Loosening the Chains: Unlearning obsolete business elements

Breaking Chains Klein

By Dr. Mohammed H. Rezazade Mehrizi

As technologies and work practices change constantly, organizations need to keep up with these changes by learning new technologies, strategies, and business models, and also by unlearning obsolete business elements. To compete successfully in the market, it is not enough for organizations to adopt state-of-the-art technologies; it is also vital that existing outdated technologies are properly discontinued. While new high-tech companies need to be acquired, it is also crucial that existing managers and employees master the art of abandoning outdated mindsets and ideas so as to avoid contaminating fresh new ideas. It is not enough to enter new markets, to introduce new products and to develop new business models; it is also essential that outmoded products, services and business models are properly marginalized to prevent them from consuming limited organizational resources.

Although unlearning is an appealing concept that is easy to recommend, it is challenging to apply. As managers, employees and customers, we develop various cognitive, emotional and habitual attachments to the strategies, technologies and products that we have developed and deployed in the past. How can we relinquish what that has become the basis of our expertise, the core of our identity and the crux of our reputation? How can we detach ourselves from the strategies that shaped the foundations of our success in the past? How can we stop allocating resources to products and services that were successful in the market, but that are not anymore? How can we stop using technologies that had been the foundation of all our business activities, yet are now obsolete? How can we not rely on core business ideas that have become part of our business DNA?

In spite of all these challenges, there are examples of businesses that have successfully and even continuously exercised unlearning. For example, Google’s agility and innovativeness is strongly based on its regular ‘seasonal cleaning’ of outmoded, obsolete products and services. Another striking example is AMBEV, the largest Brazilian beverage company (now called ABInBev), which quickly recognized the danger that implementing ISO standards would lead to rigidity2. As a common practice, its employees were thus asked to shred immediately any ISO page that was not working, in front of their colleagues. A similar tactic to get rid of outdated business elements is used by Shell, which has learned how to use knowledge management platforms not only to share ‘best practices’, but also to purge the company constantly of ‘irrelevant, obsolete practices’.

Recent management theories have analyzed these challenges from various perspectives. At the level of human cognition, scholars have looked at what makes people abandon their deeply rooted mindsets. At the level of technology, studies have explored the process of phasing out legacy systems. At the level of organizational practices and routines, various studies have examined different strategies for de-institutionalizing outmoded routines. From social and political perspectives, theories have discussed the challenges of de-legitimizing obsolete ideas. One surprising example is that in 1976, Kodak held patents on the digital camera and the company developed the first digital camera in 1980. However, it took another three decades before Mr Carp, the CEO of Kodak, announced that the traditional film technology was no longer viable and should give its place to digital technology.
As an established research team in the Knowledge, Information and Innovation (KIN) group, we have studied this phenomenon from multiple perspectives, in various local and international organizations. We have found four traps that threaten organizations in their unlearning journey.

The cognitive trap: when organizations cannot reflect deeply on fundamentally problematic ideas, and simply go for unlearning superficial, marginal ideas. For example, in the 1980s Intel initially failed to realize that it was not simply the case that some of its RAM technologies and products were problematic, but that the whole RAM business model should no longer be pursued.

The confidence trap: when organizations become overconfident that they can revitalize their outdated business models through their market power and by allocating more resources. For example, Kodak engaged in significant investment to rescue its outdated film technology, which was eventually made obsolete by the advent of the digital camera.

The contamination trap: when old ideas, technologies, and business models contaminate new ones. New ideas, technologies, and business models thus become nothing more than decorated versions of the old ones! For example, when IBM tried, after several attempts, to develop the ‘Personal Computer’ through its mainframe designers, the result was nothing but a smaller mainframe! The company then avoided the contamination trap by hiring a new team of designers, isolated from the mainframe team.

The reversion trap: when organizations abandon the unlearning process too early, the residuals of old ideas, technologies and business models can resurge, grow and return. For example, some software companies have tried to phase out some of their old products, but they revert to them when their customers pull them back into this game.

Dealing successfully with these unlearning traps often requires resolving three trade-offs:

Sometimes a change requires unlearning at very deep levels of business theories and technological paradigms. Should organizations immediately retreat the core of their business, or would it perhaps be better to start with a marginal aspect and gradually deepen the unlearning? In the former situation, organizations might find unlearning too heavy an activity to pursue, and thus gradually die in their current pleasure rather than accept the pain of rebirth. In the latter case, organizations might become locked into a superficial level of unlearning and never be able to go further.

Sometimes organizations identify an opportunity to revitalize obsolete technologies and business models, yet this might come at the risk of unlearning too late, when there remains almost no chance of surviving and competing with rival companies. On the other hand, unlearning too early carries the risk of letting go of the old prematurely, before a reliable alternative technology and business model has been adopted.

More often, both old and new aspects coexist during a change process. On the one hand, organizations need to ensure that the viable elements of the old are properly reused for the development of the new, and on the other hand, they must ensure that the reuse of old elements does not come at the expense of contaminating new aspects.

Our mission is to understand how organizations actually experience unlearning and to help them make this journey as effective as possible. Please feel free to contact us for further information about our research projects and potential lines of collaboration.

For further inquiries about the research projects, please contact Dr. Mohammad H. Rezazade Mehrizi, m.rezazademehrizi@vu.nl.

1 This article is based on a forthcoming paper by M.H. Rezazade Mehrizi and M. Lashkar Boluki, on ‘Unlearning troubled business models: From realization to marginalization’ at Long Range Planning Journal’.
2 The standard business processes developed by the International Organization for Standardization.