Friday, March 7, 2014

Historical Thinking in the World of Business

Chris McNickle is a historian and the former global head of institutional business for Fidelity Worldwide Investment.  In a wonderful essay in Perspectives on History, McNickle discusses how historical thinking is a valuable asset for those in the business world.  Here is a taste of "A Historian in the World of Investments How Historical Thinking Resonates in Business":

The typical career for a history PhD is presumed to be a university-level teaching job, but I ended up as the global head of institutional business for Fidelity Worldwide Investment. If this seems like an odd career path, it shouldn’t. As a discipline, history offers as compelling a framework for business decision making as any of the courses of study more commonly championed by those inside city skyscrapers and suburban office parks.
MBA graduates organize their thinking implicitly around case studies and spreadsheets, lawyers by way of legal constructs, and accountants according to a body of rules that must be followed in order to arrive at the right outcome. By contrast, historians frame their thinking around connections that occur over time and across multiple dimensions of human behavior. We are trained to sift through and interpret disparate facts, creating a narrative of what those facts could plausibly mean. Good historians develop an instinct for how things happen and how decisions made at one moment can affect what follows in another. It is a perspective that has inherent value in discussions of resource allocation, strategic direction, and other elements of business success.
As global head of institutional business for a firm that manages $300 billion in assets, I attended formal management and board meetings that invariably involved advance distribution of documents, often brimming with years of historic data to provide context for financial projections. No executive naively expects past trends to continue indefinitely, and so the question “What do past numbers tell us?” becomes key. What factors caused a set of results to reach the values they did? Why did they grow, and what made them shrink? Who made it happen, and what skills did they have? How do our numbers compare to those achieved by other firms during the same time in the same environment? What special or unrepeatable circumstances affected the results? What really mattered? These are the sorts of questions asked by business leaders; for historians, they should resonate loudly.
Read more about McNickle here.

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