The Re-derivation Tax, explained

Somewhere in your firm this week, a capable team is carefully, expensively working out something the firm already knows. They are not being lazy or slow. They are being thorough, which is exactly what makes the waste invisible: the question was answered conclusively a year ago, the answer was never recorded anywhere findable, and nobody in the room today knows it was ever asked.

The re-derivation tax is the recurring cost of working out, again, what the organisation already worked out once. The first derivation is the cost of thinking, and it is worth paying. The tax is every derivation after it.

How the tax is levied

It collects in familiar shapes:

• The pricing floor argued to a settled conclusion, then re-argued from first principles at the next comparable deal.
• The vendor evaluated and rejected for cause, then re-evaluated two years later with the cause forgotten.
• The market entry analysed and declined, then re-analysed on the same facts because the reasoning behind the decline retired with its author.
• The organisation design revisited with no record of why the last design was abandoned, guaranteeing an eventual return trip.

Worse, a re-derivation is not even a faithful copy. The second team works with different people, partial evidence and less time, and can land on a worse answer than the one the firm already owned. And when the new answer differs from the old one, there is no way to tell whether the world changed or the analysis did, because the original reasoning, the evidence it rested on and the quality of that evidence, was never kept. Without provenance, every disagreement between past and present is unresolvable.

Why it never appears on a budget line

Every other recurring cost a firm carries has a line: rent, licences, insurance. The re-derivation tax has none, for two structural reasons. First, it is booked as ordinary work. The team rebuilding the pricing analysis is “doing diligence”; the new director reconstructing why the operating model looks the way it does is “getting up to speed”. The hours land under respectable headings, and nothing in any ledger distinguishes the cost of thinking from the cost of forgetting. Second, reporting the tax requires knowing it was levied, and the person best placed to notice, the one re-deriving, is precisely the person who does not know the answer already existed. Nobody has ever filed the expense line “reached a conclusion the firm reached three years ago”, not out of embarrassment, but out of ignorance that it happened.

This is what separates the tax from its cousin, decision debt: debt at least announces itself eventually. The re-derivation tax is silent by construction.

One concrete example

Clearly illustrative, with no customer implied. A firm of a few hundred people bids for a piece of work strikingly similar to one it declined two years earlier. The earlier decline followed weeks of analysis: delivery economics at that client’s scale, a hidden transition cost, a contractual clause that shifted risk unacceptably. The conclusion was sound, the deck was filed, and the deck contains the recommendation but not the reasoning. Two years on, a new commercial team, seeing only an attractive logo and a filed “no” with no visible grounds, runs the full analysis again: the same weeks, more senior people, a deadline premium. They reach the same conclusion, minus one nuance about the transition cost that the original team had measured and this team could only estimate. The firm has now paid twice for one piece of knowledge, and the second copy is the worse of the two.

Estimating your exposure

No external benchmark can price this for you, and this entry will not invent one. But the exposure can be estimated honestly from the inside. List the decision types your firm faces repeatedly: pricing, bids, renewals, hires into key roles, make-or-buy, market entry. For each, ask the only question that matters: when this decision recurs, can the team in the room retrieve the full reasoning from last time (the evidence and its quality, the options considered and rejected, why the winner won), or only the conclusion? Then weigh each honest “only the conclusion” by how often the decision recurs and by the cost of the people who re-derive it. Even a handful of recurring decision types, re-derived a few times a year by senior people, is a standing cost most boards would refuse to approve if it ever arrived as an invoice. It never arrives as an invoice. That is the entire trick.

What keeping decisions does to it

The tax is not paid because people forget; people have always forgotten. It is paid because the organisation keeps no memory of its own, a gap examined in institutional memory. When decisions are kept as structured objects, with versioned facts carrying their quality state, the options priced, the choice recorded and the outcome scored, the arithmetic changes. A recurring decision stops being a derivation and becomes a review: open the prior decision, see exactly which facts have changed since, and spend the team’s judgement on the difference rather than on reconstructing the whole. That shift, reasoning from the firm’s own history instead of from zero, is the practical heart of Enterprise Decision Intelligence. The first thinking still costs what thinking costs. You just stop buying it twice.