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The corporate memory and skill embodied in employees is grossly underestimated. I left the employ of PacBell in 1991...along with 5,000 others. The company decided it needed to cut headcount to improve the bottom line. They did save lots of salary expense. They also wiped out 500 major projects that were underway. Out of that 500, they determined that 380 were a total loss. They no longer had the ability to proceed. They took the 100 most likely to succeed and outsourced many to a well known IT consulting firm. Nearly all of the outsourced jobs were screwed up beyond belief. Once again, the loss of corporate memory lead to incorrect decisions by unknowledgeable contractors.

This is one of the factors I'm talking about for building great wealth. Corporate memory. Think of a longterm engineer at Honda who started right out of university. Say hes been with the company 25 years. His memory and experience is worth a lot, hes 'been there, done that'. Its something that isn't easily quantifiable in terms of value. I see a lot of companies going new trendy management who are relatively new to the business, and especially the unique situation of that particular company.

Building longterm relationships with contractors.. and not pushing contractors to bankruptcy is another and I believe related factor. Squeezing contractors, or switching contractors all the time, is a similiar mentality to squeezing employees and hiring from the outside.

Think of a longterm engineer at Honda who started right out of university. Say hes been with the company 25 years. His memory and experience is worth a lot, hes 'been there, done that'.

That engineer is exceptionally valuable within the Honda organization where he knows all the corporate relationships and issues. Once booted out of the organization, those intricate details have little value to another employer. If the employer is a Honda competitor, the engineer must be very careful not to disclose proprietary information from his former employer. He can only leverage the "generic" experience with the new employer. That may be a much less valuable commodity.