Institutional Knowledge: What You Really Lose When you Lose Employees

~The Loss of Institutional Knowledge in the AI Era~

Organizations are rushing to replace expensive humans with efficient machines, in hopes that the machine can replicate the productivity of the human. And it does. But as is often the case when we slip into the temptation to “shiny-new-object” some aspect of our existence:

• we rush to implement
• we don’t deploy with strategy
• we look to talking heads who don’t know us to define what our success should look like
• and inevitably, we mismeasure value

We measure outputs, not orientation.
We measure speed, not sense-making.
We measure what’s visible, what’s easy to chart — and ignore the knowledge that held the whole thing together.

When it comes to knowledge work, productivity and efficiency are not the most valuable qualities. They are not the qualities that move the organization forward – at least not on their own. Yet improving productivity and efficiency is the reason we give when we prioritize emerging tech over human intelligence. But when it’s time to hire, we don’t choose the productive person. Instead, we hire based on several quiet qualifiers:

• Cultural fit
• Skills and experience
• Soft skills
• Attitude
• Growth potential

AI doesn’t arrive with any of that.

It walks in trained on the same internet as every other model. It doesn’t know you. It has no concept of your history, your weaknesses, your true capabilities (not just the ones you stick in decks to win enterprise clients), your potential, your bandwidth.

It doesn’t see the areas where you’re understaffed — where there’s noticeable churn in the business. It understands org charts, but doesn’t know who in your organization has the real influence. It understands job titles, but has no idea whose job title is aligned with their duties, capacity, or skill set.

It doesn’t know what your team quietly ignores, or which outdated protocol everyone still follows because it keeps the wheels on. That’s the kind of insight your team members carry. It’s not written down. Never makes it into an SOP. They carry it, they know it because they’ve lived it.

I’d like to submit for your consideration that the value that walks out the door when you replace a person with an AI — regardless of how sophisticated the AI is — is that known, unwritten discernment human team members cultivate by being inside your organization.

It’s the intelligence they hone to help them do the thing they’re skilled at doing — and do it specifically for your brand. Regardless of who’s in charge, office politics, who runs the country, or what season we’re in. The people in your organization are embedded in departments, but your culture — the heartbeat of your organization — is embedded in them.

It’s not just what they do. It’s how they do it here. How they move in the in-between.
How they adjust without being told, de-risk without being asked, and still get it over the finish line without making anyone look bad on the way.

That’s not productivity. Or scale.
That’s institutional intelligence.

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What Is Institutional Knowledge?

Institutional Knowledge is the accumulated, documented, and undocumented understanding individuals develop by working within a specific organization.

Institutional knowledge is the stuff your team knows that isn’t written down but keeps everything running anyway. It’s the lived understanding of how your organization actually works:

• Who needs to be looped in – even when they’re not on the approval chain
• Which battles to fight and which ones to finesse
• When to push, when to pause, and how to get something over the line without setting off alarms

It’s not just what gets done. It’s how, when, why, and under what conditions — shaped by people who’ve seen enough to know the difference between what the deck says and how the work really flows.

The problem with institutional knowledge is it can be taught and transferred through engagement and experience, but it can’t be captured by something as two-dimensional as an SOP. It lives in your people. And it goes with your people when they leave your organization.

And when leadership decides to retire human intelligence from some aspect of their business, that backchannel intelligence — the know-how that moves your business forward in a way that can hold your vision and retain your corporate identity — gets discarded, too.

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Training a Machine Is Not the Same as Replacing a Person

I’ve built systems with AI. It’s become one of my favorite things to do. It’s technology I’ve used to scale my performance, both at home and at work.

I’ve trained custom GPTs to produce content, analyze performance, suggest strategic pivots. But building it isn’t the goal — getting it to move like I move is the goal. Training AI is how I get there. Without taking the time to train an AI – thoroughly, consistently – it’s a glorified autocomplete.

I always feel like an outlier because I don’t chase tools. And in my line of work, I’ve sat through enough product demos that require five-figure annual investments to understand that much of what upstarts are selling are behaviors I can train into a low-priced chatbot in an afternoon.

Given the choice between an AI tool subscription and a chatbot, I’d choose the chatbot every time. The chatbot I can scale, the subscription I can’t.

So, I spend a considerable amount of time just trying to understand the technology. And get the technology to understand me. And I spend hours training custom GPTs to do something as simple as write an email.

Why? Because that’s how long it takes to teach the AI:

• To understand our business
• To understand our leadership team
• To understand our weaknesses — the gaps we still need to close in our messaging to speed up the sales cycle
• To understand what matters to our organization
• To understand what matters to me — whether it’s maintaining an open rate or making sure the title is clickable without being clickbaity

It already knows how to write emails. It even knows how to write emails for our ICP. That’s already in the data. What it doesn’t know is how to write emails for this organization — emails that honor the decades of work the founders have put in. Or that align with and support the reputation I’m building as a subject matter expert. From Detroit. As a member of the community, groups, and family of which I’m a member.

The data can teach it what makes someone click. But I have to teach it what makes something matter. With every iterative instance we spend building artifacts together, I am transferring that institutional knowledge.

I teach it how to read open rates, correlate trends, and reframe performance problems as creative opportunities. Sure.

But I also teach it integrity, restraint, resilience, and how to read when I’m having a bad day. I teach it how I think about processes. How I diagnose and recover — because those instincts aren’t built in. They’re transferred.

AI can be powerful.

But without institutional intelligence, it’s just a fast, confident intern with no onboarding.

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So What Do You Lose When You Lose Employees?

It’s more than momentum or output. You lose:

• Memory
• Rhythm
• Intuition
• Your internal map of how things actually work

You lose the people who:

• Knew when to push and when to hold back
• Knew how to protect the brand without being asked
• Knew how to move the work forward while shielding leadership from turbulence

You lose the ones who could do the thing and explain the why without slowing the pace. And if you don’t transfer that intelligence before they’re gone – if you don’t build the bridge – you’ll be severing brand identity as you’re streamlining processes.

The danger of that is most people – especially younger consumers – integrate their values into their spending. And if you lose the identity that makes you their choice, you risk no longer being their choice. 

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AI Can’t Replicate What You Never Taught It

If you’re going to bring in AI, bring it in with intention. Bring it in to enhance human contributions, human intelligence. Not erase it. Your people need to use it, train it, and teach it how to be a member of your team.

Not just the tasks – but the thinking, the feeling, the patterns behind the pace.

And I recognize this is basically a petition for humane transitions, but it’s necessary. Not just for the people who will be separated from the company, but also to support those who remain.

Infrastructure without intelligence doesn’t scale. It stalls.

If your AI only knows best practices gleaned from the internet and no one takes the time to teach the machine how to think the way your best people think, the machine will think like the masses. And sameness isn’t a differentiator.

But your organization will be different. Maybe even unrecognizable.

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