Corporate Amnesia – good or bad?

I enjoyed the BBC’s ‘Analysis’ programme transmitted on Radio 4 on 21st March and, as I write, available on the BBC i-player. It was about corporate amnesia. It put forward the premise that corporations easily forget things and therefore (at the very least) repeat mistakes and incur costs of people having to discover that which is already known; it was suggested this was bad, risky and expensive. The programme put forward the equally powerful argument that corporate knowledge could be a bad thing. It encouraged a corporate culture that held back innovation by clinging onto outdated ideas, for example. For so long as the programme is available I do strongly recommend it and invite you to draw your own conclusions according to your own experiences. You can find it HERE.

I recently found myself discussing this very issue with a senior TfL manager, who had evidently formed the view that dragging along the entrails of corporate culture, developed decades earlier in response to issues that have long since been overtaken by events, is a hindrance when trying to focus staff on today’s challenges. I couldn’t agree more. When I was privileged to be involved in the Underground’s massive change management programme in the ’90s it was a real eye opener to discover the extent to which the organization meandered vaguely from day to day because we knew no better way; this predisposed many people to resist change and to accept giving indifferent service. The status quo was felt good enough. Many staff had not seen significant change for years, and a few had never seen real change at all. Getting anything done was challenging and all too often the response was ‘we tried that in 1948’, or that’ll never work, or so-and-so won’t agree to that, and so it went on. The fact that the world might have moved on was rarely entertained, let alone discussed, and super-human effort seemed to be required to get anything new actually achieved. This is nothing to do with the motivation of the staff to do the existing job (most staff did a reasonable job and more than we deserved were superb) – the issue was getting them to want to do achieve things a different way.

So, You can see I might have had sympathy with the idea in the radio programme that corporate amnesia might perhaps be a good thing. Forget processes invented forty years ago, we are here to address today’s problems, and preferably tomorrow’s too. The object is to do the required job, not to perpetuate the past.

As an example of different corporate styles, the programme had an interesting insight into the difference between Apple and Sony. Apple (regarded as successful) insisted that whenever a new product was launched an old one was dropped; the theory being that because a product had previously been successful it did not mean that carrying it on would make any sense. Sony (much less successful) launched more new products and kept selling old ones making it a much more complicated business and continuing once-successful lines long after they ought to have done. The suggestion was it looked backwards for far too long, and this was bad.

But, hang on. What about things that were learnt as a result of a huge investment of time? The radio programme mention hugely expensive difficulties at BP where most of the lessons of the Texas City disaster in 2005 were forgotten (or never learned) and were a major underlying cause of the 2010 Deep Water Horizon disaster. These examples are hugely expensive of time, money and reputation as well as of the consequential human misery. I mentioned in my review of the Blunders of Governments that the costs of getting things wrong may have reached hundreds of billions of pounds (yes, billions – read the review); much of the cause was put down to not learning lessons as well as assuming you have all the knowledge required to implement policy which, it turns out, is rarely the case.

The Treasury has become so concerned about corporate memory loss it has actually begun a programme to mitigate the effects. Its problem is an inclination to employ lots of bright, young and (it is imagined) very keen and ambitious staff but it has been discovered they lack experience and have only limited knowledge of events that could have assisted them. Furthermore it is no longer expected that this will be a job for life so what experience they do gain migrates to their next employers, only to be replaced by someone newer and less experienced again. The former permanent secretary admits that having a staff that had never experienced a financial depression before, let alone a run on a bank, was a wake up call. They now employ a university to help them recreate some kind of corporate memory.

A huge issue was casualization, so the programme identified. The replacement of people with skill and knowledge who might at least be loyal to a company by people whose connection to the company to whom supplied was tenuous, and whose loyalty (if they had any) was to they employing company and not to the company to whom supplied. Skill and knowledge was even more fragile and this was evidently a factor in BP’s problems. Closer to home we see much of this outsourcing (some of which is no doubt a good thing) having unexpected and unwelcome longer term consequences as knowledge and experience falls into the control of others who do not value it or want to sell it back (or even throw it away).

Contrasting examples were given by firms employing in-house staff. One in particular relied heavily on in-house skills but it was discovered that a third of the staff were coming up to retirement and something urgent was required to ensure the skills were transferred to new people. The inevitable conclusion, suggested by the programme, was that there were at least two types of knowledge. I will paraphase for brevity, but we might call it technical knowledge which is actually business-critical, and business culture, which can be quite corrosive. The problem is that there is overlap and the descriptions are in any case imprecise. Technical knowledge of systems and processes that are (or should be) redundant because they have been replaced are at least a questionable benefit, whilst some culturally related knowledge (like understanding the inevitable internal politics) can actually help get things done and can be useful. The idea of having traditional knowledge identified and formally challenged was mooted (with examples from the Royal Navy), so young people with good ideas get to test the reasons for older ways of doing things, and vice versa – sometimes there is a reason to carry on and sometimes change becomes self evidently called for. The trick, so it seems to me, is a management structure that understands this and understands the value of knowledge, both the desirable and otherwise.

As you can see, the programme fired me up and made me reflect on my own experience. I was privileged to work on a number of massive change initiatives on the Underground and was quickly persuaded that the staff know a great deal more about how best to do things, if only anyone will listen to them. As is nearly always the case, the reason for an organization under-performing is often down to the management not trusting or listening to the staff, or, in bloated organizations, simply getting in the way (nothing a bureaucracy likes more than stopping anything changing, and systems and processes often have precisely that effect). These obstacles to progress need fixing anyway, of course. I have also been made aware of several other valuable change management processes where staff knowledge and ideas, if harnessed, have produced hugely increased productivity. So, there is usually knowledge lying around for the taking that is often systematically ignored by managers. This seems very regrettable. Incidentally, there may be another factor where managers actually do not understand what their staff do, and that is that the knowledge actually needed by staff dealing with real-life problems can be quite different from the training they actually get. I see quite a lot of this…

There is also a tendency (which the programme touched upon) to treat staff as units of production where the object is to fill a position rather than to ensure functional skill sets are maintained; this is particularly so where nobody actually knows what skills are required, let alone what may or may not be present already. Getting this wrong (and I suspect the Pareto [the 60:40] principle applies here) often has a fairly small individual impact but there is a lot of it about so the detrimental effect mounts up, but occasionally it will lead to massive blunders. It is perceived as staff who actually do not seem to be very good at their job, but actually it is often the fact they do not have the knowledge or experience required, often because nobody actually knows what is required, especially if those who did know have been allowed to go without passing it on. I very much suspect this is not even recognized as an issue because it does not appear on any company’s balance sheet or P&L, or, more accurately, it does appear but is so heavily disguised as to be unrecognizable, so nobody agonizes over it.

So what are these hidden knowledge-absence  costs? Here are some examples that clearly have a cost. Extra training, excessive staff turnover, rework, poor quality work, work taking longer than it needs to and letting clients down, reputational risk, letting staff go and then re-employing them at higher pay because their knowledge was subsequently found useful (where do you think the big consultancies make a turn?), and so on  There is also an enhanced potential for a major safety event. I have myself seen inaccurate signalling plans issued by staff without any subject knowledge (professionals look at this and just shrug because it is no longer unusual). The point is that some types of knowledge are valuable. So valuable in fact that there are businesses now considering the need for a chief memory officer (don’t imagine this is anything resembling what an Information Management function does, by the way).

So, to wind to a close, I don’t think it is helpful to undervalue knowledge and at the same time it is management’s job to identify what is important and maintain it and to stop the cultural inertia at the same time. Quite a trick and often not done well. In particular, experience (knowledge gained on the job) is very difficult to write down and can only be exploited efficiently if an enlightened management understands that (1) it exists at all, (2) is commercially important, (3) can only realistically be passed on where job-holders overlap and interact in some way and (4) there is an incentive to transfer the knowledge. Clearly there can be staff whose own personal agenda is not met by sharing knowledge and this is unacceptable (though they, at least, recognize it is important!). Since experience by its nature it is hard to write down, it is hard to ask for when either recruiting or placing a specification in a contract (actually writing decent specifications for things is a skill I think we may have lost for ever – I have seem some dreadful examples from well known organizations that should know better and it makes suppliers despair).

It would be very interesting if a senior manager took it upon themself to facilitate a knowledge audit to identify what knowledge a business actually needed to function effectively, and how the staff matched up to that. Systems could then be put in place to try and preserve or pass on knowledge that was business critical and ditch that which got in the way. I would be mighty interested to see what turned up. What I think would turn up is that staff need to know things in order to do their job that it hadn’t occurred to managers were important (or even existed), and that staff were being taught stuff that was irrelevant. A by-product would be to assist the process of employing the right staff for the job (as you would have a better idea of what was actually involved), and it would improve the possibilities of having proper succession planning. It might also steer training programmes.

Anyway, these are the thoughts that were triggered by the radio programme. I do recommend it (words you don’t hear from me very often). Well done the BBC.


About machorne

I have always lived in London and taken a great interest in its history and ongoing development. This extended into the history of its transport services, about which I have written a number of books - I have spent most of my working life working in the industry and observing changes from within, mostly to the good, but not always so. I continue to write, and have a website with half finished stuff in it so that it is at least available, if not complete. Several new books are in hand. I have many 'works in progress' and some of these can be found on my website; the we address is
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