senior partners, all expect to share Stuckey's wisdom - usually within 24 hours.

Sharing knowledge is deeply embedded (at McKinsey and
Company)... it is just totally expected, that is what you
do. - JOHN STUCKEY Photo: Jessica Hromas

Stuckey admits it can be a chore finding the time to answer all the requests for help, but he would never ignore them. Knowledge sharing is deeply embedded in McKinsey's culture. "It's just totally expected, that is what you do," he says. McKinsey has just three policy committees that report to its global board, and one of those is knowledge (the others are people and clients). The firm has about 1000 people around the world working in knowledge-related areas, supporting its 5000-plus consultants.

McKinsey has focused seriously on knowledge for at least 20 years (see accompanying story, page 84), much longer than most other professional services firms. Now, however, it has become a hot topic for law firms and other advisory firms. Most prefer not to describe their strategies as knowledge management, which was a buzz phrase two or three years ago but has fallen from favor. The phrase is seen as too closely tied to the systems and databases that support some knowledge initiatives - an important aspect but not the most central.

But the concept of knowledge management is far from dead. As the United States management specialist Tom Davenport, writing in the November issue of CIO magazine, says: "It's true that knowledge management is no longer the next big thing. It had its day in the PR sun but it has been eclipsed on the hype-o-meter by electronic commerce ... But wait, the corpse is stirring. Knowledge management may be quiet, but it's hardly dead. In fact, it's just beginning to penetrate the fabric of many businesses. The early, flashy but insubstantial applications ... have given way to broadly focused initiatives that are transforming the way organisations work."

This seems an accurate description of what is happening in several of Australia's biggest professional services firms. BRW spoke to five firms as well as McKinsey: the national law firms Blake Dawson Waldron, Freehills and Mallesons Stephen Jaques, and the consulting firms KPMG and PricewaterhouseCoopers.

The terminology varies among the firms - know-how, knowledge, intellectual capital - but the focus is similar. The common thrust is to make better use of the information and knowledge floating around in the heads of its staff.

This may involve "capturing" the knowledge, documenting it and making it easily accessible to others (for example, a database of best practices or precedents). It requires the nurturing of a firm-wide culture that shares knowledge rather than hoards it (breaking down the idea that "knowledge is power"). It may be an internal Yellow Pages, listing the experts in dozens of areas (often called "know-who"). It may require dozens or hundreds of researchers finding out everything there is to know on topics that help the client advisers. It also requires the most advanced technology, including sophisticated intranets and client extranets, an outstanding company Web site and tens of thousands of documents in databases.

Australia's big law firms are relatively recent converts to the knowledge bandwagon. Although they have been capturing knowledge for years in vast databases of precedent documents and libraries, a broader knowledge focus seems to have emerged only in the past couple of years.

Gretta Rusanow is the chief executive of Curve Consulting, which advises Australian and US law firms on strategies for knowledge management. She defines knowledge management as "the leveraging of a law firm's collective wisdom by creating processes and technology systems to support and facilitate the identification, capture, dissemination and use of the knowledge of lawyers and staff".

Lawyers thought of knowledge management in narro
terms, such as documents and databases, and are
only beginning to focus on other components.
- GRETTA RUSANOW Photo: Paul Jones

Rusanow says law-firm knowledge has explicit elements (precedents, legislation, case law) and tacit elements (such as client information and lessons learnt from past projects). She says lawyers have tended to think of knowledge management in narrow terms, such as documents and databases, and are only now beginning to focus on other components, such as client and industry information.

For example, 15 years ago Mallesons Stephen Jaques began to draft and categorise thousands of plain-language precedent documents. But it was not until 1998 that a review of the firm's support services identified know-how (its preferred term) as a key area for investment. It appointed a director (know-how), Matthew Parsons, who now heads a 60-person group that reports directly to the firm's chief executive, Tony D'Aloisie.

(Early knowledge management models often had the head knowledge person reporting through the IT function or to the chief financial officer. The present view is that a serious approach to knowledge requires a direct line to the chief executive.)

The Mallesons know-how group has absorbed several divisions, such as libraries, precedents and technology training, and a know-how representative is allocated to each practice group. It is also responsible for more intangible concepts, such as legal knowledge, client relationships, strategy and processes.

A key focus has been the development of what Parsons calls the "instrument panel" - everything lawyers need for doing their work. The tools include an online summary of the day's main news stories, customised to that lawyer's client and industry focus, and a precedents database accessible through a toolbar in Microsoft Word. The firm's best examples of various standard clauses are also located in Word (in which lawyers draft their documents), including tips on when to use or not use the clause. Another toolbar lists in-house specialists in various areas.

At Blake Dawson Waldron (BDW), earlier knowledge initiatives culminated in the appointment in September last year of a knowledge director, Merle Conyer. She says her newly created position shows that BDW recognises knowledge (her preferred term) as a core asset and that her main tasks are to harness the knowledge of lawyers, provide efficient service to clients and improve knowledge of issues.

Freehills has not appointed a separate head of knowledge or know-how. The area is the responsibility of Sydney managing partner Bruce Cutler, who chairs a seven-person steering committee that was set up last year. He says the committee's task this year is to gain acknowledgement of the importance of knowledge management across the firm.

"We already have lots of knowledge-management processes, such as precedent databases," Cutler says. "But we need a co-ordinated, strategic knowledge-management process, nationwide."

Some Freehills practice groups have attended workshops. One session asked lawyers to consider where they would start if they were asked to handle the sale of a business. Some said they would get out the firm's sale-of-business precedent, some asked about the objectives of the client and some began by questioning where Freehills fitted in the picture. The lawyers then jointly drew up a template, mapping each step of the process, drawing on each one's knowledge of the business sales they had done.

These three law firms are at different stages of developing their knowledge strategies, but all agree that it is extremely important. Rusanow says knowledge management is at the top of most big law firms' management priorities for two main reasons: client service and staff retention. If knowledge management is properly handled, work will be finished faster and more efficiently, which should translate into satisfied clients and happy staff (who have not spent hours on boring tasks that have been done hundreds of times before).

Cutler of Freehills agrees: "The solicitors we have are pretty smart people. They want challenging work, they don't want to be here until midnight churning out something that has been done before. And clients are constantly looking at getting more value for their money. They can get quite frustrated if you only deliver a standard commodity; they want to see value added."

Conyer of BDW says staff retention is a key issue, but she regards it as more than simply reducing the time spent on boring work. Conyer says that fostering a proper knowledge-sharing environment helps create a sense of community and belonging, and people who feel they belong are less likely to leave.

But do lawyers want to share? Conyer says that after meeting several hundred BDW lawyers, she is pleasantly surprised by the firm's open and collaborative culture. She says the main impediment to knowledge sharing is not a hoarding mentality, but a lack of time to devote to non-billable activities. She hopes to remedy this by appointing one knowledge worker, called a "knowledge catalyst", to each practice group to help lawyers share their knowledge.

Further encouragement for BDW lawyers to share will come later this year with changes to their performance objectives and appraisal system, which will formally recognise knowledge sharing. This is similar to the approach taken by McKinsey, where performance reviews and decisions on who will be made a partner include an assessment of the person's knowledge contribution to the firm. Even those who have become partners are evaluated every two years, on performance criteria that include knowledge.

The consulting firm KPMG has included a knowledge component in its performance appraisals since mid-1999. The firm's chief knowledge officer for Australia, Ian McBride, says the knowledge focus at KPMG began in 1997, when there was a realisation that it was not where it wanted to be in knowledge management. KPMG has committed 1% of its $US13.5 billion annual global revenue to knowledge development.

McBride heads a group of 12 (28 others work to some degree in knowledge) and reports to the chief executive in Australia, Lindsay Maxsted. Recently, he also assumed the title of chief information officer. McBride says KPMG's knowledge-sharing culture is discussed a lot and is "getting there".

He says there are four components to KPMG's knowledge strategy: KWorld (an intranet, launched in 1998, that is accessed by at least 1200 of the 4600 Australian staff each day); client collaboration (extranets); the firm's Web site, kpmg.com; and research.

The next step is to use what has been learnt about knowledge to consult to clients. In August last year, KPMG appointed its first director in knowledge consulting, and the firm is completing its first big external knowledge management project, developing a KWorld for a client. But the demand for knowledge-management consulting is not huge. McBride says the concept is more likely to grow organically, rather than through consultants knocking on doors.

This view is shared by the managing partner of the PricewaterhouseCoopers (PwC) Australasian management consulting practice, Andrew Stevens. He says knowledge transfer is an integral part of most of the consulting projects handled by his firm, but it is not a project in its own right.

Internally, PwC has focused on knowledge-transfer initiatives for about nine years and has more than 200 knowledge workers globally supporting its 45,000 consultants. Stevens says the firm has used its knowledge strategies to move beyond having teams of people waiting for the next consulting project. It now develops a point of view on a particular industry and develops "pre-configured solution sets" to problems that may arise for clients in that industry. For example, Stevens says PwC began working two years ago on developing a view on electronic marketplaces and what they might mean for suppliers.

It is a different approach from three years ago, which the Asia-Pacific KM Leader for management consulting, Petar Bielovich, describes as: "Capture what everyone does, put it in a database and share, share, share." Stevens says that today, PwC is not just waiting for a client to ask for a solution. "We are doing a lot more pre-thinking."

The McKinsey way

In the early 1970s, the global management consulting firm McKinsey & Company felt that its strong growth of the previous 50 years was slowing. An internal committee reported that the firm had been neglecting the development of its professional and technical skills and was losing ground to new competitors such as Boston Consulting Group, which emphasised "thought leadership" rather than local client relationships.

McKinsey set up working groups to develop knowledge in two key areas: strategy and organisation. It developed firm-wide industry-based client sectors, such as banking and consumer products, to cut across geographic boundaries. It began hiring some consultants with specialist industry knowledge rather than the usual broad problem-solving skills. And it created 15 centres of competence in areas such as change management and systems. But still, most internally developed knowledge remained undocumented, because of a suspicion held by many consultants about trying to package ideas.

In 1987, McKinsey launched a knowledge-management project, which recommended that the firm build a common database of knowledge accumulated from client work. It also recommended that each practice area hire a person to act as an "intelligent switch" to monitor the quality of the data and help consultants find the information they needed.

From this project came three important tools:

1. A computer database of client projects (the firm's practice information system).
2. An initial database of 2000 documents prepared by each practice group, representing their core knowledge (the practice development network).
3. A list of specialists and key document titles (the knowledge resource directory).

Next week

Knowledge management Part two

• Creating a knowledge culture, by McKinsey & Company
• Knowledge management and the balance sheet, by David James