Consulting firms were among the first organizations to have knowledge management initiatives. Generally speaking, the basic theories and principles of knowledge management outlined in Chapter 19 apply equally to consulting and other professional firms. This chapter therefore focuses on helping consultants enhance knowledge management in their own firms and activities.

34.1Drivers for knowledge management in consulting

Knowledge as the main asset

The individual expertise, knowledge and skills of the employees, together with the collective knowledge bases of methodologies and templates, make up the main resources of a consulting firm. The maintenance and further development of these resources are essential for success. The value of the company depends largely on the capabilities and knowledge of the members of staff and the organization as a whole.

The need for efficient and effective work

Consulting firms differ with respect to their competitive strategy.1 For example, IT consulting firms usually implement one solution for several customers, and therefore rely on reusable knowledge. On the other hand, strategy consultants offer unique solutions to individual high-level strategic problems; to succeed, the consultants need to share context-specific knowledge with each other. Both types of companies have to provide a solution, in a restricted time frame, and which meets predefined quality standards. Regardless of the strategic focus, the consultants need to have access to various pieces of information, either from

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documents or from other people within the organization. If appropriate solutions already exist within the company or in the market, consultants need to know about them. No consulting firm can afford to reinvent the wheel (although this is exactly what some consultants do repeatedly). Moreover, their clients expect each consultant to offer the expertise of the whole company. A failure to use all possible resources will put the consultant’s professional reputation at risk.

Time is always a factor in the consulting process. The time needed to write a new proposal can be shortened by the effective use of the knowledge that exists in the company. It should be quick and easy to search for similar proposals, profiles of similar projects, and information about the customer and the respective markets. An effective knowledge management programme can simplify and support this process.

Commodification of consultancy products

Many international consulting firms now offer similar products and ways of delivering their professional services. The fees for such standardized services are under pressure. Efficient learning from projects, economies of reuse and quality assurance are essential if such low-margin projects are to be viable. Combining standard products in an overall solution presents a further challenge as different practices have to collaborate. Such projects can involve up to a hundred consultants, particularly in integrated process improvement and software implementation projects.

Globalization of clients

Another main driver of knowledge management for consulting firms is advancing globalization. As more clients become global players, consulting companies must be able to deliver the same services throughout the world in order to stay competitive. The big consulting companies need to implement global knowledge management programmes that enable their employees to access all the information available internally and externally regarding the offered services and the specific situation of the customers and their markets.

Improving competitive response

The speed of new developments, new market trends, and new ways to conduct business is driven by the speed of new technological developments. Consultants are among the first to be affected by the increased speed of developments that lead to new requirements and new possibilities. The need to learn and continuously improve one’s own skills and expertise is urgent. A knowledge management programme should therefore support efforts to learn and to introduce new services, solutions and methodologies.

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Preventing loss of intellectual assets

The main assets of a consulting firm are its intellectual assets, which must be cared for and cultivated. The average length of employment in consulting is considerably shorter than in other sectors. Therefore a knowledge management programme must ensure that information and knowledge remain within the company even when staff members leave. Knowledge management in this context is a means to reduce the loss of intellectual assets. It also includes legal protection of intellectual property (see Appendix 5).

34.2 Factors inherent in the consulting process

Although consulting firms differ in their organizational culture and in the sorts of services offered to clients, some factors that relate to knowledge management are common to all consulting work.

Distributed work environment

In addition to working in their own and their clients’ offices, many consultants work at home, in business lounges, on aeroplanes and trains, and in libraries. Most work is done electronically, and typical technical devices include laptop computers, mobile phones and personal digital assistants (PDAs). Therefore the relevant explicit knowledge or information should be accessible remotely, and an electronic workspace that integrates all the applications is needed. Capturing new knowledge and sharing best practices must also be possible via remote access to the electronic workspace. At least some parts of the knowledge base should be portable.

Time pressure

Most work in consulting is done under time pressure. This must be kept in mind when looking at possible barriers to knowledge work. Generating, capturing, sharing and using knowledge are processes that must be neatly tied into the work processes of consulting. Treating knowledge work as something that is to be done on top of the original consulting work (and only if there is time left) will ultimately lead to a failure of the knowledge management programme.

Focus on demands of clients

All consulting work tends to be organized around the clients and their requirements. Work for the client is of the highest value; processes that directly or indirectly support the consulting process are necessary but tend to have a lower rank in the value chain. The value of a consultant’s work is mainly related to the number of billable hours. This attitude naturally hinders all kinds of knowledge

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work, as long as the client is not willing to pay for, say, a documentation of best practices and the consultant has no separate budget for knowledge processes.

Competitive environment within firms

Most consulting firms encourage competition between their members of staff. Promotion is usually based on individual performance and consultants’ ability to market themselves internally to management. Conversely, teamwork and knowledge-sharing are rarely taken into account. Part of consulting is to develop a personal success story, and many consulting firms look for individualists with a strong personality. In this respect cultural change is necessary if knowledge management in consulting is to get off the ground.

Reluctance to share knowledge

A climate of knowledge-sharing is not easily reached. In most companies the statement that “knowledge is power” is still valid. Thus many consultants are not willing to share their knowledge as they fear this will lead to a loss of status and power. They may worry that colleagues might use the knowledge without giving proper credit to its source. Also, in consulting, as in other sectors, knowledge is often tied to a specific context. When documenting best practices, for instance, it is often impossible to make explicit all the background knowledge necessary to understand the solution and use it with another client. There is a high risk that someone will use the solution in a different context and draw wrong conclusions.

Not-invented-here syndrome

Consultants are expected to deliver convincing solutions, and a consultant’s credibility depends partly on how clearly he or she identifies with the solution and can demonstrate that it is really the best one. This might be one reason for reluctance to use a solution that someone else has developed.

34.3 A knowledge management programme

In consulting, as in other sectors, knowledge management should follow a holistic approach. At least the following issues need to be tackled:

●Strategy: What is the firm’s business strategy? How does the knowledge management programme support this strategy?

●Content: What is the relevant content? How can this content be defined and structured?

●Organization and processes: Who in the organization will take care of maintaining the knowledge processes (generation, capture, transfer and use of knowledge)? How can the knowledge processes be integrated into daily work?

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●Culture and people: What can be done to overcome barriers to knowledge processes? What does that mean for a knowledge management programme?

●IT: What information technology is needed for knowledge management?

Strategy

Knowledge management is a strategic issue for consulting firms, and knowledge goals are derived from the specific strategy of the firm. The business models of companies like Accenture, KPMG Consulting or Ernst & Young rely on the reuse of codified knowledge. Their success depends on the fast availability of explicit knowledge; these companies invest heavily in information technology for knowledge management. For strategy consultants such as Bain, McKinsey, or Boston Consulting Group, there is a greater need to focus on the sharing of tacit, highly context-dependent knowledge. Knowledge networks and an enabling cultural context for knowledge-sharing are essential in these companies.

At the beginning of a knowledge management project the goals must be defined, together with indicators for measuring the success of the knowledge management programme. All consulting firms operating globally need to have global knowledge management initiatives, but it might be helpful to start by identifying knowledge areas suitable for a pilot project. The success of such a pilot project can then be used to convince the whole company about the benefits of knowledge management. Knowledge must become part of the management philosophy and organizational culture. Every member of the firm must know what knowledge strategy has been adopted and what contributions to knowledge creation and sharing are expected from individual consultants.

Content

Whatever strategy is chosen, each consulting firm must also address a number of specific problems of locating, capturing and transferring knowledge. The knowledge strategy determines what types of knowledge or information are relevant for the success of the company. For consulting firms at least the following types of knowledge are important:

–knowledge about projects done for a particular client;

–knowledge about and experiences from similar projects (for other clients);

–knowledge and information about the client;

–knowledge and information about the segment (branch, sector, industry);

–knowledge and information about the environment (business, competitive, legal, social etc.);

–knowledge and know-how about the service: methodologies, templates, expertise;

–subject knowledge;

–knowledge about project management and consulting methodologies;

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–knowledge of the consulting and professional service sectors (competitors, collaborators, networks, institutions, sources of expertise);

–personal skills.

Only a small portion of relevant knowledge can be codified effectively. Most of the above types of knowledge are personal, highly context-specific and hard to capture by codification. This tacit knowledge (see Chapter 19), which cannot easily be copied, is of the highest value to the company and constitutes its main competitive advantage. Therefore a knowledge management solution for consulting firms should have two components:

1.It should provide a database of explicit, relevant information, such as market studies, financial information about customers, daily news, case studies, packages of information concerning certain services, descriptions and courses for methodologies, project profiles, etc.

2.It should provide access to tacit knowledge through a database of experts or “yellow pages”. Knowing that someone has experience in a particular field can be the key to using this expertise in solving a new problem. The principal purpose of “yellow pages” is to tell people in the organization where to go when they need expertise. The exchange of tacit knowledge can be enhanced by supporting communities of practice, organizing knowledge fairs, or introducing a mentoring model into the company.2

The access to explicit knowledge or information should be simplified by using a taxonomy or knowledge map to structure the relevant information. A taxonomy is highly beneficial, especially for global knowledge management, for the following reasons:

●The terms on which the structure is based build up a common language, which is a fundamental prerequisite for knowledge-sharing.

●A knowledge map enables users to navigate in the company’s knowledge base. Finding knowledge or pieces of information is easier and more successful than simply using a full-text search engine.

●Browsing through the knowledge map enables new employees to get to know the company’s knowledge base and knowledge management practices.

Organization and processes

The value of the knowledge base depends mainly on its being up to date and valid. Thus knowledge processes, such as capture and transfer, need to be integrated into daily working routines. In addition, it might be helpful to assign certain support functions to staff members. Many companies appoint a chief knowledge officer – a senior manager responsible for knowledge management at strategic level. On a more operational level, there are typically positions such as knowledge engineers, knowledge brokers, and knowledge managers, in charge of particular knowledge management processes.

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New knowledge-related positions are usually necessary and the related roles and responsibilities need to be specified. The consultants who are both users and suppliers of knowledge need to be informed about their new tasks. As consultants work under high time pressure it is a good idea to reserve time for everybody to do knowledge work.

Hansen and von Oetinger propose a different organizational role, the T-shaped manager.3 T-shaped managers are not only committed to the performance of their individual business unit but are also responsible for the sharing of knowledge across business units. Their key task is to improve cross-unit learning and collaboration. T-shaped managers aim at fostering:

●transfer of best practices,

●improvement of the quality of decision-making,

●revenue growth through shared expertise,

●development of new business opportunities.

Their main focus is not on capturing and transferring codified knowledge but on sharing knowledge and enabling the creation of new knowledge. Rather than commanding and controlling, they focus on guiding and inspiring other people. A T-shaped manager very often functions as a “human portal”, i.e. he or she helps people identify others in the organization who can provide needed information, and brings them together.

As mentioned, the knowledge processes (generation, capture, transfer und use) should be integrated into the daily work routines. A requirement at the start of a new project could be the submission of a short project file describing the mission and the most relevant data. At the close of the project, a detailed documentation of best practices could be required, and could be compiled at a project closure workshop. This is one approach to managing the process of converting tacit knowledge into explicit knowledge. It is based on the fact that writing a scientific or journalistic article is a way of explicitly codifying an individual learning experience, a finding, an idea or certain thoughts. While it is not possible to train all consultants in writing such articles or notes, it is possible to use specialized staff to perform this task. These specialists might hold a project closure workshop, ask questions and try to gather useful learning points for other projects. They should be trained to ask the right questions, facilitate the process and write intelligible articles. The outcomes of a project closure workshop are not only the documentation of lessons learned but also the sharing of implicit knowledge and the possibility to reflect on the experiences.

Culture and people

The most critical factor for successful knowledge management is the people involved. They must be willing both to share their knowledge and to use the knowledge of others. Also, knowledge management can only work with the support of senior management. It must be made clear by senior management

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that knowledge is regarded as a highly valuable resource and that knowledge work is as valuable as direct work for clients.

Partners and senior managers have a particularly important role to play in creating a knowledge-sharing culture. Building teams, supporting cross-selling, and contributing to product development and to learning from projects demonstrate that partners and senior managers take knowledge management seriously. Factors to be considered when managers are being assessed as possible partners should be their contribution to the firm’s knowledge base and their ability to foster knowledge creation.

Another way of stressing the value of knowledge is by rewarding individuals for sharing knowledge. Bonus payments for knowledge work could be a possibility. Membership in something like a best practice club could be a reward in itself. Ultimately people should realize that knowledge-sharing keeps their business going. A climate of trust is crucial to the success of knowledge management.

Information technology for knowledge management

Information technology is an enabler to the knowledge management programme. In the context of global knowledge management IT has a special role: the knowledge management initiative must be supported by a global IT strategy. A fast network and a standardized software infrastructure are prerequisites of knowledge-sharing and collaboration. Large consulting firms might consider sophisticated technologies such as data warehousing, data mining, document management and intelligent agents. An enterprise information portal can provide global access to the company’s knowledge base. Fast remote access via modem and laptop computer or mobile telephone is necessary for effective work. The portal should incorporate personalization, offering a means to customize layout and content and store shortcuts and frequently used links to Web sites.

Simpler systems can also be valuable. An Intranet with a home page for each employee can help advertise the interests of individual consultants. A series of specialist discussion groups on the company email system or participation in an open discussion on the Internet can stimulate exchange of ideas. The ability to carry out a keyword search on previous reports and presentations can avoid a lot of repetition of work.

Easy and rapid access to external expertise is also vital. The World Wide Web can provide a wealth of information at a very small cost. Commercial information services are more expensive but they give instant access to company, marketing and industry reports or the full text of academic and business journals, magazines and newspapers.

For an information search, both a powerful full-text search engine and a taxonomy should be provided. Collaboration tools such as messaging and document management are also useful. Chat rooms, discussion groups, or virtual knowledge markets can allow tacit knowledge to be exchanged.

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