MITSloan

WINTER 2004

VOL.45 NO.2

Management Review

Pablo Martin de Holan, Nelson Phillips

& Thomas B. Lawrence

Managing
Organizational
Forgetting

Please note that gray areas reflect artwork that has been
intentionally removed. The substantive content of the article
appears as originally published.
REPRINT NUMBER 4529

Managing

Organizational Forgetting
Knowledge
management is

ver the last decade, companies have become increasingly

aware of the value of managing their organizational
knowledge, and researchers have investigated those processes
extensively.1 Indeed, the ways in which organiza- tions learn
and have stocks of knowledge that underlie their
capabilities can be a powerful tool in explaining the
behavior and competitiveness of companies. Yet something is
missing in the current discussions of organizational
knowledge: Companies dont just learn; they also forget.
Organizational forgetting is a critical and common
phenomenon, but one that is not well understood. Forgetting,
like learning, is not simple: It may be accidental or
purposeful, detrimental or beneficial, but in all cases it
can signif- icantly affect the competitiveness of a company.
Thus, along with organizational learning, businesses also
need to manage processes to ensure that they forget any
knowledge that must be discarded and not forget knowledge
that should be retained. In short, the management of
organizational forgetting is a crucial task for at least two important reasons.
First, the involuntary loss of
organizational knowledge is costing companies
millions of dollars every year. Lost knowledge means forsaken capabilities and
potentially decreased competitiveness. When a
company finds itself in the situation of
having to reinvent or buy knowledge it once
had, resources are wasted. In that situation,
not only is the time and money spent developing
those skills lost, but there is also an
opportu- nity cost. In a highly competitive
market, effectively managing forgetting can
mean the difference between success and
failure. Second, organizational learning
frequently depends upon processes of
organizational forgetting. That is, companies
that want to transform themselves not only must
acquire new capa- bilities, but they also must
often forget old knowledge that

creating processes
not just for
learning and
retaining what is
important but also
for avoiding or
unlearning what is
not.
Pablo Martin de Holan,
Nelson Phillips and
Thomas B. Lawrence

Pablo Martin de Holan is a professor of entrepreneurship with the

Instituto de Empresa, Madrid, Spain, and with INCAE, Alajuela,
Costa Rica. Nelson Phillips is the Beckwith Professor of Management Studies at the Judge Institute of Management, University of
Cambridge, United Kingdom. Thomas B. Lawrence is the Weyerhaeuser Professor of Change Management with the faculty of BusiWINTER 2004 MIT SLOAN MANAGEMENT
REVIEW
45

ness Administration, Simon Fraser University, Vancouver, Canada.

They can be reached at pmdeh@ie.edu, n.phillips@jims.cam.ac.uk
and tom_lawrence@sfu.ca.

traps
them
in
the
past.
Furthermore,
businesses must purpose- fully forget other
types of knowledge, such as bad habits learned
from a partner.
Dealing
effectively
with
such
situations
requires the careful management of organizational
forgetting. In this article, we present a new
construct for companies to determine how best to
remember the knowledge they should retain and
forget the knowledge they shouldnt. Based on
an extensive multiyear

About the
Research
From
1995 to 1999, we conducted field research
on seven international hotels in Cuba. Six of
those facilities were under the umbrella of an
international strategic alliance between a major
Cuban hotel chain and two foreign part- ners
large Western hotel chains respected for their
extensive expertise in the management of
hotels around the world. The seventh hotel,
which was fully owned and operated by the
Cuban hotel chain (and therefore had
no formal contact with any foreign
organization), was used as a reference. Each of
the hotels was independently managed and
operated as a semiautonomous business unit.
They were either newly constructed or recently
reopened after several years of remodeling and
reno- vating, providing what we considered to
be ideal environments for studying
organizational learning (and forgetting),
because we could observe those organizations as they worked to improve their level
of service from very low initial levels.
The project, conducted in collaboration with
the Universidad de la Habana, relied on the
case-study methodology. We gathered data
mainly by interviewing management
personnel, frontline employees and customers at each of the facilities. The employees
were asked questions such as: How has your
function changed? How were the changes
implemented? Could you give examples of
changes that were not successful? Was there a
common reason for those failures? In total, we
con- ducted 78 interviews, with an average
duration of about
90 minutes. The interviews were transcribed
and analyzed by software that helped to
identify and group common issues. To verify
the information provided in the inter- views,
we drew on a range of other material,
including training manuals, letters and internal
memos. The data allowed us to observe and
46trace
MIT SLOAN
MANAGEMENT
REVIEW
the creation,
transfer
and loss of
WINTER
2004
knowledge from the very early stages when

study (see About the Research), the framework

presented here can help managers understand and
manage
organizational
forgetting
both
productively and effectively.

What Is Organizational Forgetting?

Organizational knowledge makes collective action
possible.2 It is the understanding of cause and
effect that results from expe- rience and is
stored both in the shared mental models of people
and in the assets, standard operating procedures,
rules
and
routines
of
a
company.3
Organizational learning, then, relates to the
processes by which companies add to this stock of
knowl- edge and hence to their repertoire
of capabilities. Organiza- tional forgetting,
conversely, is the loss of such knowledge.
When companies forget, they become unable to
perform some- thing that they had previously been
able to do.4 They lose capa- bilities and, at
least in some cases, competitiveness. (Although
in other situations, as we discuss later,
organizational forgetting can lead to increased
competitiveness
if
some
elements
of
past
knowledge are interfering with the development of
new capa- bilities.)
Forgetting can be categorized along
two
dimensions. The first differentiates between
accidental and intentional forget- ting. There
is a fundamental difference between the two.
Acci- dental forgetting is most often associated
with the loss of valuable knowledge, which thus
reduces a companys competi- tiveness. The
process is detrimental because organizations have
to relearn the forgotten knowledge. Intentional
forgetting, on the other hand, can result in
increased competitiveness. If a company manages
it properly, intentional forgetting can rid the
organization of knowledge that has been producing
dysfunc- tional outcomes.
The other dimension highlights the difference
between knowledge that is entrenched versus new.
Specifically, some pieces of knowledge are deeply
ingrained within a company, whereas others have
been developed or acquired only recently.
Processes associated with forgetting things
deeply embedded in a companys memory are very
different
from
those
associated
with
new
knowledge, which can be shed more easily before
it becomes widely known and established. An
important point here is that organizational
knowledge takes different forms as it becomes
more deeply embedded, both culturally and
technologically. Existing stocks of knowledge
tend to be embodied in relatively durable
organizational objects: machines, databases,
taken-for- granted routines, deeply held values,
widespread cultural sym- bols and so on. In
contrast, new knowledge lives a more ephemeral

life in the minds of individuals, relationships

among small teams and ad hoc organizational
groups.

For companies to manage their organizational

forgetting
effectively,
they
must
first
understand both dimensions of for- getting and
the relationships between them. The exhibit
Forms

WINTER 2004 MIT SLOAN MANAGEMENT

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47

Information not used regularly tends to decay. Key personnel leave the o

of Organizational Forgetting is a matrix

that highlights the four processes stemming
from the intersection of the two dimensions:
memory decay, failure to capture, unlearning and
avoiding bad habits. Together, they describe the
range of orga- nizational forgetting that can
occur. Each is associated with a distinct set of
processes and contexts that results in a
specific set of challenges. As such, each of the
four processes must be man- aged differently.

Accidental Forgetting
There are two types of accidental forgetting.
The first is memory decay, which occurs when
well-established knowledge is acciden- tally
lost.5 The second is failure to capture, which
occurs when new knowledge is lost inadvertently
before it can become firmly established in the
organizations memory.6

Memory Decay A company often forgets things

that have long been embedded in its organizational
memory. Concepts, prac- tices and even values can
be unintentionally lost through memory decay,
often with harmful, costly results. Consider the
recent experience of the Central Bank of Argentina.
After struggling for years with a deep recession,
in January 2002 the government of Argentina
devalued the currency and defaulted on its debt.
Simultaneously, it ordered the Central Bank to once
again man- age the countrys monetary policy.
However,
according
to
Clarin,
a
respected
Argentine newspaper, the Bank is frantically
looking in its archives and asking its current and
former employees to locate the skills that have
been lost after years of not using them: the
ability to manage monetary emission, to let the
currency float, and to get involved in exchanging
money at a variable rate. Sadly, the Central Bank
has realized that it has lost all its knowl- edge
in one of the essential points of the new economic
plan: managing foreign trade and the exchange
rate.7
This
situation
highlights
the
potential
difficulty associated with retaining even very
valuable pieces of organizational knowl- edge:
If that information is not used regularly, it
tends to decay. Key personnel leave the
organization, routines are forgotten, close
working relationships break down and important
docu- mentation is lost. The problem is often

particularly acute during periods of downsizing.

Memory decay can cause companies to

ten knowledge. Unfortunately, discussions of

knowledge man- agement seldom focus on this
problem
(and
its
critical
strategic
importance), when in fact preventing memory
decay requires a concerted effort and a
specific set of practices.
Find the true locations of organizational
knowledge. To avoid forgetting important
knowledge, companies first need to under- stand
where it resides. In our experience, managers
often have an oversimplified view of what
constitutes organizational knowl- edge. In a
well-established manufacturing company in
Pitts- burgh, for example, managers wanted to
clean up their library of blueprints of
industrial products. So those documents were
redrawn and refiled with the expectation that
the process would enhance productivity by
making the blueprints more available and easier
to read. What management had failed to realize,
though, was that the old blueprints contained
critical informa- tion in the form of notes
that workers had handwritten over the years.
But management mistakenly considered those
lose critical sources of their competitive
advantage, and those organizations can easily
incur huge costs to re-create that forgot-

notes as wear and tear on the blueprints, so the

new documents were pro- duced with just the
formal, technical aspects of the
drawings,

Companies can forget knowledge in one of four

ways (mem- ory decay, failure to capture,
unlearning and avoiding bad habits), depending
on whether the loss is accidental or inten- tional,
and on whether the information is embedded or
new to the organization.

Fro
m Existing
Stock

Memory decay

Unlearning

Source of
Knowledge

Newl
y
Innovat
ed

Failure to capture Avoiding bad habits

Accident
al

Mode of
Forgetting

Forms of Organizational Forgetting

Intentional

Given todays communication technologies and decentralized organizatio

thereby losing the informal but crucial

information that workers really needed for
operating the plant.
The key lesson is this: Valuable knowledge in
an organization is often hidden, implicit,
informal and created by employees in myriad
ways. Much of this information might be stored in
the
minds
of
employees
as
well
as
in
disconnected, idiosyncratic databases, such as
bits of paper pinned on corkboards. More- over,
given
todays
communication
technologies
(such
as
the Internet) and decentralized
organizational
structures,
more
and
more
corporate knowledge is being created rapidly and
in highly fragmented pieces.
One form of knowledge that is particularly
challenging to manage is embedded in so-called
communities of practice, which exist in every
organization. The importance of tacit knowledge
is generally accepted,8 but the emphasis has
often been on individ- ual experts. Less well
understood is the importance of communal forms
of implicit knowledge what we refer to as folk
knowl- edge. Such
information
is
typically
embedded
in
the
routines and relationships
among a group of employees that make up their
day-to-day operations. Consequently, it is less
visible than even an experts tacit knowledge and
is thus even more suscepti- ble to long-term
decay.
Maintain organizational memory as a strategic
imperative. Being aware of the location of
knowledge is not enough; compa- nies must also
adequately maintain that information, especially
when they use it just sporadically. In such
situations, skills can atrophy, and organizations
might completely forget how to per- form a valued
activity.
Consider the experiences of a company that
was once in charge of building the afterburner
for the engine of the Con- corde. When asked
whether the company could build that key
component today, a senior manager replied, No,
we have a subsidiary to do regular
maintenance for the [airplanes] that still use
it, but we wouldnt be able to make it today. ...
We sim- ply
dont
have
the
capabilities
anymore. As
it
turns
out,
the companys
knowledge of building the afterburner was
distrib- uted in peoples heads, paper manuals,
sets of practices and rou- tines, and even in
particular tools and machines. People have

left, explains the manager. Our tools have been

transformed. We have lost some of the manuals.
Moreover, important infor- mation was also
contained in the complex web of interactions

among those different entities. To maintain

that network, the company would have had to
establish sets of practices to ensure that
the distributed pieces of knowledge were
somehow main- tained as a coherent body.
Many organizations face situations that occur
only infrequently and irregularly, so that
managers face uncertain rewards for bearing the
costs of trying to manage the knowledge
necessary to deal with them. The problem is
exacerbated
when
that
knowledge
is
represented by a complex arrangement of skills,
informa- tion and tools. In such cases, it
might be more sensible (and
certainly less
costly) simply to forget. But the important
point is that the decision whether to maintain
such complex organiza- tional capabilities
should be a strategic one, and companies should
be careful to avoid any memory decay that could
affect their competitiveness. At the very
least,
organizations
should
include
the
management of knowledge in their strategic
planning process, and a specific person should
have the responsibility and authority for
identifying and protecting core stocks of
knowledge.

Failure To Capture Along with memory decay,

there is another kind of accidental forgetting:
to capture the valuable new knowledge before it
dissipates.
Numerous companies have innovated, but then
theyve failed to incorporate that learning into
the broader organizational memory. Consider the
experiences of a large international hotel in
our
study.
The
hotel
manager
personally
supervised the first banquet catered at his
hotel a large reception organized by the
ambassador of a G8 country. The party was a
smashing success, and the hotel was widely
praised for its impeccable service and gourmet
food. But on the next occasion when such a
reception was held this time when the general
manager was not present
things fell apart. Food was cold when it
needed to be warm; beverages were warm when
they should have been cold; a fire burst out
of control in the barbecue pit, charring the
roast; and several waiters dropped food and
drinks onto important guests. In short, not
only did the hotel fail to incorporate the
knowledge it gained from the first experience,
but also it damaged its repu- tation for
quality service. To prevent such debacles,
companies should deploy specific tactics.
Avoid heroes. Sometimes, companies are able to
perform a com- plex task only under specific
conditions that are difficult to repli- cate
or that cant be repeated at all. A common
situation is when specific key individuals (such
as the general manager of that hotel) are needed

failing to incorporate new knowl- edge into the

broader organizational memory. In such cases, a
company neglects
to
make
valuable
new
information
available to the rest of the
organization, and that knowledge becomes lost when
certain individuals leave or work teams disband
or change. To prevent that, information must be
captured from individuals and made institutional
a process that involves a range of activities to
routinize, codify and store knowledge. Also,
certain types of information, such as a companys
stories, myths and other forms of discourse, must
be embedded into the organizations culture.
The process of knowledge capture can be
divided into two interrelated parts. First, the
new knowledge must be made explicit a process
that has been called knowledge articulation.
Then the information must be communicated to
other parts of the organization and embedded in
the appropriate parts of its memory system a
process we call knowledge institutionalization. The two processes can pose different
problems of varying difficulty, depending on the
circumstances. For example, some situations do
not require knowledge articulation because the
information is already explicit and available
for
transmission
to
other
parts
of
the
organization. In such cases, the critical thing
is
in order for the organization to perform an
activity.
Of
course,
resident
experts
are
inevitable in organiza- tions, but when their
knowledge isnt managed properly they can make the
company as a whole more vulnerable and stifle
organi- zational learning. To prevent that,
managers should structure work in ways that
replicate new knowledge across individuals
and, ideally, even across teams and departments.
Without such procedures, the organization fails
to learn and competency can be lost if the
critical personnel leave.
Often, the experts in question will resist any
attempts to con- vert their specialized knowledge
and skills into organizational knowledge. After
all, it would be natural for those individuals to
prefer being indispensable, and they may fear a
loss of impor- tance and power. Obviously, such
tricky political situations require the careful
attention of skilled managers. A company might,
for
instance,
implement
a
bonus
incentive
structure that rewards knowledge sharing, or it
could help the in-house experts to develop
additional competencies as they pass along their
past knowledge and skills. But even though
considerable effort might be necessary to manage
such situations, companies should bear in mind
that the cost of having to relearn important
knowledge could be far greater.
Link the new to the old. An important factor in
capturing knowledge is the relationship between
new information and an organizations existing

stock of knowledge. Companies are much more

likely to recognize and capture new knowledge
when peo-

ple can relate it to their areas of current

expertise. When they cant, they might fail
to see the strategic importance of the
knowledge and resist adopting it. Moreover,
they could find the new knowledge threatening.
Such situations can occur, for instance, when
a company tries to transfer knowledge from a
competitor or partner.
Managers should remember that organizational
knowledge is interconnected in complex ways. It
is this complexity that leads to organizational
capabilities that are difficult to imitate, thus
providing
companies
with
competitive
advantage. New knowledge that is complementary
to those capabilities will be relatively easy to
embed in the organizations memory system.
But
when
the new knowledge disrupts or
conflicts with the existing ways of doing
things,
companies
will
need
to
expend
considerable effort to ensure that the knowledge
is adopted instead of rejected.

Intentional Forgetting
While accidental forgetting can decrease an
organizations compet- itiveness, intentional
forgetting can actually increase it.9 This could
occur in two types of situations. In the first,
managers strategically remove knowledge that, for
instance, is hindering an important change
initiative. In the second, managers identify
potentially detrimental knowledge (for example,
an inefficient practice trans- ferred from an
alliance partner) and prevent it from becoming
part of the organizations stock of knowledge. In
both cases, forgetting is an active process that
the company purposefully manages.

Unlearning To

unlearn knowledge, a company

intentionally removes something that is well
established in the organizations memory. That
process can be just as important as learning, particularly when a company needs to shed knowledge
that
has
begun to undermine its success. This
often occurs when some- thing (for instance, a
change in technology or a shift in the mar- ket)
renders previously useful knowledge ineffective.
For unlearning to take place, a company must
disorganize some part of its knowledge store.
The
process
can
be
understood
by
first
considering
the
more
familiar
process
of
learning. At its core, organizational learning
occurs when a company organizes knowledge by
taking it out of the heads of individuals and
mak- ing it institutional. Unlearning involves
the reverse: disorganizing knowledge by breaking
routines, changing structures and man- aging
cultures in ways that dismantle deeply embedded
knowl- edge. Several tactics can help a company
to unlearn knowledge that has become an
impediment.

Break routines and practices. Companies embed

knowledge in routines and practices, thereby
making that information available to a range of

employees and facilitating its reproduction

over time even after its originators have left.
Such knowledge can become deeply embedded because
people dont

Learning organizations are typically viewed as healthy and competitive, b

typically
question
the
assumptions
behind
established routines and practices, and because
employees whose status or influence is dependent
on them will fight to protect the status quo.
Both of those factors make unlearning difficult:
Long-held assump- tions are rarely questioned
without a significant catalyst, and vested
interests tend to resist change even when it is
strategically important. Even so, companies can
succeed at unlearning by making a concerted
effort to break those routines and practices
that
are
central
to
the
production
(or
reproduction) of the problematic knowledge.
Consider the experience of one of the large
international hotels in our study. The executive
team wanted to implement radical cost reductions
in an organization that had traditionally not
paid much attention to such concerns. Instead,
the hotel had focused on a customer-centric
strategy. For example, it regularly conducted
comprehensive customer-satisfaction studies. Not
only were those surveys costly to perform, they
continuously introduced into the organization
new knowledge that was focused on customer
responsiveness, thereby distracting employees
from the task of reducing costs. After the
situation became urgent (the hotel was posting
regular losses), managers replaced the surveys
with
informal
fireside
chats
with
customers, and employees began to implement a
series
of
comprehensive
belt-tightening
measures. As a result, the hotel was able to
shift its focus to the new strategic goal of
cost reduction, and it discovered it could
provide the same level of service at a considerably lower cost.

organization. Another alternative is a corporate

restructuring that reassembles parts of the
organization. Whatever the approach, the important
thing is

Divest businesses. Sometimes organizational

knowledge is so deeply embedded that a company
has tremendous difficulty unlearning it without
major
disruptions
to
important
ongoing
activities. The unquestioned assumptions might
be too firmly rooted or the vested interests
just too powerful. In such cases, a more radical
approach might be necessary. Divesting parts of
a company is an effective though often costly
way to rid the organization of knowledge that
conflicts with core activities or that stands in
the way of strategic change. It may take the
form of selling off operations that are
ancillary to the core business. A less severe
option is to close a department or group and
absorb the employees back into the rest of the
WINTER 2004 MIT SLOAN MANAGEMENT
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51

to dismantle the complex body of knowledge

whose intercon- nections
with
other
parts
of
the
organizations
memory
make change
difficult or impossible.

Avoiding Bad Habits Learning organizations

are typically viewed as healthy and competitive,
but learning is actually a double- edged sword.
Organizations, like people, can learn bad
habits routines, practices, ideas and values
that
are
counterproductive.
Successful
companies are able to forget such knowledge
purpose- fully before it becomes embedded in
their organizational memo- ries. To accomplish
this, a company has to be able to distinguish
between useful knowledge and potential bad
habits, and it must have the systems in place
to ensure that the latter are forgotten before
they become ingrained.
It is important to note that the ability to
avoid bad habits becomes increasingly critical
as organizations become better learners. After
all, companies that excel at learning are often
just as good at picking up bad habits as they
are at gaining useful knowledge. Thus, as an
organization becomes more adept at learning, it
also needs to become better at identifying and
forget- ting potentially detrimental knowledge.
Otherwise, the organiza- tion could incorporate
it simply didnt know how to make small cars,
and
that
faulty assumption became deeply
ingrained in the organizations mem- ory until
the mid-1980s, when the company had to unlearn
that lesson to remain competitive.
A similar problem occurs when innovations
succeed but man- agers are unable to distinguish
between the positive factors (those that led to
success and can be replicated more broadly) and
the negative ones (those that are harmful to the
organization but
happen to be associated with
the success). In such cases, the neg- ative
elements can easily become organizational bad
habits, espe- cially if a company mistakenly
assumes that they are essential to success. In
the late 1970s, for example, Guccis success at
extend- ing its brand beyond the fashion
business led the company to believe that it
could market products far removed from its core
business. Overlearning from its earlier success,
Gucci proceeded to brand a wide range of goods,
including pens, key chains and coffee cups. The
result: a rapid erosion of the Gucci brand that
led to a crisis from which the company almost
did not recover.
Isolate yourself from partners bad habits. Common
wisdom suggests that company collaborations and
partnerships
are
a
fundamental
way
for
corporations to develop new competencies and
enhance their knowledge bases. Through such
arrange- ments, though, an organization must be
careful to control what it learns. When
50

MIT SLOAN MANAGEMENT REVIEW

WINTER 2004

numerous bad habits into its knowledge system,

and the learning capability that was supposed to
enhance competitiveness will, ironically, have
the
opposite
effect.
Identifying
and
forgetting potentially bad habits can require
the same kind of effort and dedication as
learning useful knowledge, and managers should
be aware of certain common pitfalls.
Dont overlearn from either failure or success.
Its actually easy to learn; the real challenge is
learning the right things. Indeed, one of the
fundamental challenges facing organizations is
to learn the right lessons from failure. It is
far too easy to learn noth- ing or, worse, to
overlearn from failure. That is, companies might
lack the insight to identify clearly why they
failed, and that short- coming could color the
judgment of their capabilities. At its most
extreme, they could decide that they are simply
unable to succeed in a particular activity.
They learn that they shouldnt be involved
in a certain business because they will surely
fail. As the management guru Tom Peters argues,10
Ford Motor Co. over- learned greatly from its
inability to manufacture small cars in 1938.
Instead of evaluating why that effort failed and
then
attempting
to
build
the
missing
competencies, Ford decided that
companies evaluate potential alliance partners,
they typically focus on the value of the
knowledge that they might obtain and on the
capacity for the arrangement to facili- tate
learning. Manufacturing companies, for instance,
often engage in international marketing alliances
in order to gain access to a local partners
expertise in an overseas market. The assumption
is that through such relationships, a company
will gain only knowledge that is strategically
advantageous. In reality, though, collaborations
and alliances designed to facilitate learn- ing
often involve multiple points of contact between
partners that can lead to employees picking up
detrimental knowledge that was not on the
learning agenda.
Consider the recent scandals that engulfed
Arthur Andersen LLP and its clients Enron Corp.,
Sunbeam Products Inc., World- Com Inc. and others.
Critics have argued that the dependence of
accounting firms on their largest clients results
in a number of potential difficulties. For one
thing, such relationships can make a company more
susceptible to the transfer of bad habits, such
as a lax attitude toward audits and business
ethics. It is unclear how much of a factor that
was in Arthur Andersens demise, but the important
point
is this:
The closer and deeper a
relationship, the more critical it becomes for
companies
to
manage
the
processes
of
organizational forgetting to ensure that they
reject any bad habits. Without such vigilance,
the default situation is that com- panies will
tend to become increasingly like their partners

(just as individuals
their friends).

often

become

more

like

COMPANIES FORGET the things they need to

know, incur- ring huge costs to replace the
lost knowledge. Other organiza- tions cant
forget the things they should, and they remain
trapped by the past, relying on uncompetitive
technologies, dysfunctional corporate cultures
or untenable assumptions about their markets. Successful companies instead are able to
move quickly to adapt to rapidly changing
environments by being skilled not only at
learning, but also at forgetting. Indeed, as
companies work to increase their capacity to
learn they also need to develop a corresponding ability to forget. Otherwise, they
could easily be learn- ing counterproductive
knowledge, such as bad habits. The bottom
line is that companies need to manage their
processes for forgetting as well as for
learning, because only then can they deploy
their organizational knowledge in the most
effective
ways
for
achieving
sustained
competitive advantage.
SOME

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WINTER 2004 MIT SLOAN MANAGEMENT

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