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The gradual loss of institutional capacity to learn from experience, often invisible until crisis reveals it. Learning decay occurs through personnel turnover without knowledge transfer, documentation that isn't maintained, training programmes that become ritualistic, and incentive structures that punish learning from failure.
A financial institution conducts post-mortems after every significant loss but treats them as compliance exercises. No one reads previous post-mortems; recommendations aren't tracked; the same failures recur. Learning decay is complete—the forms exist but learning doesn't happen.
Section 4.2: Learning and Institutional Memory