The Past

A lot of people may think that I live in the past because of all the references that I make to it. I read business books that are hundreds of years old because I have decided that almost all new business books and articles are a recycled version of the classics with some modern jargon thrown in to make it seem fresh and contemporary. I compare present generational norms and business performance to the past because they are good benchmarks and yardsticks for what has been done as compared to what is now being done. Those comparisons do not always favor the past generations or business performance. I am eminently aware of the past because without knowledge of the past how would we know what direction we are going? I am definitely aware of the past but I definitely don’t live in the past.

It’s time to get a little esoteric, but why not? George Santayana, the twentieth century philosopher, poet and essayist wrote is his book “The Life of Reason”, (1905):

“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. Those who cannot remember the past are condemned to repeat it.”

Many think that Winston Churchill was the author of the famous quote “Those that fail to learn from history are doomed to repeat it”, but he was in fact paraphrasing Santayana. This is just a small literary nugget for your historical learning pleasure.

The key point here is that the retention of what we have learned is the key to progress. This would logically mean that the future is built upon the past. Go figure. It takes a visionary to be able to interpret what was and extrapolate to what’s next. Just as Sony took the leap from portable transistor radios to portable cassette players (the then ubiquitous, and now all but forgotten Sony Walkman – ranked as one of the top TWO technical inventions of the last fifty years), Steve Jobs and Apple took the next leap along the same path with the now ubiquitous iPod (which ranks number THREE behind the Walkman). Contrary to popular belief these products did not materialize out of thin air. They had their roots in the past.

Conversely, there is the ubiquitous financial caveat contained in every investment prospectus that I have ever read, that states very clearly:

“Past results are not a guarantee of future performance”

In business as in sports we always keep score. That is how you tell who is successful and who is not. A very good example of this is the batting averages of baseball players. While the player’s batting average is not a guarantee of the performance of any individual at bat, it does give an indication about what you might expect from that player over time. There are always hitting streaks and slumps that must be factored in, but in general past results are a reasonable predictor, not guarantee, of each player’s future batting performance.

This fact may also be demonstrated in the Walkman – iPod comparison as well. The Walkman was indeed a game changer in the market, but not anymore. The iPod has supplanted it – but it was not until after twenty years had passed where the Walkman was dominant that the iPod was introduced, and even then it took a few years.

The same concept would logically be analogous to business. Understanding past business performance allows you to understand what worked well and what didn’t. Just like knowing individual batting averages or team won-loss records may give you an insight into how they may do for the rest of the season (although no guarantee), in business we like to know who has been profitable, how profitable they have been and how long they have been profitable. It doesn’t mean that they will continue to perform the same way that they have done successfully in the past, and it doesn’t mean that they will have to change everything if they were not successfully done in the past, but it is a good indicator (not a guarantee). There are hopefully always ways to do good things better and ways to improve on failures without starting changing everything and in effect starting anew, or returning to the “infancy” that Santayana mentions. There is that retention of the past thing again.

Staying with my esoteric bent I am going to go a little further into the past. Heraclitus, the fifth century B.C. Greek philosopher said:

“Nothing endures but change.”

This statement has been quoted and paraphrased by everyone from Plato to Diogenes to the latest business management books de jour . We like to all say that the only constant is change. The concept comes from three thousand years in the past, but still seems reasonably applicable today.

However, staying focused on your past is like trying to drive a car forward by looking in the rearview mirror. I don’t know who said this one, and it didn’t seem to be so valuable a quote to spend the time looking it up. Even so, it is reasonably accurate. But you do need to have some idea of where you have been if you are to successfully get to where you want to go. The past is where you were, the present is where you are and the future is always a goal.

So enough already with the philosophy and esoteric. What has this got to do with business?

The past is no guarantor of the future, and we know things are going to change. Knowing the past allows us to understand what the business has done right and what it needs to improve. Even the most disruptive of market forces take time to take effect. Walkmans replacing radios, iPods in turn replacing Walkmans, CDs replacing LPs, digital replacing analog technologies or even automobiles replacing horses for transportation did not happen overnight.

It takes people who understand the past and the trends and directions that it has imparted on the present to make sense of and deal with the present. It is the visionary who understands the past and the trajectory that it has put us on, that can take the next leap and either extend or modify this trajectory as is called for in business to realize the future. The past is useful in that it tells us where we have been in comparison to where we are. It is also a necessity if we are to recognize what we must change and what we should retain to get to the future. You can’t live in the past but you need to be aware of and understand the past if you are to make it to the future.

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