How Knowledge of Business History Will Improve Your Business Now

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For many business leaders, few activities are quite as important as lifelong learning. As the most successful CEOs in the world will tell you, skill-building should not end simply because our school days are over, and a strong familiarity with business history is often an essential component of success at a time when the nature of business seems to be shifting into hyperdrive.

So why is a knowledge of business history so important? The reasons are many: For one thing, a knowledge of business history enables you to spot mistakes before you make them by seeing how other CEOs have responded to crises. Every leading business has made mistakes in its past, and seeing how those businesses have been affected by a decision is a profound way avoid the same error.

1. Those Who Ignore History are Condemned to Repeat It

Indeed, it is often said that those who ignore history are condemned to repeat it, and this is particularly true in the world of business. Looking to history, one can read in great detail about how even the mightiest companies have been laid low by a misjudged decision.

Just last year, for example, Tesla CEO Elon Musk came under fire for attacking his critics via the social media platform Twitter, calling into question his judgment and character. It was a mistake that Musk could have avoided simply by looking at the public relations effect that such attacks have had for other business leaders in the past.

2. Virtue and Vice in Business: Never the Twain Shall Meet

Take the example of the clothing manufacturer American Apparel, which went from being one of the most fashionable and profitable brands in the United States to failure in less than a decade because the company’s CEO Dov Charney seemed addicted to making controversial public decisions that irrevocably tarnished the brand’s image.

Charney’s mistake was to believe that his actions as a private citizen would not affect the American Apparel brand as a whole, when in fact his image directly influenced public perception of the company. To run a successful company, in other words, owners must earn a good reputation; when we let our character slide as leaders, we destroy the reputation of our companies.

3. Standing on the Shoulders of Giants

So why do businesses continue to make the same mistakes again and again? As human beings, we sometimes forget that we are just as liable to making the mistakes that have dogged businesses throughout history, and that we are also just as liable for the consequences of those mistakes. The same principle holds true when we are delegating leadership for company policy.

Who can forget the damage Apple Inc. inflicted on itself when its board voted to fire Steve Jobs from his own company in the 1980s, for example?

Jobs’s season in the wilderness eventually led him back to leading the Apple brand and brought about the company’s stunning return to form with the iMac, iPod, and iPhone, but it is now clear that company higher-ups saw themselves as immune from the consequences of terminating the position of its leading visionary. Indeed, Apple firing Steve Jobs was akin to a solar energy company firing the person who invented solar panels in order to succeed in the solar panel business. Nothing could have hurt the company more.

4. There is Nothing New Under the Sun

But perhaps the strongest reason for business leaders to spend time each week learning about business history is that there is truly nothing new under the sun in the corporate world. Most of the technological breakthroughs that society has benefited from in the last 50 years has simply been modified versions of pre-existing technology.

The iPhone revolutionized the smartphone industry, it’s true, but in large part Steve Jobs and his company were combining existing tech gadgetry (cell-phones, personal computers, and wi-fi capability) to make life easier for consumers. Jobs and co. understood business history and reframed old notions of marketing to create a landmark product, in other words.

So if businesses want to look into the future, they need to understand the past: Some of the greatest strides and most successful ideas in the private sphere have undoubtedly come through the streamlining of ideas that have been around for years.

For these reasons, striking the right balance between cutting-edge market research and an understanding the tried and true virtues elucidated by the history of business is a vital part of being a leader in today’s world. For true leadership, it is essential that we understand the past before we venture into the future. And that is business done right!