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Feature

posted 6 Mar 2006 in Volume 9 Issue 6

Gone, but not forgotten

By Mikko Arevuo

The debate about how organisations should manage their existing knowledge and learn new competencies goes to the heart of knowledge management (KM). The ability for an organisation to absorb new knowledge and innovation, and to convert this into competitive products and services, is widely recognised as providing organisations with the competitive edge they need to survive in today’s tough marketplace.

But what about ‘organisational forgetting’?

In a hyper-competitive environment, the ability to forget or abandon ‘old’ knowledge becomes as important as acquiring new knowledge. Indeed, frequently the two go hand in hand – new knowledge cannot be properly absorbed if members of staff remain strongly wedded to the old way of doing things.

In a fast-moving environment where knowledge lifecycles – in terms of knowledge creation, maturity and obsolescence – are short, businesses are faced with the question of how to ensure:

1. That valuable new knowledge is recognised and absorbed and not lost, forgotten or ignored;

2. How old knowledge that no longer has strategic or competitive value can be decoupled from day-to-day practices, or ‘unlearned’.

Other structural factors that need to be taken into account include the ageing workforce (especially in Europe, Japan and North America) and rapid staff turnover, particularly at times of economic uncertainty. Staff turnover, either due to retirement or rationalisation, can result in a loss of knowledge, especially tacit knowledge, regardless of how well developed the corporate KM systems are.

Organisational ‘forgetting’ and ‘unlearning’ have not featured prominently in KM thinking until recently1. This is not surprising, given the KM profession’s emphasis on knowledge capture and accumulation.

However, forgetting and unlearning should be considered an integral part of a learning process, as these twin elements can have both an adverse as well as a positive impact on business strategy and performance. For this reason alone, forgetting and unlearning should be considered an integral part of any organisation’s strategic KM effort.

Organisational forgetting

In general, organisational forgetting represents a loss of intangible material, skills and know-how, and can result in a deterioration in business performance in instances where the lost or forgotten knowledge has strategic value. 

However, not all losses of knowledge have a negative impact on corporate performance. Destroying, unlearning or simply forgetting knowledge that is past its sell-by date, but which is deeply rooted in organisational practices and routines – or simply avoiding newly acquired ‘bad habits’ – may, in fact, improve business performance.

De Holan, Phillips and Lawrence2 identified four forms of organisational forgetting in their seminal article on the subject. De Holan et al identify two basic dimensions to organisational forgetting: the ‘intentionality’ of the forgetting process and the freshness (or age) of the forgotten knowledge. Based on these two dimensions, De Holan, Phillips and Lawrence suggested that organisations forget knowledge in one of four ways:

1. Accidentally as a result of forgetting existing knowledge;

2. Unintentionally failing to capture newly acquired or innovated knowledge;

3. Intentionally by unlearning deeply embedded knowledge;

4. Purposely avoiding bad habits that have been recently acquired. 

Their conclusion, of course, was that while accidental forgetting can have an adverse impact on business performance, intentional forgetting and unlearning can actually improve organisational performance.

Let’s look at both modes of forgetting, accidental and intentional, in turn.

Accidental forgetting

There are two types of accidental forgetting, namely memory decay and failure to capture new knowledge. Both can have an adverse impact on business performance.

  • Memory decay

All organisations suffer from memory loss over a period of time. This is more commonly referred to as corporate memory decay.

Beazley and Boenisch3 estimate that just one-third of expertise is explicit. Two-thirds, they say, resides in people’s minds, PC hard disks or even on note pads and Post-It notes.

This is no joke. There is a well-documented case of a manufacturer that wanted to safeguard its old paper-based blueprints so that they could be distributed to new engineers as and when. Naturally enough, it decided to digitise the documents.

However, those in charge of the document-capture process did not recognise the importance of the Post-It notes that had been stuck on the original blueprints. They represented critical knowledge about how the product had evolved from the initial drawings to the product manufactured today. But the knowledge held on these sticky notes was never captured, despite its critical importance.

The most common type of memory decay occurs as organisations lose people through retirement, redundancy or natural staff turnover. This is a challenge that many organisations are being forced to consider, given the volume of retirements they are increasingly facing.

The North American Space Agency (NASA) was forced to rethink its KM strategy following audit reports criticising the agency for failing to communicate vital information within teams and across organisational boundaries.

This was important because of the forecast that by 2006, more than half of the agency’s scientists and engineers (55 per cent) would be eligible for retirement – half its engineering knowledge could simply walk out of the door by the end of this year. The problem was compounded by downsizing at NASA that had taken place during the past decade that had resulted in an imbalance in NASA’s skills mix.

A flurry of activity followed. Technology-based KM systems were considered as one part of a wider strategy to generate, capture and disseminate core knowledge.

Many areas within the agency had initiated their own local KM efforts, too. Education and training programs, collaborative tools, document management systems and online communities were implemented, but they functioned in isolation or within the confines of specific programs.

However, the critical success factor for NASA was identified as a change in culture. The agency’s strategic plan for KM4 states: “Tomorrow’s NASA must become one where tasks are interwoven to encourage knowledge sharing to achieve our goals. In this area, the essential changes are cultural – modifying how we reward people for sharing information, taking time to make information re-usable for others and adapting or adopting previous best practices… Resolve and leadership must flow down from the highest levels for us to become an organisation that shares knowledge broadly to achieve our greater goals.”

The purpose of this article is not to provide a run-down of all the knowledge tools that can be used to combat this type of memory loss, but to highlight that the development of a knowledge-sharing culture, core competence and knowledge mapping are the key tools for understanding where an organisation’s core competitive capabilities lie and how they can be shared. 

Strategic management is increasingly focusing on businesses’ internal resources as the basis of competitive advantage, and it is only through rigorous resource audits that firms can identify and ring-fence core competencies and safeguard them against organisational memory decay.

Based on my experience with organisational knowledge/competence audits and mapping exercises, mistakes are often made by senior managers who consider mapping and audit activities as a one off, rather than an ongoing strategic and cultural process.

Another problem that frequently surfaces is that too much knowledge is identified as core, often as a result of internal politics, rather than the audit teasing out the real knowledge and competencies required for competitive excellence and survival.

Failure to capture

Failure to capture newly acquired or innovated knowledge is another manifestation of accidental forgetting. Valuable new information can be lost to the organisation when, for example, individuals on short-term contracts leave the company and, perhaps more often, when work teams that had been formed for a specific task disband or re-group for a new challenge.

In their ground-breaking book, The Knowledge-Creating Company5, Nonaka and Takeuchi developed a model for organisational knowledge creation, known as the SECI model. Nonaka and Takeuchi identified four modes of knowledge conversion: socialisation, externalisation, combination and internalisation (SECI).

The model ought to be well known among KM professionals. It describes knowledge creation as a continuous process of interaction between tacit and explicit knowledge, whereby tacit knowledge is converted into explicit knowledge and back to tacit again. In this way, it can be internalised into the organisation’s fabric adding to the existing knowledge bases.

The SECI model can be used as the basis for the development of processes to safeguard against the failure to capture valuable new knowledge.

The key factor behind successful knowledge capture, as well as knowledge creation in the SECI model, is to make tacit knowledge explicit so that it can be articulated, or externalised. This newly created and captured explicit knowledge must be communicated to other parts of the organisation and combined with other forms of existing knowledge. Through internalisation – or institutionalisation – new knowledge is ultimately embedded into the organisational routines and rituals, thus becoming part of the corporate memory.

In conclusion, the loss of valuable knowledge, in terms of memory decay or failure to capture new innovated knowledge, has a negative impact on business performance.  In the case of corporate memory decay, the business can lose its ability to perform certain tasks as competently as it was previously able to do.

In a fast-moving environment that requires continuous innovation and new knowledge creation, such as the computer industry, for example, the failure to capture new knowledge and embed it in organisational routines and capabilities can have a detrimental effect on the company’s competitive position. This is often reflected by a slowing product or process innovation, increasing costs and, as with any new innovative product or service that has to be continuously re-invented, with a concomitant loss in market position.

  • Intentional forgetting

Unlike accidental forgetting, intentional forgetting can improve business performance.  Organisations should intentionally forget knowledge that no longer has strategic value, or may hinder performance in the new competitive environment, and unlearn bad habits that may have been acquired recently.

One of the hypotheses of this article was that while much effort is expended on accumulating and storing knowledge, in a fast-moving competitive environment, knowledge also becomes obsolete at an increasingly rapid rate and therefore needs to be disposed of equally quickly. There are two reasons for disposing of knowledge that has no strategic significance. 

First, there is the economic reason. As organisations have become better at retaining and storing knowledge in various types of repositories, the cost of keeping that knowledge has also increased. This is fine for ‘knowledge stock’ that has a strategic and competitive value, but the cost of maintaining obsolete knowledge (either on paper or on computers) is not in the economic interest of any organisation.

The second and more important reason for unlearning is that deeply embedded ‘old knowledge’ can still provide tacit guidance for organisational behavior and can, therefore, hinder organisational change.

But unlearning is, perhaps, easier said than done. Little research has been undertaken into how organisations can identify obsolete, or ‘destructive’ knowledge and how they should dispose of it.

One way to approach this task is first to examine organisational culture and the composition of what is called the ‘prevailing paradigm’. This lies in the centre of distinctive culture that every organisation develops over time as the various individuals and groups inside and outside the organisation learn a way of working and performing together. It is in this dominant logic where we find the deeply embedded core values and beliefs of an organisation, often described as, ‘the way we do things around here’.   

As all knowledge is bound by context and experience, any new knowledge that becomes integrated with the company’s existing knowledge bases will be interpreted within the confines of the existing, deeply embedded values and beliefs of the organisation. Johnson and Scholes6 have developed the ‘cultural web’ concept as a tool to help make sense of all the interlinked intangible values, beliefs and embedded knowledge that make up the paradigm of an organisation.

The organisational paradigm is comprised of six interlinked core factors: stories, symbols, power structures, organisational structures, control systems, and rituals and routines. Any one of these core factors contains deeply embedded knowledge that is used as both tacit and explicit reference points for any newly acquired or innovated knowledge.

It is commonly accepted that for a company to undergo strategic change, it must change all core factors that make up the paradigm in order for cultural change, or the paradigm shift, to be successful. This requires the company to discard knowledge that no longer has strategic value or knowledge that can be a barrier to strategic change, preventing new knowledge from taking root.

Identifying such destructive knowledge is not easy. It is an area that requires much more research. However, knowledge mapping and core competence analysis should be taken as a starting point for defining ‘destructive’ knowledge.

Once identified, this knowledge must be uprooted, however painful, from the organisation’s core activities. For example, by divesting non-core operations, closing departments or divisions, absorbing employees back into the rest of the organisation where they can be retrained, or by executing a total culture shift by changing the core factors that make up the paradigm. 

A little knowledge…

As organisations become better learners, they also run an increased risk of learning the wrong things. Learning can be a double-edged sword; not all learning is good. We can also unintentionally pick up bad habits – ideas, practices and values that may be counterproductive.

Again, very little empirical research exists on how companies identify harmful new knowledge that should be ignored or discarded before it becomes embedded into the knowledge fabric of the business. However, de Holan et al have identified two instances where bad habits can be picked up.

First, businesses can try to learn too much from either success or failure. In terms of ‘over learning’ from failure the company may not be able to identify the true reasons for failure and learns to believe that certain activity is beyond its strategic and operational capabilities.

Management guru Tom Peters in his seminal book, Liberation Management7, recounts the story of car maker Ford that, back in 1938 as a result of trial and error, came to believe that it was unable to manufacture small cars. Rather than trying to understand the reasons for failure and, through that process, to acquire the competencies required for manufacturing small cars, Ford’s thinking became so ingrained in its psyche that it took decades for the company to unlearn this deeply embedded belief.

This same logic applies to learning from success. Do managers and companies really understand why certain activities or innovations were successful? Unless the critical success factors are properly identified, there is a risk that the wrong factors will be incorporated into the company’s knowledge bases.

Second, strategic alliances and collaboration undoubtedly delivers business benefits to partner firms in terms of added competences and learning, economies of scale and scope, as well as other forms of market benefits. They involve contact at many levels between organisations, and learning will involve both good and bad practice. It is therefore important for organisations to develop systems and processes to filter learning that flows into them from the outside, in order to avoid bad practice to be incorporated into the knowledge bases – to sort the wheat from the chaff.

The scandal that brought down accounting and consulting firm Arthur Andersen, involving energy trader Enron, US electrical appliance maker Sunbeam Products and telecoms giant WorldCom, have been used to highlight the dangers of very close collaborations and dependence on large clients.

Critics of Arthur Andersen suggested that its close relationships with clients made the accounting firm vulnerable to the transfer of destructive habits, such as questionable business ethics and lax auditing standards. This specific case may never be proven, but what seems clear is that learning in a collaborative environment can result in companies beginning to resemble each other for better or for worse.

In conclusion

As organisations develop their KM practices, it is no longer enough for them to focus purely on knowledge accumulation. KM strategy needs to evolve to include organisational forgetting as much as organisational learning. Existing knowledge bases need to be audited so that outdated knowledge can be purged.

Organisations also need to develop strategies for safeguarding against unintentional forgetting, and to create processes and mechanisms to unlearn knowledge that may act as a barrier for change or introduce counter-productive practices into the firm from outside.

Many organisations already recognise the risks involved with losing core knowledge through corporate memory decay and have amended their corporate knowledge strategies accordingly. However, more empirical research needs to be undertaken, especially on how organisations can unlearn deeply embedded counter-productive knowledge – and how to screen for new potentially damaging knowledge that enters the organisation from the outside.

 

Mikko Arevuo is the CEO of consulting firm Delta Strategies Ltd, as well as a visiting lecturer in strategy and knowledge management at London South Bank University in the UK. He can be contacted by e-mail: marevuo@deltastrategies.co.uk.

 

BOX: References:

1 de Holan & Phillips, Strategic Organization, Volume 2(4). Pages 423-433, London, 2004.

2 de Holan, Phillips & Lawrence, Managing Organizational Forgetting. MIT Sloan Management Review, Winter 2004.

3 Beazley, Boenisch & Harden, Continuity Management, John Wiley & Sons, 2002.

4 Strategic Plan for Knowledge Management, NASA Knowledge Management Team, 2002

5 Nonaka & Takeuchi, The Knowledge-Breaking Company, Oxford University Press, 1995.

6 Johnson, Scholes & Whittington, Exploring Corporate Strategy, Prentice Hall, 2005.

7 Peters, Liberation Management: “Necessary Disorganization for the Nanosecond Nineties”, Macmillan, 1992. 


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