The Amnesia Test

The Redo Test asks how much it would cost to redo a task, given that everything except the worker's memory of doing the task is lost. The Amnesia Test uses the opposite scenario: what if the worker forgets everything they learned from doing the task, but everything else is unaffected? How much would it cost to recover the worker's memory, given that the other results of the work remains? The Amnesia Cost Ratio (ACR) measures this as a percentage of the cost of doing the task the first time. An ACR of 100% means that nothing is useful without the worker's mental state, an ACR of 0% means that the worker can walk away (or be kicked out) without any loss of value, for the given task. 

Some examples:

1) You are a junior engineer working for a company that produces doohickeys. In evaluating a new prototype doohickey, a senior colleague asks you to check whether the prototype manifests "overextended flimming". You start writing a script to provoke overextended flimming, but get interrupted by a more pressing task. When you get time to work on the flimming again, you look at your script and draw a complete blank as to what you were trying to do. It is faster to just rewrite the script from scratch, rather than to salvage your old half-finished idea. The ACR for this (partially completed) task is 100%. 

2) You are the best welder in the doohickey factory, with 15 years experience. Every year, you have become 10% faster, which means that you can now weld a doohickey about 5 times faster than a new recruit. One day, you are hit by a tram, causing you to forget everything you knew about welding, so you have to start again. Let's assume that wages for doohickey-welders are always the same, and that learning saturates after 15 years. How many more doohickeys would you have welded in the following 15 years if you hadn't been hit by the tram? About twice as many. The ACR for this task is 50%. 

Number of iterations until saturation	Improvement per iteration	ACR
15	10%	50%
1	30%	30%
2	30%	40%
5	30%	61%
100	2.25%	61%
10	2.25%	12%

Difference between KCR and ACR

One important difference between the KCR and the ACR is how the incentives of employer and employee are aligned. The employer wants a high KCR, since it means that the capital is safe against loss of physical inventory, or disk crashes. The employees also want a high KCR, since it means that they themselves have increased their human capital; they could now do similar tasks faster. There is however a conflict between the employers and the employees when it comes to ACR. The employees want a high ACR, since it gives them leverage; they could leave and remove value from the company. The ideal situation for an employer would be a company whose main capital is an idea or a culture. Once understood, the idea or the culture can be used to create value for the company, but an employee cannot remove the idea or the culture by quitting. The issue with having an idea or a culture as the main capital is that a competitor might try to copy you.