As someone who has studied and analyzed histories of many companies over the past 25 years, I want to praise the article in the December 2012 issue of Harvard Business Review “History as a Leadership Tool” by John T. Seaman and George David Smith. In my work, I analyze and interpret business history, to identify and understand why companies succeed or fail. But, unlike the authors of the Harvard article, I have no involvement with archival services. My emphasis is on research, analysis and identifying patterns.
I find that business history offers many lessons. Paying attention to these lessons can pave the way to business success. And, I fully agree with the Harvard article’s opening position that too many in business think “there’s no need to dwell on the past” when, in fact, the past offers valuable lessons.
The Harvard article talks a great deal about history’s ties to a company’s culture. This is certainly a valuable use of historical information and it provides much needed input to strategy development. Based heavily upon what I found in historical information, I have written about the importance of corporate culture in strategy. On this topic, I wrote my July 2010 newsletter, and a related article in the winter 2010-2011 issue of the American Management Association publication MWorld.
But, based upon my experience, I think a really key point in the Harvard article is the subhead “Looking Back to Plan Forward.” I find that historical perspectives provide numerous insights into the direction companies should take. So, how companies evaluate and learn from history can strongly influence their level of success. That’s why reports, newsletter articles, and blog posts on this Winning Moves® web site offer insights derived from historical perspectives. Looking back is a valuable way to understand many facets of what worked, what didn’t and why. Companies need to pay attention to what history teaches about these issues. Doing so equips companies to plan for the future, especially when addressing major, possibly transformational, change.
Another key point from the Harvard article is the importance of history when making business decisions. Regarding that topic, I especially like the Harvard article’s example of how Alcoa came to recognize the importance of funding R&D. I, myself, would describe this as history showing Alcoa the dangers of matching costs with revenues, which is essentially what companies are doing when they cut R&D that is not specifically related to revenue generation. Based upon what I find, history suggests that matching costs with revenues without understanding the broader implications of the role those costs play can be a mistake.
In summary, I encourage all leaders to pay attention to history. History teaches valuable lessons for future success.
