Knowledge Management

The U.S. Experience

In the United States, the Ford Motor Company illustrates the effects of one of corporate amnesia’s causes—the flexible labor market—in the production of its Taurus model car (The Economist, 1996). The previous version of the car had been a big hit because it met the needs of big-car buyers better than most of its rivals. It then experienced a loss of its so-called design memory when it massively cut back on jobs in the recession of the early 1990s. As a result, the new model was largely reengineered from scratch. Having forgotten what its customers wanted, the result was a model that failed to capture the buyers’ imagination.

The price of forgetting—specifically how often dominant companies complacently ignore the effects ...