Why Should We Study Business History?

Great scientists learn from and build upon what has gone before them. Similarly, attorneys make their careers by studying precedent and the legal cases of the past. Military leaders still study Clausewitz and Sun Tzu. Religious leaders immerse themselves in texts that are millennia old. Learning from the great thinkers, leaders and innovators of the past—from their mindsets, successes and failures—inspires and informs human activity.

The primary activity in the United States is business. Yet no MBA program in any American graduate school of business requires a course in business history. Few outside of Harvard and Wharton even offer such courses. No college textbook on business history has been published since the 1990s. Businesspeople read all the latest books, studying the management fads of the day, but few look back to learn from history.

I believe this oversight is costly to our society. It’s not hard to imagine that learning from the past, not repeating its mistakes, and gaining new insights from our rich business history would increase “business intelligence”—and thus our economy—by at least 0.01%. That would be over $2 billion a year. I think it’s likely that the potential gain is far greater.

What Can We Learn from Business History?

Consider some examples of how the leaders and managers of the present and the future might learn from the past. Technology leaders must decide whether to focus their time, energy and resources on the desires of Wall Street, the design of their products, the dreams of engineers, patent fights or the needs of their employees. Yet all of those issues were confronted between 1910 and 1940 by the heads of the Big Three automakers, Henry Ford, Walter Chrysler and Alfred Sloan, the man most responsible for the success of General Motors (and an inspiration to Bill Gates). What can we learn from those decisions and their outcomes?

Those same technology leaders often stumble when it comes to marketing and branding, viewing Apple’s marketing prowess with envy. Have they studied the man who might be the greatest technology entrepreneur in American history, George Eastman? Have they seen the pattern that connects Steve Jobs’ methods to IBM, which got many of its ideas from National Cash Register founder John Patterson? Today Apple leads the nation in consumer electronics. Might their leaders learn something from studying how RCA, which once held a similar position, fell from its lofty status?

Elon Musk and others race into space and take on other humongous projects. Have they learned the lessons of Henry Kaiser, who helped build Hoover Dam, broke records building ships for the Navy, tried to launch a car company, and led in the development of Hawaii as a tourist destination?

Today, everyone wrestles with the “right way” to treat and compensate employees. Have they considered giving away a big chunk of the ownership of their company, as Julius Rosenwald of Sears, Roebuck and Co. did? Or make everyone a partner, as did James Cash Penney?

Amazon continues to seek success in bricks-and-mortar retailing, yet has anyone there read the story of Robert Wood, who transformed Sears, Roebuck and Co. from the largest mail order retailer to the largest bricks-and-mortar general merchandise retailer in the world in less than a decade?

Founders of startups closely read the latest books on lean methods and a hundred other current ideas. What might they learn from Jim Casey, who began with a $100 loan as a teenager and proceeded to spend his entire life creating and building UPS?

If your company is drowning in debt and the financiers take the company away from you, how do you react? Can you learn something about saving your company by studying Conrad Hilton? Can a family-owned business start small but grow and prosper without raising money on the public stock markets? See how Bissell, Carhartt and others have made it happen.

Often startups are competing with existing giants that dominate the industry. Coming up against corporate behemoths, it’s easy to get discouraged. Might they be inspired by how Adolph Zukor took on the Edison patent trust and won, creating the modern movie industry? Or how a small city newspaperman from Tennessee, Adolph Ochs, created the greatest American newspaper, The New York Times?

Do today’s leaders have the focus and commitment of an Estée Lauder, whose grandkids are all billionaires due to her obsession with skin care and cosmetics? Could they overcome the trials and tribulations of Madam C. J. Walker, the daughter of slaves who rose to become a millionaire a century ago?

How many managers are prepared to step in and fill the shoes of their partner if that person dies? Olive Ann Beech did—and she ultimately led Beech Aircraft Co. literally to unprecedented heights. Can they engage with people of a different color with the boldness that Atlantic Records founder Ahmet Ertegun did, in the face of sharp criticism?

How great a value does the average businessperson or entrepreneur put on curiosity? Are they humble or arrogant? Might they learn something from the life of Sam Walton, who was both humble and curious—and built Walmart, the world’s largest corporation?

As you can see, the lessons one can learn from the history of business are truly endless.

Blinded by the Future

It may seem that I am obsessed with history. Quite the contrary: I am obsessed with seeing the future.

Forty years ago, I foresaw the need for bigger, better bookstores when no one else did. My friends and I built the first chain of book “superstores,” and within seven years, we had stores from Florida to California. Barnes & Noble bought our company in the late 1980s, which served as a springboard to that company creating a national chain of giant stores.

Thirty years ago, I saw the need for better and more accessible information about the world’s giant companies, both publicly held firms and private ones. My colleagues and I created the enterprise that evolved into D&B Hoovers today.

I am always trying to look 10 years, 20 years or even further into the future. But I have found that the best way to see that future is to study the past—to look hard at long-term trends, to connect the dots. I am not alone in this: As Steve Jobs said, “You can’t connect the dots looking forward; you can only connect them looking backwards.” Winston Churchill agreed, pointing out, “The further backward you look, the further forward you can see.”

Many people are, in fact, blinded by the future. So many talking heads and writers go on endlessly about the future without any historical perspective. Book after book pours out. Investors obsess over where the market is going next, while the wisest among them refer to the events of the 1970s or even the 1920s for needed context.

There are many benefits to studying the successes and failures of the men and women, the industries and the companies of the past. For one thing, looking at history enables us to see how things turned out. No matter how much we study Amazon, Apple, Meta, Google or Tesla, we don’t really know how those companies will evolve over the long run. When we study Sears, Roebuck and Co., we can see the original idea, how the company evolved, how it rose to success, and how and why it died. We can see how General Motors rose to the greatest heights of any company, then went bankrupt, and is now reborn. We can learn something from the long lives of Procter & Gamble and Deere, both founded in 1837 and today stronger than ever in their history.

We can study the rise and fall, and sometimes re-rise, of industries by studying bowling and billiards, bicycles and watches. We can see the turmoil caused by corporate takeovers and mergers by reading about Beatrice Foods or the banking industry. We better understand how great companies fade by studying General Foods, International Harvester, Westinghouse and Bethlehem Steel. We can learn how major industries begin by taking a look at American Airlines or Howard Johnson’s. In short, we can tell so much about where a business might be going by becoming more familiar with the stories of businesses that have come before.

The Future Learns from the Past

You can probably tell that studying business history is a strong personal interest of mine. I have been teaching and preaching entrepreneurship for the last 20 years. People of all ages, all over the world, are hungry to learn from the American experience. There is no better way to understand how entrepreneurs think and act, how they deal with challenges, and how Davids conquer Goliaths than studying the lives of the greats of the past.

Anyone who reads these stories soon realizes that business is above all else a human venture. As Ralph Waldo Emerson said, “All history is biography.” The stories like the ones I’ve listed above are great stories—sometimes uplifting, sometimes tragic, always full of adventure and drama.

As one reads more business history, a broader picture of and a context for modern business evolves. One comes to realize that nothing that really matters in business changes. Yes, technologies change: Streaming replaces cable, which replaced rabbit ears, which replaced radio, which replaced vaudeville shows. Computers replaced calculators, which replaced the abacus. Culture and customers change. But how to react to those changes, how to innovate, how to listen to customers and how to compete remain the same decade after decade. Supply and demand, debt and equity, profits and losses, pride and humility have all been with us for centuries and will continue to underlie all that we do in the business world.

For those with more curiosity, the best “serious” book to understand the big picture of American business history is The Visible Hand by Alfred Chandler. For lighter reading or younger readers, it is hard to beat Harold Evans’ They Made America (get the hardcover edition—it’s filled with great illustrations). The History Channel also runs many shows on the founders and origins of companies; I’ve had the opportunity to appear on several of these. However, they are often scripted with little knowledge of how business actually works and too much emphasis on business fights and wars, often greatly exaggerated for dramatic purposes.

Yet Google “American business history,” and you’ll find few links. Seeing that, a few friends and I created the nonprofit American Business History Center five years ago. It is a labor of love for us. We’ve published over 150 articles on the stories of different leaders, industries and companies on our website. The website also includes videos on the history of several industries and animated charts where you can visualize the changes in such industries as automobiles and airlines, as well as see the rise and fall of the market capitalizations of the largest companies. We took 34 of the best business stories and created a book. We try to cover almost every industry and era of time, even including a reach backwards to the European precursors of modern business. As far as we’re aware, ours is the only website devoted to studying these histories and making them available for free for the general reader.

No matter how you approach these histories, you will be well-rewarded for the investment of your time and attention. When everyone else is blinded by the future, never looking back, you can gain a real competitive advantage by taking some time to dive into these stories.