Now that re-engineering and general professional mobility have shortened the average job tenure, the knowledge and experience of departing employees can be a major resource loss unless companies move fast to put it on record.
Have you found yourself grumbling recently at yet another request for contributions to a gift for yet another departing employee? Your company should see more serious cause for concern. For these departing individuals will take with them not just their farewell tokens, but all the knowledge and experience they have gathered through their years at the company.
This complex knowledge might include the individual's experience of particular events and projects, lists of clients and contacts, and an awareness of decision-making styles and company culture. It will also include assumptions (often unspoken) about the firm's informal working practices and relationships, what 3M calls the 'shadow organisation' or grapevine that communicates 'how things really get better round here'.
Collectively, this knowledge forms what is variously known as organisational or corporate memory, and the body should be regarded as the firm's intellectual capital and a major resource. But most companies in the UK have no way of capturing and recording this knowledge, whether for the purposes of passing it on to newcomers or allowing existing managers to draw on it for instruction.
Indeed, they do not see the necessity, believing in the value of change and new brooms sweeping clean rather than in the lessons of history. The fact that business history is a neglected topic in Britain is illustrated by the detail that here there are just three professors in the subject, compared with over 400 in Japan. 'We prefer to look to the future rather than back at the past' is a typical response when you enquire after British company policy.
But while there are obviously dangers in dwelling on the past, there are equal dangers in remaining in ignorance of it. Studies at Warwick University have shown that many companies reproduce their blunders on a regular basis, while management consultants McKinsey have concluded that many waste time and resources resolving problems that have already been unravelled in the company: reinventing the wheel is a 'much more common drain of cash and creativity than most managers imagined'.
The dangers of corporate memory loss are particularly acute in an era when downsizing and re-engineering have shortened job tenure to an average six years, against the backdrop of an eight-year trade cycle, comments Arnold Kransdorff of Pencorp, the London-based business historians. He cites as one example the case of a leading building society which found, at the beginning of the 1989/90 housing market collapse, that it no longer had any senior managers at branch level who could remember first-hand how the organisation had handled the previous housing market downturn.
Ironically, he points out, now that the housing market is recovering, there are apparently once again 'few managers who can remember how the organisation responded to the last upturn'.
Corporate amnesia can also be the result of the trend towards outsourcing, according to Margaret Graham, founding partner of the Winthrop Group in Cambridge, Massachusetts, one of the leading corporate memory and business history consultants in the US. Companies intent on reducing their capital base or hiving off a problem by outsourcing a function forget the importance of 'local knowledge, specific to the company', with serious consequences for productivity. 'An awareness of history can play an important role at all times of change-re-engineering, growth initiatives, selecting a new leader, launching new products, mergers and acquisitions,' she adds.
So how do you go about capturing and recording the company's collective knowledge? One obvious method is the exit interview - not the traditional, formulaic 20 questions routinely posed in many companies, but a carefully structured and well-researched debriefing, based on a knowledge of the individual's career and expertise. 'Every individual and every job is different,' points out Kransdorff, 'so you can't just use a carbon copy format.' The interview is geared to extracting the detail of events and projects, a flotation, perhaps, or product design or marketing strategy, and to capturing the nuances of the company culture. In both the UK and the US, this sort of detailed debriefing still tends to be reserved for senior managers, although studies are now showing the importance here of supervisors and middle managers, so the net may widen (certainly, the Japanese believe in the value of supervisors and middle managers as keepers of the corporate memory).
In Kransdorff's experience, exit interviews last on average half a day (with a break to draw breath in the middle), although somebody with 15 years' experience to impart may need several sessions. Speaking is better than writing, simply because most managers are better at the former, he says. And as Elizabeth Adkins, archives manager at Kraft Foods in the US, points out, 'Retirement is a good time to talk: the history is still recent enough to recall, and people are ready to relax a little, to talk about the issues'. At Kraft, the interview will be preserved in transcript, edited only for hesitations and lapses of grammar, and can be used to speed up the process of induction, plugging the newcomer into the company scene. It will also be indexed, stored in an archival database, complete with index and abstract, and ready for future reference. 'This way, individuals are still able to be of value, even after they have left the company,' says Kransdorff.
Another way of building up oral history is to interview key individuals during their actual employment, thus avoiding the dangers of the distortions of memory - the glamorising, glossing over, or simply forgetting. These interviews can take place either at regular intervals of every nine or 12 months, suggests Kransdorff, or at the conclusion of important projects.
Or it can be useful to track important corporate projects while they are unfolding. The Pencorp approach is to debrief decision-makers in the equivalent of an oral diary: at the end of the project, a suitably edited transcript contains unequivocal, sequential evidence of how and why individuals made their decisions at the time. This is subjected to the scrutiny of independent functional experts, who also produce a learning audit for the company that specifically identifies lessons which can be applied in the future.
The learning audit is a development of the post-implementation review, such as the three-year Project Home-work carried out by senior employees at Boeing before the development of its 757 and 767 aircraft. This studied the managerial failures and successes of past development processes and then came up with hundreds of recommendations, after which several members of the team transferred to the 757 and 767 start-up projects: the result was the most problem-free product launch in Boeing's history. Business historians would argue that tracking the project while it is in progress has the further advantage of showing the actual circumstances in which decisions were made.
The corporate history in book form can also be useful, if used not as whitewash but as learning tool, as can a detailed product history. Corporate memory consultants stress the value too of professionally managed archives - a sadly neglected sphere in the UK. Managing an archive so that it can be fruitfully used involves more than simply collecting items, explains Graham. 'Live interviews, for example, should be made accessible both topically and interpretatively,' she advises. They should be annotated by subject, and illuminated with a short history and comment to provide the context.
Increasingly, the best-managed archives are incorporating what the Fuji-Xerox company calls 'registered know-how', that is, the knowledge which is really critical to the company. And the most advanced corporations are now building their archives into their intranets. For a good example of the latest advances, look no further than management consultants Booz-Allen & Hamilton and their 'knowledge programme'.
The programme was developed some two-and-a-half years ago, explains Jan Torsilieri, principal and member of the original 'core knowledge team', and has since been introduced to a wide range of clients who, like Booz-Allen itself, have identified knowledge as a key component. Incorporated in a third-generation intranet network, the programme now contains some 3,000 documents, and is constantly being augmented. Knowledge creation comes not only from the firm's global innovation teams (composed of senior staff, seconded for two years at a time and charged with developing the firm's intellectual capital) but from all staff, at all levels: at the end of each client engagement, any 'frameworks' or generic lessons that have emerged are fed into the programme. The information is accessible to all, but at different levels, depending on the employee's status in the company.
The programme is headed by a 'chief knowledge officer' and managed by some 12 to 15 knowledge managers or super-librarians, as she describes them, who combine expertise in library science with an under-standing of the consulting world, supported by some 85 researchers. The knowledge managers are an integral part of the consultancy staff, working with the partners when launching client engagements, and coming up with suggestions: their understanding of what is in effect the firm's corporate memory means they have a very good overview.
Any such intranet-based knowledge programme implies a culture shift towards greater openness, a considerable challenge. But the merit of such a move also needs to be accurately measured, which is probably the hardest part of all, says Torsilieri. 'We are absolutely convinced of its value,' she says, but while both profits and turnover have increased dramatically since the system's introduction, it is of course difficult to prove cause and effect. The benefits of the programme do seem to have registered on other more precise measures, however: 'We've published more books, and we're being quoted more in other publications. We are also continuing to commit our senior players to the programme, which reflects the belief that it's worth it.'
In the case of management consultants, it may seem self-evident that the firm's collective knowledge is its most valuable resource. Kraft Foods provides an example of the value of well-managed archives in a very different industry. With material dating back to 1780 (when the company's first product, Bakers Chocolate, came out), the Kraft archives have been professionally managed since 1984. The call for such management came from a number of quarters, explains Adkins, including the company's PR and legal departments, its advertising department, staff engaged in strategic reviews of product planning, and the marketing people trying to get the most out of the equity invested in the Kraft trademark. The number of different audiences interested has helped the system succeed, she believes.
The archives now contain some 6,000 cubic feet of documentary records: biographical files, minutes of meetings, legal and research documents, advertising, marketing files, and oral history, consisting of transcribed interviews with all employees on their retirement. These interviews are conducted by archives staff, and the results 'personify our corporate memory, and give us a deeper understanding of company history,' says Adkins.
'We research each career and the kind of events people experienced, and prepare questions on the relevant subjects.'
Perhaps the most obvious use of the Kraft archives is in marketing and advertising campaigns, which can draw on a particular product's heritage.
A successful relaunch of Cracker Barrel cheese, for example, (see box) was based partly on how the product was sold in the 1960s, when sales began to take off; and 'Interactive Kitchen', the company's Internet home page, draws on the Kraft tradition as part of the American way, on its leadership in creative kitchens, and on its pioneering approach to adopting new media.
The archives department is also involved in strategic reviews, says Adkins, such as the recent taskforce study on the advantages of growth by acquisition compared with growth through product development. This conducted an 'assessment of the company's record over the last 25 years, of what worked, and what didn't', she says.
Broadly speaking, Adkins adds, corporate history is useful as a source of 'feelings of continuity, particularly at a time of change'. It can be reassuring, she suggests, for employees currently involved in a merger to know that this is not the first time former competitors have been expected to work together: the 1920s and 1930s were in this way very similar to the 1980s and 1990s.
Kraft Foods - A history lesson perks up Cracker Barrel's future
Towards the end of the 1980s, sales of Cracker Barrel cheese, one of Kraft Foods' major and hitherto highly successful brands, were beginning to slow down. Brand manager Linda Crowder consulted the company's extensive archives, using the information these contained on the origins of the brand (launched in 1953) to shape a new marketing strategy.
Crowder drew her information partly from transcripts with retiree Med Connelly, national sales manager of cheese products from 1959 to 1962, which was when the brand's sales really took off. She also studied the Cracker Barrel commercials and print advertising from that period. What she discovered, explains archives manager Elizabeth Adkins, was that Cracker Barrel had been positioned as 'the finest cheese that Kraft made - and that this message had started to get lost'.
The new strategy therefore involved repositioning Cracker Barrel, presenting it as an award-winning cheese (for it has indeed won many awards, Adkins points out). And the history lesson appears to have worked since sales have started to pick up again.