Twentieth Century Fox



From Iraq to Mars and Construction to Insurance: Leadership and the Importance of History

Humankind’s destiny to inhabit the Moon, Mars, and beyond appears increasingly manifest. Historians can help, and not just by explaining the concept of “manifest destiny” slipped into the opening sentence. Space colonists will face many of the same communication delays and supply challenges confronted by European colonists in the New World. Expeditions may be funded, in whole or part, by private enterprise, much as many early earthly colonies were.

Space colonists may bless the new “Old World” with cheap, abundant resources but they may also inadvertently spread contagion or introduce invasive alien species. Earthlings will want to exert control but sooner or later Moon people and Martians will seek independence. Today, engineers and rocket scientists work diligently to create the physical means of travel, much as innovative shipbuilders did in the fifteenth century, but will business and policy leaders be prepared for interplanetary and eventually interstellar space travel? Probably not, unless they deeply understand the long human history of exploration and colonization.

The notion that understanding the past is requisite to understanding the future will strike some readers as odd. For too many, history is just a dull litany of useless, chronologically-arranged “facts” or a vehicle for espousing views from the extreme left or right of the political spectrum. Properly understood, history is analytical storytelling that, when done well, becomes a form of fortunetelling. The best history is not “one damn thing after another” but rather an exploration of change over time, of the causes and effects of human action and interaction in specific contexts.

In other words, good histories relate what happened and when but also why it happened and what it led to. Leaders who read good, analytical histories expand their reservoir of experience far beyond what they could personally live through and thereby become wise beyond their years.

Although many leaders pay lip service to history by repeating one or more of the many clichés that warn that those who do not understand history are bound to repeat it, too few systematically study the past. I refer not to skimming the nth biography of Thomas Jefferson or Abraham Lincoln for leadership tips, I am talking about deeply studying the history of specific subjects germane to the important decisions they must make. Few financial and regulatory leaders, for example, bothered to investigate the claim, common before the crisis of 2008,that “real estate prices always go up.” Financial historians, however, knew otherwise. They also knew that mortgage securitization schemes had failed on at least six previous occasions, all before World War II and hence not in the memory of active leaders.

Like all other tools, history can be misused and even abused. When well done, however, history is an empirical discipline. While subtle interpretations of the past cannot be readily replicated the way lab results can be, good history is not just a bunch of opinions. Even when not readily quantifiable, historical claims can be assessed by third parties and proclaimed more or less solid or utter bunk. Not many history articles and books are critiqued as fully and carefully as Michael Bellesiles’ largely discredited Arming America (2000) was, but reviews in reputable journals will usually separate reliable studies from hack jobs.

When published studies on specific areas of interest are not available, leaders of business and policy ought to hire historians to investigate them, independently of course. For example, I was once charged with ascertaining why a certain mutual life insurer was sometimes less successful than at other times and concluded that it did better when its leaders paid increased attention to the concerns of its field force (salespersons). In another historical consulting role, I was able to determine that most U.S. construction companies remain small because they compete on their ability to make “change orders” stick, i.e., to charge owners higher than the contract price, rather than on price and quality. Few leaders, however, hire historians for “outside of the box” analyses and strategies, preferring instead to contract with standard, generally ahistorical business and policy consultants adept at, if nothing else, discerning what leaders want to hear.

Of course not every historian wants to ply his or her craft in ways obviously relevant to current business or policy questions. Some even deride such attempts as “presentism” and argue that it “distorts” the past. The truth is, though, that everything that happened in the past is, in some way or another, related to the present. And vice versa. After all, past, present, and future constitute a seamless streaming web of cause and effect.

Good historians learn that the present is never exactly the same as the past so potential causal variables must be identified, quantified, and, if possible, isolated via comparative history, natural experiments, and careful attention to change over time. As tentative hypotheses begin to form, counterexamples must be sought with alacrity and diligence and views modified to fit the evidence. What results from that iterative process, that back and forth with the past, is not “fact,” but a plausible hypothesis that leaders should consider when making decisions, especially important ones.

Consider, for example, the Bush administration’s decision to invade Iraq in 2003. Proponents of the invasion noted that after World War II the United States had created thriving democracies in occupied West Germany and Japan. That other than the U.S. occupation forces helped spur those postwar “miracles” were, however, not seriously considered, and the details of actual occupation policies were left unexplored. Moreover, the Union’s ill-fated attempt to democratize the former Confederate states was almost completely ignored. Also generally ignored were earlier attempts by British and other colonial powers to bring democracy and prosperity to the Middle East. So a reasonable pre-invasion hypothesis would have been that America’s ability to democratize occupied Iraq was much less certain than the almost assured success of the initial invasion.

Even the best history is not a panacea and sometimes leaders stumble into effective decisions without historical support. Great leaders, however, will use history whenever possible to help them make better decisions and avoid costly blunders.