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To Expand Your Thinking, Explore the History of Your Industry

How the future of your company depends on your knowledge of its past.

Alex Goldman | Institute for the Future

Professionals tend to see the operational structure of their institutions as reflections of the natural state of things.

From their vantage point, new disruptive models can seem unnatural, unfamiliar, outside forces.

Clothing companies are supposed to have designers. Insurance companies are supposed to have agents. Hotel companies are supposed to manage buildings.

If you believe you know how the world is supposed to work, BetabrandMetromile and AirBnB are black sheep.

Much of this ‘supposed to’ thinking for today’s executives might come from practices for promoting talent from before rapid industry transformation.

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By cultivating a bigger picture perspective, we cease limiting our capacity to imagine the next iteration of our organization. 

Historically, executives worked their way up through many strata and roles within the same company, ‘from the mailroom up’ as the phrase goes.

After developing intimate knowledge of how each department ought to function they eventually reached upper management to find themselves ideally situated to lead the company.

Assuming, of course, that nothing changed during their ascendancy.

But in a world of rapid industry transformation, this steadily accrued intimate knowledge risked becoming a liability. Learning exactly how things are done today can stifle the capacity to imagine how things can be done differently.

Agility of thought is increasingly identified as a vital skill for those in the leadership pipeline.

Of course, we all know that there is no ‘supposed to’ in terms of how industries or organizations ought to work.

Legacy business and organizational models don’t reflect some optimal solution to an eternal, unchanging economic landscape.

The corporate world simply came about because of co-evolving techno-social forces in the 20th century and before that enabled large businesses to thrive. These forces can’t be taken as gospel, though.

Even certainties change

Economies of scale, for example, which made massive corporate headquarters and centralized manufacturing ‘efficient,’ rest on a foundation of variable mass communication technologies.

Further rapid reductions to the cost of coordination have made it possible to scale up labor forces far faster, and more efficiently, using decentralized networks, which were never before part of the equation.

Thus, the freelancer explosion, led by UpWork and Uber. And as machine-machine communication capacities accelerate, this landscape will metamorphose again, and with it, our interpretation of economies of scale.

So it’s important to take a bigger picture perspective, and see that our organizations today simply happened to take form as they are now, because of an endless series of (mostly) smart decisions amidst conditions that are no longer necessarily the case.

By cultivating this bigger picture perspective, we cease limiting our capacity to imagine the next iteration of our organization.

[Also on Longitudes: The Secrets of the Most Community-Minded U.S. Companies]

Taking the next step

This is easier said than done.

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Successfully navigating change starts by first stopping to identify with how your organization operates today. 

Successfully navigating change starts by first stopping to identify with how your organization operates today.

It’s incredibly, insanely important to understand how your organization operates today, but that’s not the same as identifying with it.

If you can see your organization as a thing which simply happens to exist, you open your eyes to the creative potential of change, and position yourself to guide that change successfully within the organization. It’s a rather Zen-like capacity.

I know that sounds abstract, so let’s talk specifics.

One of the best ways to build this creative perspective is by studying the history of your industry.

By taking a step back, you gain an invaluable sense of context for how your organization simply happened to become what it is today.

At IFTF, we often say ‘look twice as far back as you look forward’, but I think it’s actually easier, and more productive, to look 100 times as far back as you look forward.

[Also on Longitudes: Doing Your Part as a Company]

A case study

The insurance industry began thousands of years ago, originally helping merchants and naval traders manage risk, often by paying an additional quantity on top of loans should a shipment be stolen or lost.

It was in maritime trade that the concepts of mutualization (spreading risk across a similar group) and risk pricing (in this case, charging more to insure vessels during dangerous weather seasons) also found footing.

So established financial institutions like lenders defined the start of the insurance industry. Insurance wasn’t its own thing, just part of a financial agreement. 

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Look 100 times as far back as you look forward.

But things get interesting (and weird) with the Roman/Greek advent of Friendly Societies (also called Benevolent Societies), the first historic recording of anything like health or life insurance.

Professionals in the same guild would pay into a common pot to cover funerals or emergencies.

Friendly Societies still exist today, and often form around communities with a common religious, political or professional background.

Besides being fascinating, this tidbit of history provides a few valuable insights for those in insurance: the first being that insurance was originally an additional service or offering on top of major loans provided by financiers, and the second being that life and health insurance actually resembled, in their origins, a social exchange facilitated by deep common bonds.

In fact, the startup GiveForward, which facilitates crowdsourcing of medical bills, more resembles ancient health insurance than today’s insurance companies, which are often very light on (expensive) relationships.

The output from that brief foray into the history of insurance helps modern leaders in the insurance industry see how how the growth of social networks, given the importance of trust and trust-building in insurance, could be seen as both a threat and an opportunity.

It can also inspire insurance company strategists to pioneer new services built for communities or groups for whom trust is already an established bond.

And finally, knowing that it’s only in the past 600 years or so that insurance companies existed as separate entities from banks, innovators in insurance today could consider what other industries to enter.

In the end, the most important thing is to practice stepping back and seeing the bigger picture. And if you think you’re looking at the whole thing, step back further. goldbrown2

This article originally appeared on the Institute for the Future and was republished with permission. 


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Alex Goldman is a Research Manager focusing on emerging technologies and how they impact the landscape of human interactions at the Institute for the Future.

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