The power of the past: How history informs better decision making

In the late 18th century, the Industrial Revolution, powered by the steam engine, transformed the British Isles, leading to the emergence of highly successful global companies that capitalized on the transformative technologies sweeping the country.

Fast forward to today, and companies around the world are grappling with generative AI and its similarly groundbreaking potential. In these times of great change, how can the past help illuminate the correct path forward?

At Rakuten Optimism 2024, Ryunosuke Fukai, CEO of COTEN Inc., and Ryo Matsumura, Group Managing Executive Officer of Rakuten’s Commerce & Marketing Company, discussed how historical insights can offer guidance towards better, bolder decision-making.

From centuries to decades

While the 18th-century Industrial Revolution unfolded over decades, today’s transformations, like genAI, are happening at breakneck speed. Fukai began the session by noting that massive change is not unique to our current era; what sets the 21st century apart is the speed of change.

“Turbulent times have actually been relatively common throughout history. Every era was a turning point in its own way,” Fukai told the audience. While in the Middle Ages, changes in concepts or technological developments took two or three hundred years, Fukai pointed out that today, such changes occur in just 20 or 30 years – 10 or 15 times faster. “This is the most significant feature of our time,” he noted.

The span of change has shrunk. In the 21st century, we can expect to experience large-scale technological or societal changes multiple times during our lifetime. Consequentially, it’s more crucial than ever for business leaders to navigate transformation correctly.

Access to new resources: A key to success

According to Fukai, access to new resources is one key factor that differentiates organizations that flourish from those that fail. “The people who notably succeed in new eras are those who see the value in new emerging resources,” he said. This applies to emerging energy sources like coal, oil and renewable electricity as well as human resources, such as groups that have historically been excluded from the workforce.

“Only when you understand history can you start to envision the future.”

Ryunosuke Fukai, CEO of COTEN Inc.

Fukai noted how companies in the 19th and 20th centuries that embraced diverse labor forces often gained competitive advantages. The lesson today is clear: businesses must be ready to utilize and invest in new resources, whether technological, social or human.

Keeping up with the rules of the game

Another crucial differentiator is the ability to understand the current environment in which a company operates. Are company leaders fully aware of the internal and external situations surrounding them? Fukai explained that organizations with a sound understanding of the standards and values – or “rules of the game” – that determine success or failure for companies, have a higher chance of succeeding.

“The most critical external information for companies today isn’t marketing data, but ordinary societal information,” he explained. “Things are moving at the fastest speed in human history. This means that the rules of the game that influence corporate value and a company’s very existence are changing drastically too. So, to maintain corporate value and your existence, you have to have a deep understanding of society.”

Prior to the Edo period, for example, samurai were primarily military specialists whose key measure of success was the ability to wield force. When the Edo period began, however, the era of constant warfare ended. Consequentially, the new socio-political environment required skillful bureaucrats, who could handle administration, accounting, and legal matters. Fukai emphasized that the samurai who were able to quickly grasp these new criteria and reevaluate what success looked like, were able to adapt their roles and meet the new demands required of them.

Think big, think wider: Expanding perspectives

The speed of change in the 21st century means the rules of the game governing companies are regularly upended. Fukai believes we need to take a fluid approach to this problem, adapting to society’s changing values.

“You must not fall into the trap of thinking that the rules of the game, or success, or truth are fixed in the first place. Because they are not” Fukai said. Finding real correctness that is true from all angles is therefore futile. “There’s no definitive answer. We need to keep thinking about this continuously. I believe this itself is one answer—knowing that it’s something we must keep contemplating.”

To help make sound decisions, Fukai recommends expanding the scope of one’s thinking.

“It’s about broadening our perspective of time and space as much as possible when considering what’s right,” he told the Optimism audience. Which is exactly what sustainability and ESG strategies are about.

Sustainability, Fukai noted, encourages companies to think beyond short-term profit and consider the longer-term success of the business. To create broad positive impact, it also expands the corporation’s focus to a wider range of stakeholders: employees, the community, the ecosystem, etc.

“The broader your perspective, the less likely you are to make a mistake, whether looking at the past or the future” Fukai emphasized.

Studying the past to see the path forward

Rounding out the session, Fukai stressed the importance of understanding history for better decision-making. “Fundamentally, you will not be able to create value for society if you don’t know yourself and you don’t understand society” he said. “And to understand society, studying only the present is not enough.”

Matsumura noted this is all the more crucial when considering the cyclical nature of change. “Without historical context, our understanding of the dynamics behind societal changes are limited. However, viewing such trends as part of a cycle that has repeated over 3,000 years allows for a broader, more informed perspective.”

Developing the skill to think long-term and study history is therefore key to making informed, strategic decisions in today’s fast-changing world, Fukai says.

“Only when you understand history can you start to envision the future. Understanding the characteristics, trends, strengths and weaknesses of the modern era allows you to chart a vector towards the future.”