Corporate amnesia
Encyclopedia
Corporate amnesia is a phrase used to describe a situation in which businesses, and other types of co-operative organization, lose their memory of how to do things. The condition is held, by some people, to be analogous to individual amnesia
.
The causes are various. Employees have an inherent short and selective memory recall alongside a defensiveness that screens out unwelcome events with which they and their employer are involved . Flanking this are the effects of the single biggest change in workplace practice for at least a century - the actively-encouraged flexible labor market. In many countries employee turnover - the rate at which old employees leave and new ones arrive - is now above the recognised annual danger level of 10% in many industry sectors where productivity starts to be affected. What happens is that the knowledge and experience known as organizational memory
(OM) - the unrecorded event-specific, organization-specific and time-specific ‘how’ of know-how that characterizes any organization's ability to perform - walks out of the front door on a regular basis. Jobs change was initially related to downsizing but it is now a general feature of the labor market, where, on average, annual employee churn exceeds 20% in many countries and up 60% in some industries.
Secondly, the body of evidence that would otherwise be available for better decision-making is reduced, a situation that affects the ability of organizations to learn efficiently from their own experiences. By encouraging high levels of job churn, organizations have consciously chosen to operate in isolation to their own hard-won and expensively-acquired experience, depending on others’ unrelated experiences. This is even more expensive than having to re-learn, with experiential non-learning estimated by an international management consultant to cost up to 9.7% of gross domestic product in many developed countries .
Thirdly, with the relationship between knowledge and power intimately linked, the corporate body has – quite deliberately and entirely unwittingly – allowed their command to be displaced. No longer are individuals an aggregate part of an established institution. Individuals are the institution for as long as they remain in situ. Then, when the face changes the institution changes, or, more accurately, tries to change, bereft of its continuity and at the mercy of new brooms. Ordered evolution has become a shapeless revolution with such things as corporate culture, ethos
, values and tried and tested usage struggling to maintain an even keel. In effect, the motor of the wealth machine has largely disempowered itself. The cost of this is incalculable.
Also known as institutional forgetting, corporate amnesia is among the biggest constraints to decision making
excellence and a massive contributor to productivity
shortfalls.
(KM) under the even wider umbrella of the Information Age
. In its conception OM consists of the institution’s documentation, objects and artifacts that are stored in the corporate library/electronic database) and which can be applied alongside resident employees who are intimate with institution-specific events and experiences. The physical evidence is known as explicit knowledge
while the more cerebral is called tacit knowledge
. They are integral for efficient decision-making and experiential learning to build on success and escape the pandemic of repeated mistakes, re-invented wheels and other unlearned lessons that litter modern industry.
Because of the high levels of jobs churn in the modern workplace, however, much of the mind-resident tacit knowledge is now non-existent within organizations, with employers believing that the imported tacit knowledge from employees hired from other institutions is an adequate stand-in that can be replaced by osmosis. Tacit knowledge, sometimes called cognitive knowledge or coping skills, is a category of knowledge first identified by the Hungarian-born émigré to the UK academic Michael Polyani in 1958, described as the non-technical 'how' of getting things done, what Edward de Bono
, the inventor of lateral thinking
, calls 'operacy’ or the skill of action, and what management guru Peter Drucker
identifies in the use of the word techne
(the Greek for 'skill'). Much of it is implicit and ambiguous and acquired largely by experience that is functional as well as context- and institution-specific.
Its collective awareness provides the type of expertise that is both an organisation’s adhesive and its lubricant - i.e. it relates to all the routines and processes (formal or otherwise) that make an organization tick. Its value represents the capability of the firm and is perhaps the main ingredient of its resilience. In broad brush terms, it includes the individual’s understanding and accommodation of their employer’s individual corporate culture, habits, management, communications and decision-making style, the contacts and relationships between employees or teams of employees, the detail of job-related events and the knowledge of tried and tested usage as it applies to the organization’s own market circumstances and special environment (so-called episodic memory
). The qualitative application of OM is closely allied to memory, which is most commonly described as knowledge retention or the difference between having acquired knowledge and having to re-acquire it. It is what is not forgotten; the reconstruction of experienced events.
(OM) can be broken down into three distinct time frames. Short-term OM lasts up to about five years; medium-term OM occupies a time frame of up to around ten years, with periods in excess of this constituting long-term OM. Typically existing only in the minds of individuals, it is normally very difficult to share and to capture. Because of its contemporary and contiguous nature, short- and medium-term OM is generally more relevant to operational issues facing the organization, whilst long-term OM is more conformant with strategy and culture.
The phenomenon of corporate amnesia was first identified by the British knowledge management specialist Arnold Kransdorff
in his 1998 book of the same name . By then the flexible labor market had been in tow for more than two decades. Employees in many developed countries, who could previously be expected to have had one or two jobs in their working lifetimes, were now employer-hopping every four or five years in a workplace where redundancy was – and still is - commonplace.
, but these channels all suffer from the effects of individuals’ memory loss, their defensiveness about failures, short jobs tenure and – above all – an inability to apply employee-specific precedent to better decision-making. To date the management of organizational memory is an unformalized discipline, not least because of the widespread lack of understanding of tacit knowledge, the prevalent belief that experiential learning is all about learning from others’ experience – what is called benchmarking
- and the informal and theoretical ways managers are taught how to benefit from hindsight.
The latest capture tools to get attention are the traditional corporate history, usually seen as a public relations medium, and oral debriefing, an augmentation of the old-fashioned prescriptive and formulaic exit interview. The former is being produced as an induction/educational tool that transmits long-term memory while the latter, which concentrates on short- and medium-term memory, targets exiting and key occupant employees, recurring corporate events and important projects in detailed testimony of participants. Both are designed to extract tacit knowledge in an easily accessible format that also generates the ‘lessons of history’. Its permanent character also means that it does not have to be continually reproduced and that its necessary re-interpretation alongside changing circumstances is predicated on a more reliable evidential base.
In the world of evidential gathering where rigorous substantiation is a pre-requisite for experiential learning, the oral route is seen as more valuable than anything extracted from internally-produced written sources. The reason its developers give is that individuals are generally better speakers than they are writers. Also, their spoken word is invariably a more efficient way of conveying the abstract and complex nature of ‘humanware’ elements like the nuances of corporate culture, management style and the often-obscure issues surrounding decision-making within groups. To further formalize what up to now has been a largely theoretical teaching process, the capture methodologies have also been applied directly to decision-making through an adaptation to the modern workplace of the experiential learning models developed by academic David Kolb
and others’ .
, or is aggrieved for some other reason, he/she may seek revenge by deleting files from the company's computer
. This risk can be minimised by effective backup
procedures.
Amnesia
Amnesia is a condition in which one's memory is lost. The causes of amnesia have traditionally been divided into categories. Memory appears to be stored in several parts of the limbic system of the brain, and any condition that interferes with the function of this system can cause amnesia...
.
The causes are various. Employees have an inherent short and selective memory recall alongside a defensiveness that screens out unwelcome events with which they and their employer are involved . Flanking this are the effects of the single biggest change in workplace practice for at least a century - the actively-encouraged flexible labor market. In many countries employee turnover - the rate at which old employees leave and new ones arrive - is now above the recognised annual danger level of 10% in many industry sectors where productivity starts to be affected. What happens is that the knowledge and experience known as organizational memory
Organizational memory
Organizational memory is the accumulated body of data, information, and knowledge created in the course of an individual organization’s existence...
(OM) - the unrecorded event-specific, organization-specific and time-specific ‘how’ of know-how that characterizes any organization's ability to perform - walks out of the front door on a regular basis. Jobs change was initially related to downsizing but it is now a general feature of the labor market, where, on average, annual employee churn exceeds 20% in many countries and up 60% in some industries.
Cost
Firstly, the organization has to continually re-learn its tried-and-tested practice. Induction periods of up to 12 months are typical – and expensive, with direct costs variously calculated at 46% of annual pay for a front-line employee to 240% for a middle manager .Secondly, the body of evidence that would otherwise be available for better decision-making is reduced, a situation that affects the ability of organizations to learn efficiently from their own experiences. By encouraging high levels of job churn, organizations have consciously chosen to operate in isolation to their own hard-won and expensively-acquired experience, depending on others’ unrelated experiences. This is even more expensive than having to re-learn, with experiential non-learning estimated by an international management consultant to cost up to 9.7% of gross domestic product in many developed countries .
Thirdly, with the relationship between knowledge and power intimately linked, the corporate body has – quite deliberately and entirely unwittingly – allowed their command to be displaced. No longer are individuals an aggregate part of an established institution. Individuals are the institution for as long as they remain in situ. Then, when the face changes the institution changes, or, more accurately, tries to change, bereft of its continuity and at the mercy of new brooms. Ordered evolution has become a shapeless revolution with such things as corporate culture, ethos
Ethos
Ethos is a Greek word meaning "character" that is used to describe the guiding beliefs or ideals that characterize a community, nation, or ideology. The Greeks also used this word to refer to the power of music to influence its hearer's emotions, behaviors, and even morals. Early Greek stories of...
, values and tried and tested usage struggling to maintain an even keel. In effect, the motor of the wealth machine has largely disempowered itself. The cost of this is incalculable.
Also known as institutional forgetting, corporate amnesia is among the biggest constraints to decision making
Decision making
Decision making can be regarded as the mental processes resulting in the selection of a course of action among several alternative scenarios. Every decision making process produces a final choice. The output can be an action or an opinion of choice.- Overview :Human performance in decision terms...
excellence and a massive contributor to productivity
Productivity
Productivity is a measure of the efficiency of production. Productivity is a ratio of what is produced to what is required to produce it. Usually this ratio is in the form of an average, expressing the total output divided by the total input...
shortfalls.
Knowledge management
Both corporate amnesia and organizational memory are part of the new vocabulary associated with the broader discipline known as Knowledge ManagementKnowledge management
Knowledge management comprises a range of strategies and practices used in an organization to identify, create, represent, distribute, and enable adoption of insights and experiences...
(KM) under the even wider umbrella of the Information Age
Information Age
The Information Age, also commonly known as the Computer Age or Digital Age, is an idea that the current age will be characterized by the ability of individuals to transfer information freely, and to have instant access to knowledge that would have been difficult or impossible to find previously...
. In its conception OM consists of the institution’s documentation, objects and artifacts that are stored in the corporate library/electronic database) and which can be applied alongside resident employees who are intimate with institution-specific events and experiences. The physical evidence is known as explicit knowledge
Explicit knowledge
Explicit knowledge is knowledge that has been or can be articulated, codified, and stored in certain media. It can be readily transmitted to others. The information contained in encyclopedias are good examples of explicit knowledge....
while the more cerebral is called tacit knowledge
Tacit knowledge
Tacit knowledge is knowledge that is difficult to transfer to another person by means of writing it down or verbalising it. For example, stating to someone that London is in the United Kingdom is a piece of explicit knowledge that can be written down, transmitted, and understood by a recipient...
. They are integral for efficient decision-making and experiential learning to build on success and escape the pandemic of repeated mistakes, re-invented wheels and other unlearned lessons that litter modern industry.
Because of the high levels of jobs churn in the modern workplace, however, much of the mind-resident tacit knowledge is now non-existent within organizations, with employers believing that the imported tacit knowledge from employees hired from other institutions is an adequate stand-in that can be replaced by osmosis. Tacit knowledge, sometimes called cognitive knowledge or coping skills, is a category of knowledge first identified by the Hungarian-born émigré to the UK academic Michael Polyani in 1958, described as the non-technical 'how' of getting things done, what Edward de Bono
Edward de Bono
Edward de Bono is a physician, author, inventor, and consultant. He originated the term lateral thinking, wrote a best selling book Six Thinking Hats and is a proponent of the deliberate teaching of thinking as a subject in schools.- Biography :Edward Charles Francis Publius de Bono was born to...
, the inventor of lateral thinking
Lateral thinking
Lateral thinking is solving problems through an indirect and creative approach, using reasoning that is not immediately obvious and involving ideas that may not be obtainable by using only traditional step-by-step logic...
, calls 'operacy’ or the skill of action, and what management guru Peter Drucker
Peter Drucker
Peter Ferdinand Drucker was an influential writer, management consultant, and self-described “social ecologist.”-Introduction:...
identifies in the use of the word techne
Techne
Techne, or techné, as distinguished from episteme, is etymologically derived from the Greek word τέχνη which is often translated as craftsmanship, craft, or art. It is the rational method involved in producing an object or accomplishing a goal or objective...
(the Greek for 'skill'). Much of it is implicit and ambiguous and acquired largely by experience that is functional as well as context- and institution-specific.
Its collective awareness provides the type of expertise that is both an organisation’s adhesive and its lubricant - i.e. it relates to all the routines and processes (formal or otherwise) that make an organization tick. Its value represents the capability of the firm and is perhaps the main ingredient of its resilience. In broad brush terms, it includes the individual’s understanding and accommodation of their employer’s individual corporate culture, habits, management, communications and decision-making style, the contacts and relationships between employees or teams of employees, the detail of job-related events and the knowledge of tried and tested usage as it applies to the organization’s own market circumstances and special environment (so-called episodic memory
Episodic memory
Episodic memory is the memory of autobiographical events that can be explicitly stated. Semantic and episodic memory together make up the category of declarative memory, which is one of the two major divisions in memory...
). The qualitative application of OM is closely allied to memory, which is most commonly described as knowledge retention or the difference between having acquired knowledge and having to re-acquire it. It is what is not forgotten; the reconstruction of experienced events.
Organizational memory
For practical purposes, organizational memoryOrganizational memory
Organizational memory is the accumulated body of data, information, and knowledge created in the course of an individual organization’s existence...
(OM) can be broken down into three distinct time frames. Short-term OM lasts up to about five years; medium-term OM occupies a time frame of up to around ten years, with periods in excess of this constituting long-term OM. Typically existing only in the minds of individuals, it is normally very difficult to share and to capture. Because of its contemporary and contiguous nature, short- and medium-term OM is generally more relevant to operational issues facing the organization, whilst long-term OM is more conformant with strategy and culture.
The phenomenon of corporate amnesia was first identified by the British knowledge management specialist Arnold Kransdorff
Arnold Kransdorff
Arnold Kransdorff is the expert practitioner of knowledge management who first identified the phenomenon of corporate amnesia. This was documented in his first book, Corporate Amnesia. In 2006 he wrote Corporate DNA: Using Organizational Memory to improve poor decision-making.He owns the consulting...
in his 1998 book of the same name . By then the flexible labor market had been in tow for more than two decades. Employees in many developed countries, who could previously be expected to have had one or two jobs in their working lifetimes, were now employer-hopping every four or five years in a workplace where redundancy was – and still is - commonplace.
Capture tools
Knowledge loss is not entirely ignored in industry and commerce. In an attempt to capture and use its departing know-how, some organizations depend on intranets, electronic bulletin boards, theatrical improvisations, social networks and mentoringMentoring
Mentorship refers to a personal developmental relationship in which a more experienced or more knowledgeable person helps a less experienced or less knowledgeable person....
, but these channels all suffer from the effects of individuals’ memory loss, their defensiveness about failures, short jobs tenure and – above all – an inability to apply employee-specific precedent to better decision-making. To date the management of organizational memory is an unformalized discipline, not least because of the widespread lack of understanding of tacit knowledge, the prevalent belief that experiential learning is all about learning from others’ experience – what is called benchmarking
Benchmarking
Benchmarking is the process of comparing one's business processes and performance metrics to industry bests and/or best practices from other industries. Dimensions typically measured are quality, time and cost...
- and the informal and theoretical ways managers are taught how to benefit from hindsight.
The latest capture tools to get attention are the traditional corporate history, usually seen as a public relations medium, and oral debriefing, an augmentation of the old-fashioned prescriptive and formulaic exit interview. The former is being produced as an induction/educational tool that transmits long-term memory while the latter, which concentrates on short- and medium-term memory, targets exiting and key occupant employees, recurring corporate events and important projects in detailed testimony of participants. Both are designed to extract tacit knowledge in an easily accessible format that also generates the ‘lessons of history’. Its permanent character also means that it does not have to be continually reproduced and that its necessary re-interpretation alongside changing circumstances is predicated on a more reliable evidential base.
In the world of evidential gathering where rigorous substantiation is a pre-requisite for experiential learning, the oral route is seen as more valuable than anything extracted from internally-produced written sources. The reason its developers give is that individuals are generally better speakers than they are writers. Also, their spoken word is invariably a more efficient way of conveying the abstract and complex nature of ‘humanware’ elements like the nuances of corporate culture, management style and the often-obscure issues surrounding decision-making within groups. To further formalize what up to now has been a largely theoretical teaching process, the capture methodologies have also been applied directly to decision-making through an adaptation to the modern workplace of the experiential learning models developed by academic David Kolb
David Kolb
David Kolb is a well-known philosopher and the Charles A. Dana Professor Emeritus of Philosophy at Bates College in Maine.Kolb received a B.A. from Fordham University in 1963 and an M.A. in 1965. He later received a M.Phil. from Yale University in 1970 and a Ph. D. in 1972...
and others’ .
Sabotage
Corporate amnesia can be a result of sabotage by a disgruntled employee. If an employee is sackedFiring
Dismissal is the termination of employment by an employer against the will of the employee. Though such a decision can be made by an employer for a variety of reasons, ranging from an economic downturn to performance-related problems on the part of the employee, being fired has a strong stigma in...
, or is aggrieved for some other reason, he/she may seek revenge by deleting files from the company's computer
Computer
A computer is a programmable machine designed to sequentially and automatically carry out a sequence of arithmetic or logical operations. The particular sequence of operations can be changed readily, allowing the computer to solve more than one kind of problem...
. This risk can be minimised by effective backup
Backup
In information technology, a backup or the process of backing up is making copies of data which may be used to restore the original after a data loss event. The verb form is back up in two words, whereas the noun is backup....
procedures.