20 July, 2009

An elephant never forgets. How about you?

People often think of contractual and business relationships lasting a few days or years, but rarely think about ones that might last decades and beyond. I’ve seen several organisations bitten by seemingly unimportant or just plain forgotten undertakings given in the dim and distant past.

One company received a letter from the city council announcing that the city would start charging the company for 10 up-til-now free CBD carparks that the city provided. No big deal; after all, who expects to get a free CBD carpark these days? But one of the company old-timers remembered that the city had traded the free CBD carparks some 15 years earlier for some company-owned carparks where the city wanted to build a motorway. Imagine the value of 10 car parks in the CBD close to the motorway exit - in perpetuity. A search of the city’s records (better than the company’s) produced the documentation. After some haggling, the city bought the car parks back - a very nice windfall for the company given CBD property inflation over that time. It was pure luck that someone remembered the original deal. Bad luck for the city; good luck for the company.

It’s not just property deals:
  • A letter offering a job to an overseas immigrant which promised repatriation if he was fired or made redundant - which he was, 20 years later. He had no intention of returning to his old country, but it paid for a nice visit home.
  • An enduring exclusivity clause in a services contract. After several years, the work tailed off. Some years later still, the contractor was invited in by another company - a possible rival to the original client.  The defunct client invoked the clause to stymie its competitor.
  • And so on.
Partly these problems are down to poor negotiating, poor contract drafting and poor record management. That’s not my point. In these cases, at least one of the parties had forgotten all about the original deal. In each case, someone remembered and was able to take advantage of the situation. It also makes you wonder how many times such deals have been forgotten by all concerned, and whether they won or lost as a result.

So who or where is your institutional memory?

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