What Lessons Do CEOs Take From Historians?

19 01 2016


As readers of this blog will know, I’m interested in how history is used by businesspeople to make sense of the present.  People in all walks of life use history, especially historical analogies, to understand what they see.  As Paul Ricoeur correctly argued,  ideas about history play an important role in how  people understand the present and strategies for the future.  They are a core part of human cognition.

Within management and organisation studies, increasing attention is now being paid to how history is used by economic actors. As a result, we’ve recently seen lots of great research on topics such as how companies create “usable pasts,” how incorrect historical analogies contributed to the 2008 financial crisis, and how history is used to sell products. However, I’ve noticed that we haven’t yet seen much research on how the decision-makers at the very apex of organisations think about history and apply historical reasoning to the managerial problems. The one exception to this generalization is an important 2013 paper by Kroeze and Keulen, which was based on interviews with Dutch C-Suite executives.

Management scholars can learn a great deal from political scientists, who have long debated the importance of historical-analogic reasoning in the thinking of high-ranking political leaders. For instance, Khong (1992) documented the widespread use of the analogy with Neville Chamberlain’s appeasement of Hitler in the discussions in the White House that led the United States to escalate the Vietnam War in 1965. Khong showed that President Lyndon Johnson and his advisors viewed the Vietnam conflict through the lens of a historical analogy with appeasement in the 1930s. The use of this analogy, which was probably a misleading one, caused Johnson to escalate the US involvement in Vietnam.  The key point here is that historical ideas, both when they are right and when they are wrong, can have a major influence over decisions. I suppose the chief barrier in applying Khong’s research methodology to understand the historical ideas of decision-makers in the private sector is access to raw data: unlike US Presidents, who communicate their historical ideas in a vast number of texts that became available to researchers either immediately or eventually, CEOs are typically pretty guarded with their thoughts. CEOs generate less public-domain source material for us to work with.

The reading habits of executives provide us with some insights into their historical ideas.  A few weeks ago Bloomberg published a very interesting article the dealt with the reading habits of some of the most powerful decision-makers in the world. Fifty key decision-makers, most of whom were in the private sector, were asked which 2015 books they would recommend.  The 50 contributors included “former U.S. Treasury secretaries Lawrence Summers and John Snow, Israeli Prime Minister Benjamin Netanyahu, HSBC Chief Executive Officer Stuart Gulliver, Ellevate Network Chair Sallie Krawcheck, and hedge fund titan Jim Chanos.”

The book that appeared most frequently on their reading lists was Ben Bernanke’s The Courage to Act, which is essentially a memoir of the 2008 financial crisis. That’s not surprising at all, especially since some of the Bloomberg 50 were mentioned in Bernanke’s book. Superforecasting: The Art and Science of Prediction by Philip E. Tetlock and Dan Gardner was another popular book among these titans of business.  However,  I was struck by the number of historical works that had been read by CEOs in 2015. For instance, both of the book recommended by Dominic Barton, the global managing director of McKinsey, were by historians: History’s People: Personalities and the Past by Margaret MacMillan and The Silk Roads by Peter Frankopan. James Chanos, the founder of  Kynikos Associates, said that Professor Valerie Hansen’s The Silk Road: A New History had inspired him to read another history book, William Manchester’s A World Lit Only by Fire. Stuart Gulliver, the CEO of HSBC, recommended Hiroshima Nagasaki: The Real Story of the Atomic Bombings and Their Aftermath by Paul Ham.

Many of these business professionals said that these works by historians offered important lessons for the present. For instance, Abby Joseph Cohen, an investment strategist at Goldman Sachs said that Stacy Schiff’s book on the Salem Witch Trial is “a 17th century lesson for today.” In addition to these explicitly historical books were a number of books that had a lot of historical content in them, most obviously the economist John Kay’s Other People’s Money: The Real Business of Finance.

I haven’t had time to systematically read through all of the historical books on the list to see what sort take-home lessons, implicit or explicit, are communicated by the authors. Given the variety of ongoing research projects and other commitments I have right now, I just wouldn’t be able to analyse these texts properly.  However, it occurs to me that this might be a worthwhile research project for someone else who shares my interest in how historical idea shape business.  Ideally, the work of researching and writing up a paper on this topic would be a team effort. What I would be most interested in knowing is:

  1. Two of the history books on this list deal with the famous Silk Road trade route. What do these historical works suggest about the future relationship between China and the West? Would these historical narratives encourage a reader to adopt a relatively optimistic view of the future or would they push the reader towards believing that the US and China are doomed to fall into the Thucydides’s Trap?
  2. What, if anything, do these books say about the ability of humans in the past to respond to environmental change?
  3. Do these works of history present a Whiggish metanarrative of progress (Francis Fukuyama style) or do they present cyclical conceptions of historical time in which civilizations periodically regress into barbarism? Personally, I would want my money to be managed by a mutual fund manager who is guardedly optimistic about the future.

Kroeze, R., & Keulen, S. (2013). Leading a multinational is history in practice: The use of invented traditions and narratives at AkzoNobel, Shell, Philips and ABN AMRO. Business history55(8), 1265-1287.




4 responses

19 01 2016
Jonathan Weisman (@JJWeisman)

It’s an interesting question, Andrew, but you may be leaning too heavily on a commonly-used piece of glibness: “history offers important lessons for today”. Few people would disagree (thought it might be fun to try) with that, but it leaps readily to the tongue.

22 01 2016

You are right that glib statements about “learning the lessons of history” obscure almost as much as they illuminate. It reminds me of people who say “the data speak for themselves.” History, like raw data, is basically silent and it is up to interpreters, in this case, historians, to spell out the lessons.

25 01 2016
Jonathan Weisman (@JJWeisman)

I wonder, as an alternative explanation, to what extent these readings might be a combination of convenience and egotism. When an issue becomes current, a historian specializing in the past of that issue is readier to publish than would be an analyst of contemporary trends (I hope). Thus the market might rapidly be better-supplied with higher-quality history books on, for example, inequality, than it would be supplied with higher-quality works on the causes of/solutions for today’s inequality, At the same time, readers with little or no background on the issue may prefer to review history rather than current analysis. History makes them knowledgeable with a supply of safe anecdotes (can’t change what’s happened now), without indebting themselves to any particular analyst or way of thinking.
Do historians have a first-mover advantage in any such situation?
All cynicism aside, I’m glad you’re out there spelling things out.

31 01 2016

Hi JW, You are indeed right that history, or rather than a smattering of historical anecdotes. may make a CEO feel knowledgeable. Works by historians tend to be rich in data bu to lack a strong theoretical or ideological frame, which means that one can always find some facts that fits one’s preferred narrative in a historical book.

Re your question about whether historians have a first-mover advantage in any such situation. In theory, they do. However, I find that historians are less agile than academics in other disciplines in making non-academics aware of their research and its implications. It’s a marketing failure, in part.

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