As the pace of technological and corporate change accelerates, one thing stays the same: the past. And when you're strategising your company's future, that's an excellent place to start.
Organic companies learn from history. They know who they are, where they've been and what successes and failures they've met with along the way. This story will show: How companies can profit from studying their history Why history lessons are relevant to new ventures What CIOs can do to preserve and leverage their company's history Motorola Inc. pioneered television manufacturing in the 1940s. By the late 1950s, when more than half of all U.S. households owned at least one set, TV sales accounted for a major portion of the Schaumburg, Ill., manufacturer's revenue.
But by the mid-60s, Motorola's then-president Bob Galvin, son of company founder Paul Galvin, could see that the television marketplace was saturated, demand was levelling off and Japanese competitors were increasingly dominating the business. No question, Motorola's TV business was still profitable, but Galvin could foresee a day when that might no longer be the case. It was, he thought, time to explore new markets.
In the 1970s, Motorola shipped its last TV. In fact, it walked away from the consumer electronics business entirely. The company's resources were redeployed to develop new, high-tech commercial, industrial and government products ranging from cellular telephones to space satellites, which fuelled Motorola's global expansion in the '80s and '90s.
Today at Motorola, TV manufacturing is history. But the lessons learned from that experience continue to be drilled into the heads of new recruits at the company's Motorola University training facility. What's the lesson? Continual renewal. This recurring theme in the company's history is now a core value. Today's senior executives want succeeding generations to understand that Motorola's history teaches that sometimes the critical decision is not when to get into a market but when to get out.
The television story is just one example of how Motorola leverages its history to inculcate its core values in its new employees, and Motorola is but one of many businesses to have discovered the value of preserving and teaching their business histories. By maintaining archives, establishing museums and compiling corporate histories, executives find not just that they can share lessons learned from the past but that they can profit by using history to Market the brand.
Walk into Levi Strauss & Co. headquarters in San Francisco and the first thing you see is a wall display of jeans, past and present. When it comes to boasting of its history, Levi Strauss is like a grandmother with baby pictures. And if customers can't trust grandma, who can they trust? Transfer knowledge.
Today, business is like baseball: Loyalty to the team is out; free agency is in. To bring newcomers up to speed on core values and past experiences, to teach them what has worked and what hasn't, Wells Fargo & Co., the San Francisco bank that started out as a stagecoach company in 1852, teaches its corporate history to each new employee.
Avoid past mistakes.
Companies like Motorola preserve and present the historic details of specific projects or business ventures, such as television manufacturing, so today's employees can apply the lessons learned in today's - and tomorrow's - ventures.
At Motorola, this corporate history is preserved by a full - time staff of six, which maintains both a museum and archives. The museum, opened to the public in 1991, offers exhibits and time lines of Motorola's diverse products.
The archives, available mainly to Motorola executives and researchers, include business documents, annual reports, employee communications and product information used regularly by today's execs for marketing, patent protection and - most important - to educate new employees.
"We really don't maintain this material for sentimental reasons," says Sharon Darling, director of the Motorola Museum of Electronics. "We're in the competitive high -tech business. Turnover is swift; memories are short. This information needs to be shared on an ongoing basis with the people we bring in.
They need to know about how we value creativity, our ability to shift focus from one business to another. They need to see the consistent themes. They need to know what other people did before them, and why they did it." Still, devoting corporate resources to historic preservation can be a tough sell to business executives who think vision is what they imagine they can see down the road. "The word 'history' carries a lot of baggage," says George Roth, a researcher at MIT's Centre for Organisational Learning and cofounder of Reflection Learning Associates, a Cambridge, Mass. - based consultancy that writes business histories for companies. "Businesspeople are so action -oriented," says Roth, "that reflection and learning often aren't valued.
Performance is all that's valued."
To counter sceptics, many historians cite the well - travelled George Santayana quote, "Those who cannot remember the past are condemned to repeat it." But Philip Cantelon, president and CEO of History Associates Inc., a Rockville, Md., consultancy, has a different spin on the old line. Once, while preparing a presentation on business history, Cantelon found that his secretary had made a typo transcribing the quote. Instead of "repeat," she typed "repent." Cantelon began to correct the error but then stopped. "I liked the word repent," he said. "It's only one letter different, but it makes a world of difference in meaning." Cantelon ran with "repent," and he's been running with it ever since. It's now the key point he tries to hammer home: If you don't heed the lessons of your corporate past, then you surely will pay the price in the future. If you have a future.
HUDSON'S BAY CO. - A Return to Roots
If history teaches us anything, it's that prices rise, empires fall and enterprises tend to be short - lived. In fact, in a recent study of long - lived companies and what makes them tick, Arie de Geus, author of The Living Company (see "Recommended Reading", sets the average corporate life span at less than 50 years. But the companies that do beat the odds - the DuPonts and the General Electrics - share both an appreciation of their legacies and a willingness to change with the times. The two are not incompatible. Indeed, the history of long - lived companies is almost always a story of change. These industrial Methuselahs bind themselves to their sense of corporate identity but not to the way they've always done things.
Yet sometimes even the longest - lived companies don't fully appreciate their legacy until they stray from it. Such was the case with Canada's Hudson's Bay Co.
Established in 1670 by a royal charter from England's King Charles II, Hudson's Bay Co. (HBC) began as a fur - trading operation near Canada's northeastern inland sea. Over the next two centuries, HBC became an integral part of North American history, leading exploration and settlement of Canada's vast western provinces. The company also became world renowned for its fur trade and its famous HBC Point Blankets, the ones with the colourful stripes on the ends.
Yet in the early - to mid - 20th century, HBC moved away from its past. As the company grew to become Canada's largest retail outfit, it gobbled up such large Canadian competitors as Zellers and Simpsons and expanded into new businesses, including real estate and oil. But then came the recession of 1981, forcing HBC to divest unprofitable assets. Among the casualties was its Northern Stores Division with its historic ties to a fur trade that had become increasingly unpopular in an era of heightened sensitivity to animal rights.
At that point, says Judith Hudson Beattie (no relation to Henry Hudson), keeper of the HBC archives, executives lost touch with the company's history.
"It was very hard to get [HBC executives] to pay much attention to our archives," Beattie says. "I think they thought the history made them look dated." What they didn't understand, of course, was that the archives were one of HBC's greatest assets. Originally amassed in England in the 1920s for a 250th anniversary book that never materialised, the HBC archives consist of photographs, maps, drawings and other documents dating back to the 1600s. In 1994 HBC donated both the archives and a Winnipeg - based HBC museum to the province of Manitoba. Today the archives, appraised at $60 million, are managed by a full - time staff of 13 and consist of roughly 11,000 maps and drawings, 5,000 books and pamphlets, 150,000 photographs, 800 works of art and a mile and a half of business records.
In recent years, Beattie says, HBC executives have learned to look to their past. And as the company has returned to its roots, so has it returned to prosperity. In its most recent earnings report, HBC claimed nearly a 10 percent growth in sales and revenues over the same period in 1997, purchasing Kmart Canada along the way.
The company's aversion to history is history. Historic images now appear in advertisements. A large portion of HBC's Web site (www.hbc.com) is devoted to detailing HBC's past - the high points and the low. HBC executives also have taken new steps to contribute to the archives, Judith Beattie says. Earlier this year, the company hired its first records manager to supply the archives with new and important documents. "It had been very difficult previously to get a steady flow of documents from the company," Beattie says. "We had better records for the 1880s than we did for the 1980s." In November HBC brought its legacy to market with the opening of its first Outfitters store - a retail outlet that sells clothing, equipment and collectibles that represent HBC's heritage. The store, featuring indoor waterfalls and working fireplaces, evokes Canada's frontier past. In announcing the opening of the Outfitters store, HBC CEO Bill Fields paid more than passing tribute to the 328 - year - old company's legacy. "Many retailers have opened stores, but only one has opened a country," Fields said in his announcement.
"While Hudson Bay Co. Outfitters is inspired by our past, it is driven by the future..." - and the realisation that yesterday is HBC's most valuable commodity.
AIRTOUCH - Keeping in Touch
Even a startup - a company without a storied past - can benefit from tracking its own history -in -the - making. By recording key decisions and capturing pivotal events as they occur, these businesses can show investors, customers and succeeding generations just what opportunity their founders saw, what niche they filled and what opposition they encountered.
AirTouch Communications Inc., a San Francisco -based wireless communications provider, doesn't have a lot of history, but it sure profits from what it does have.
The company began 14 years ago as a unit of telecommunications giant Pacific Telesis, which, on the eve of the 1984 Los Angeles Olympic Games, foresaw a market for cellular telephones. Beginning with a core market of several thousand customers in greater Los Angeles, AirTouch has grown into a veritable giant, offering cellular telephone, paging and other personal communications services to millions of customers worldwide.
AirTouch evolved into a publicly traded business (it spun off from PacTel in 1994), employing thousands of people around the world. And in a company where the age of the average employee is 32, AirTouch executives use the company's short history to demonstrate to newcomers just how quickly a young business can take advantage of emerging opportunities. This approach is in line with founder/CEO Sam Ginn's stated objective to differentiate AirTouch from AT&T and other telecom giants. "We want to position ourselves as the open, friendly, easy - to -do -business - with, young and aggressive [company]," Ginn recently told The Atlanta Journal and Constitution. "You call AirTouch, they respond." Tracey Panek, a trained historian previously employed by the California State Archives, is AirTouch's corporate archivist. She was hired in 1995 by Ginn, who always envisioned AirTouch as a company whose story people would want to hear. "He saw that AirTouch as a company was going somewhere and that the history needs to be captured and shared [with new employees and customers]," Panek says.
So far, Panek has amassed a 2,000 - entry archival database accessible to employees, and she regularly collects key documents and memorabilia from AirTouch executives to add to the collection. Panek's archival work was shared companywide in 1997 at a "Vision, Mission and Value Summit" in which employees came together to plot company strategy. A historic exhibit was put together showing a time line of key events in AirTouch history. "This display was used as an integral part of making decisions about where we wanted to go," says Panek. "People really liked to focus on the developments and accomplishments of the company. It helped them realise that the company didn't start where it is today." Air Touch also created a special documentary video, Made in California, to educate new employees about the company. Jonathan Marshall, a new recruit who joined AirTouch's public relations staff earlier this year, says the video helped him develop a sense of the company's identity and mission. "It gives a sense of rootedness, which can be quite important," Marshall says. "For a company that wants to attract and retain employees in a competitive market, giving them a sense of rootedness does create an advantage." One of the highlights of the film, Marshall says, is 30 -year -old footage of an AT&T lineman, reminding everyone that that was once Sam Ginn. "For people used to seeing Sam Ginn as this distinguished corporate CEO, this film gives them a sense of the different qualities he brings to bear as CEO today," Marshall says. And underlying this image, of course, is the message that those who toil on the front lines today may be sitting in the boardroom tomorrow.
Made in California has aired on CNBC and on United Airlines flights, helping AirTouch develop brand recognition with potential customers and employees. "It distinguishes us," Tracey Panek says of the film. "It shows we do have a vision of the future, but we also understand the history that brought us here." The CIO's Opportunity The Information Age has thrown Motorola's historians for a loop.
In the old days, archivists had memos and correspondence. But those days are gone. "There are no memos, no correspondence anymore," Sharon Darling says.
"People don't even write letters anymore. We're faced with the challenge of documenting a digital world." Motorola's historians haven't yet figured out how to overcome that obstacle, but Darling is hopeful that the company's newly appointed corporate CIO, Leslie Shroyer, will help the company come up with a solution.
To this point, few if any CIOs anywhere have concerned themselves with business history. The task - if performed at all - has been relegated to corporate archivists or to outside consultants. But as key business decisions increasingly are made and communicated electronically, the CIO can play a powerful role in how future business histories are written and leveraged.
"The CIO role is the crucial role in the corporation," according to Phil Cantelon of History Associates. "No one else knows how to store and gain access to the new electronic records that are so critical to understanding the operations, administration and policies of a corporation." At Motorola, for instance, archivist Mary Edith Arnold is trying to digitise the company's archives so that select information can be "pushed" onto the desktops of employees who might benefit from the knowledge. But to succeed, Arnold needs IS help to develop a system that will send the right information to the right people.
If CIOs rise to the challenge, they can become what Cantelon calls the "keepers of corporate history," providing valuable data and decision support for their colleagues. If they back away from the task, then it's back to Santayana. Except that companies might not just "repeat" or "repent" if they fail to learn from history; they just might become history.
FOUR EASY STEPS FOR TACKLING BUSINESS HISTORY- Be prepared.
Business history isn't just an antiquarian exercise; it requires as much strategy and tactics as any business move. First, determine what elements of its history are important to your business. Otherwise, you're on a fishing expedition - and a doomed one at that.
- Be thorough
. Records management is the key to successful archiving. Start with your company's annual reports, which account for the major year - to - year decisions. Then ensure access to whatever documents detail key hirings, acquisitions and decisions.
- Be professional.
This isn't a job for amateurs. True archival research is as much science as art, and it requires training and experience to do it right. If you don't have the skills on staff, outsource the work.
- Be accessible.
History isn't any good if it's kept a secret. To maximise the benefits you gain from your company's legacy, establish either a physical or a digital archives centre that executives can search. Also, put together exhibits that show how past projects succeeded or failed. Don't assume that people will draw these conclusions by themselves.
Senior Writer Tom Field can be reached at email@example.com.
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