The value of organizational history

'Why don't people ask us why things are the way they are?' is a question I've heard several times recently. 'They don't understand the history' is one of the many variants on this question, posed by established employees about newcomers to the company. This started me wondering about organizational history and its value. It's all too easy when joining an organization to rubbish what's going on or talk disparagingly about what seem like old fashioned or odd ways of doing things. Maybe a real curiosity about why things are the way they are would be helpful in positioning organization design work.
Investigating down this track a bit I found a piece about the acquisition of Cadbury (a UK company) by Kraft (a US company).

'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.'

This didn't happen: an outcome that the writer of this article puts down, in part, to the skillful uses the integration team made of each organization's history.

'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.'

It would be easy to scoff at this as just a PR stunt but in 2012 2-years after the acquisition came a newspaper report that despite some acrimony, generally speaking the tone was in favor of Kraft's takeover.

'Kraft is far more engaged with the local community than Cadbury ever was," says Katie Teasdale, at the Birmingham Chamber of Commerce. Steve McCabe, the local MP for Selly Oak, says: "I'm personally quite impressed with what they are trying to achieve. This R&D is pretty crucial to keeping business in the area."

And earlier this year – January 2014 – parent company Mondelez International (Kraft spilt into two companies in 2012) announced a massive upgrade to the UK facility which involved some layoffs and redeployment of staff. Following the Cadbury/Mondelez tradition of employee care and community involvement this was being carried through with care and sensitivity. Tim Pile, president of Birmingham Chamber of Commerce, noted "I would also commend the maturity of Mondelez's approach to consulting with its employees. Technology investments of this type inevitably mean a requirement for fewer jobs. However, Mondelez wants to involve its employees in thinking through every idea possible before arriving at a jobs number."

The respect for company tradition and history appears to carry through in the way Mondelez makes leadership appointments. In September 2013 Hubert Weber, more than 25 years with the company, was appointed Executive Vice President and President, Mondelēz Europe bringing 'a deep knowledge of the European business from both a country and category point of view.' h

So is this 'deep knowledge' of an organization necessary for leadership success? Certainly the Board appointing Satya Nadella (22 years with the company) to Microsoft's CEO position, in February 2014, appeared to think so. As did those appointing 'company veteran' Doug McMillion, in February 2014, to lead Walmart. Board chairman Bob Walton noted, "Doug is uniquely positioned to lead our growing global company and to serve the changing customer, while remaining true to our culture and values. He has broad experience – with successful senior leadership roles in all of Walmart's business segments – and a deep understanding of the economic, social and technological trends shaping our world. A merchant at heart, Doug has both a long history with our company and a keen sense of where our customers globally are heading next."

Seaman and Smith, writers of the Cadbury story above are strong advocates of the value of knowing the organization's history. '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.'

Accepting that it's true that knowledge of an organization's history is a powerful tool for successfully shaping its future – how can leaders new to an organization manage without that legacy? Here are five ideas:

1. Don't ignore or discount an organization's history. You may have come in to save it but do so bearing in mind that "The past can never be hidden [we must embrace] it with new hope and new dreams so that both past and present form one unified trunk that continues to shelter our people"
2. Acknowledge the power of the past. An organization's 'store of experience – its evolving culture and capabilities, its development within the broader contexts … shapes the choices that executives have to make and influences how people think about the future.'
3. Look for people who will tell you stories about the organization's triumphs, failures, mode of operation and then listen attentively to them. With them use some of the techniques of learning histories to learn how the history has shaped today's perspectives
4. Ask 'how did we get to this point?' 'Unless you pose that question …. you risk tearing down fences without knowing why they were put up. Armed with insight into the history, you may indeed find the fence is not needed and must go. Or you may find there is good reason to leave it where it is.'
5. Where employees have a record of long service, shared experience and community, and a strong culture ask them to help you develop and tell the story of ' This is where we need to go. This is why we're here. This is why we can't be here anymore.' Ask them to tell it with you.

What is your view of organizational history? Do you think new leaders have to learn it to be successful? Let me know.

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