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Opinion

Your Company's History as a Leadership Tool

By George Smith, Professor of Economics and Academic Director of the Langone Program, and John T. Seaman, Jr.

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A sophisticated understanding of the past is one of the most powerful tools we have for shaping the future.

“There’s no need to dwell on the past; what matters is the future.” As business historians who consult frequently to companies, we hear some version of this sentiment all the time from executives. When the history of an organization does come up, it’s usually in connection with an anniversary—just part of the “balloons and fireworks,” as one business leader we know characterized his company’s bicentennial celebration (knowing that the investment of time and money would have little staying power). This is not to say that celebrations are unimportant, and we sympathize with managers’ day-to-day need to focus on the steps ahead. A fast-changing world leaves little time for nostalgia and irrelevant details—or, worse, strategies for winning the last war.

We also know, however, that leaders with no patience for history are missing a vital truth: A sophisticated understanding of the past is one of the most powerful tools we have for shaping the future. Consider how Kraft Foods managed its 2010 integration of the British confectioner Cadbury. Cadbury’s management had mounted fierce resistance to the acquisition, and many of its 45,000 employees feared the loss of their values and an end to the product quality for which the company was known. As the clash of cultures was picked up by the business press, many observers predicted that this would prove to be yet another value-destroying deal, a nightmare of postmerger failure to integrate.

To help smooth the process, senior executives turned to Kraft’s long-established archives. Company archivists quickly launched an intranet site, titled “Coming Together,” that honored the parallel paths Kraft and Cadbury had taken. Poring over historical materials, they had found much evidence of shared values, and the presentation reinforced those common themes. For instance, the founders, James L. Kraft and John Cadbury, were both religious men whose faith had deeply influenced their business dealings. Both had demonstrated a commitment to creating quality products for their customers. Both valued their employees at a time when workers were often seen as a commodity, and both believed in giving back to their communities. In addition to the founders’ stories, the intranet site included interactive time lines, iconic advertising images, brief documentary videos, and dozens of detailed histories of brands such as Oreo cookies, Maxwell House coffee, Ritz crackers, and now Cadbury chocolate and Halls candies—all designed to show how leading Kraft and Cadbury brands had come to sit side by side on grocers’ shelves. The ultimate illustration, titled “Growing Together,” traced Kraft’s previous mergers as well as the one with Cadbury. Its clever road map motif implied continued forward motion as a stronger, united company. The same narrative took hold in other communications, from CEO speeches to press releases, and in employee training sessions. Kraft ended up integrating Cadbury more smoothly than any of its previous acquisitions.

That very deliberate use of the company histories to ease anxiety was masterly, but the story only begins to explain how a company can utilize its past. The job of leaders, most would agree, is to inspire collective efforts and devise smart strategies for the future. History can be profitably employed on both fronts. As a leader strives to get people working together productively, communicating the history of the enterprise can instill a sense of identity and purpose and suggest the goals that will resonate. In its most familiar form, as a narrative about the past, history is a rich explanatory tool with which executives can make a case for change and motivate people to overcome challenges. Taken to a higher level, it also serves as a potent problem-solving tool, one that offers pragmatic insights, valid generalizations, and meaningful perspectives—a way through management fads and the noise of the moment to what really matters. For a leader, then, the challenge is to find in an organization’s history its usable past.

Read full article as published in Harvard Business Review