NJM Consulting | Loss of Institutional Memory Leads to Organisational Dementia
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Loss of Institutional Memory Leads to Organisational Dementia

Knowledge Management

Loss of Institutional Memory Leads to Organisational Dementia

What is Institutional Memory (IM)?


I am going to make a distinct differentiation here between what is commonly referred  to as ‘knowledge management’  and institutional memory:

Institutional Memory is the protocols, facts, the human experience and human skill that should inform organisational practice which are held in records and people’s minds that add value to an organisation through revenue, process and procedure.

Knowledge Management is defined in the dictionary as efficient handling of information and resources within a commercial organization. It has been our observation that too often today the focus has been on the word ‘efficient’ in that definition, where ‘efficient’ is taken to mean “As cheap as absolutely possible at the expense of long term value” often using a knowledge management application alone. Any implementation of knowledge management which is focused on purely user entry into a knowledge management ‘system’ alone is doomed to cost an organiastion much lost intellectual value, damage business continuity prospects and show limited return on the investment in software used.

Institutional Memory (knowledge management) has to be a pro-active, ongoing process that is focused on human beings who are supported and facilitated by content and knowledge management systems.

The Problem


A recent British Government report into the history of policy relating to people and culture found policymakers in government and business in the private sector have a real difficulty in retaining, valuing and respecting institutional memory.

One of the underrated costs of employee turnover, in addition to the costs of recruiting and training new employees, is the loss of institutional knowledge represented by departing or off-boarding employees. When employees leave your company, they take with them a lot of valuable knowledge, connections, expertise and social capital that can be difficult to replace. In the city of London staff turnover is running at some 26%, which is higher than fast food chain McDonalds !

The UK Treasury’s former permanent secretary, Sir Nicholas Macpherson, said that while young staff are highly knowledgeable the short time they spend in their posts means they often miss out on the “folk memory”. This, he says, became very clear to him and to the then Chancellor of the Exchequer Alistair Darling during the course of the 2008-09 financial crises when they realised “the vast majority of Treasury staff had never been through even a recession, let alone a banking crisis”. When the run on one of Britain’s biggest banks, Northern Rock, struck in 2007, Sir Nicholas said, the Treasury “might have been able to stop the run, but we were all starting from first principles”. In this case loss of institutional memory cost British tax payers dearly as they were the ones having to bail out the flawed and reckless banks. This whole episode also makes me wonder at just what business continuity arrangements they had in place at the time, if any at all.

Several years ago the British Royal Navy suddenly woke up to IM loss particularly around its nuclear deterrent. Hard as it is to see the exact impact of that loss in such a secretive organisation the possible end results of such could end up being seen in mushroom clouds 10,000 meters high!

Then there is the matter of the Great Western Mainline electrification in the UK. This was a project originally costed at some £800 Million some years ago, whose costs have risen to £2.8 Billion and now are expected to finish around £5.2 Billion. A National Audit Office report slammed both the British Department for Transport (DfT) and the national rail infrastructure company Network Rail for their lamentable performances. The reasons for the over runs are complex but a great deal of it can be laid at loss of experienced railway men who knew the network and critically knew the older, signalling systems. In its haste to outsource everything, including the kitchen sink, Network Rail managed to eradicate most of its historic knowledge. Things are changing in Network Rail now, but did the memory loss have to happen at all?

Institutional Memory is an Asset That Matters


In short: INSTITUTIONAL MEMORY MATTERS, it has financial value, it should contributes to Business Continuity and it has potential to help an organisation grow. It needs to be seen as an investment, not as the overhead that it is often seen in when the accountants are preparing the next quarterly results.  Most of all it is about the human element being recognised, then facilitating and encouraging knowledge transfer between those human elements.

Next week NJMC will be announcing the release of its Institutional Memory Service (IMS) which seeks to close the gap between Knowledge Management and Institutional Memory in order to provide opportunities to drive marketing, business continuity, business process & effeciency.


NJMC IMS PMOaaS Institutional-Memory

NJMC’s Institutional Memory Service – providing inputs for Marketing, Business Continuity & Business Process Development