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Past performance is no guarantee of future results

Lessons from the past may be the only available guide for navigating the present and future, but CEOs need to take them with a grain of salt.

By 1905, when philosopher George Santayana wrote, “Those who cannot remember the past are condemned to repeat it,” humans had already been gleaning lessons from history for several millennia. Around 800 BC, in the Iliad, Homer used the principal players in the Trojan War to explore leadership strategies and styles. Nearly a thousand years later, at the start of the second century AD, Plutarch compared the character traits of historical leaders in Lives of the Noble Greeks and Romans. And of course, we are still at it today. The business bookshelves are sagging with leadership and strategy lessons drawn from the lives of yesterday’s inventors, tycoons, generals, politicians, and other leading lights.

Sometimes these lessons feel like too much of a stretch — not only because they tend to idealize their subjects, but also because they elevate ad hoc responses into generic rules. How much credence, for instance, should a new CEO put in creating a “team of rivals” à la Abraham Lincoln? Or, to hold my own feet to the fire, how much faith should a leader in a battle for market share put in the “hit ’em where they ain’t” military strategy of Douglas MacArthur?

Ben Laker, professor of leadership at Henley Business School and dean of education at the National Centre for Leadership and Management in the U.K., points to current Prime Minister Boris Johnson, who wrote a book about another U.K. prime minister, The Churchill Factor: How One Man Made History, to illustrate the difficulties of applying lessons from the past. “The Prime Minister knows how Winston Churchill created a sense of connection through a ‘backs against the wall’ mentality in 1941. He is basing his rhetoric, decisions, and actions on Churchill’s example. And many people do feel more connected to him because of it,” Laker says. “But as Johnson’s critics observe, Brexit is not a war and a wartime mentality is at odds with a situation that requires openness and collaboration to reach a feasible outcome.”

Clearly, context is a critical factor in applying history. “You can look at the past and ask yourself whether you would do the same thing in the same situation,” Laker told me in recent conversation. “But the problem is you are not in the same situation. So, how relevant is history to your present situation?”

Martin Duberman, professor of history emeritus at Herbert Lehman College, offered a disarmingly frank answer to that question back in 1965 in an article in The Antioch Review. In describing the limitations of his profession, Duberman wrote, “Even when historical writing emphasizes that which is of maximum relevance, it cannot be more than a tentative guide for present action. The analogy can only be rough, the similarities approximate, but some information is preferable to none.”

Just before delivering his famous aphorism, Santayana wrote: “Progress, far from consisting in change, depends on retentiveness. When change is absolute there remains no being to improve and no direction is set for possible improvement: and when experience is not retained, as among savages, infancy is perpetual.”

The past may be our only means of understanding and improvement, but, as Duberman seems to relish admitting, it is “likely to be partial, faulty, and distorted.” So, given all this, how should leaders approach the lessons of history?

The past may be our only means of understanding and improvement, but it is “likely to be partial, faulty, and distorted.”

First, recognize the limitations of history as a guide to action. “It doesn’t matter if you are looking back to last week or last year or the last millennium, the world was a different place then,” Laker says. “Understand that you could be looking at actions that worked in another time, but might not in your time.”

Second, check sources and double-check assertations. Every historical lesson is filtered through our perceptions and the perceptions of others. As a result, it is hard to ascertain the facts of an incident and impossible to know the thinking of the leaders involved. This is especially true when it comes to memoirs and autobiographies — genres in which writers are notorious for rewriting history. A recent biography of P.T. Barnum draws heavily on the showman’s own, often revised memoirs. How much weight should we ascribe to lessons drawn from the stories of a man with such a prodigious talent for humbug?

Third, look for the differences in past and current situations, as well as their similarities. The leaders of platform-based digital businesses that enjoy large market shares are being threatened with the prospect of government-mandated breakups. What lessons should they take from the examples of John D. Rockefeller and Bill Gates? Both men fought government antitrust lawsuits with every means at their disposal. Rockefeller lost, and the value of Standard Oil skyrocketed after his giant company was broken up; Gates won, and Microsoft stayed intact. But the company’s value languished for many years, only to take off under the current leadership of Satya Nadella. For today’s leaders, the answer will depend on the nature of their companies, how their businesses produce value, and the current environment in which they operate, all of which are likely to be very different than those of Standard Oil and Microsoft.

In the first volume of his memoirs, White House Years (which was criticized for rewriting history), Henry Kissinger wrote, “History is not, of course, a cookbook offering pretested recipes. It teaches by analogy, not by maxims. It can illuminate the consequences of actions in comparable situations, yet each generation must discover for itself what situations are in fact comparable.” The same goes for CEOs.

Theodore Kinni
Ted Kinni

Theodore Kinni is a contributing editor of strategy+business. He also blogs at Reading, Writing re: Management.



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