Learning from the Past

My high school freshman History teacher, Mike Fitzpatrick, began our first class by quoting Spanish philosopher George Santayana: “Those who cannot remember the past are condemned to repeat it.” That simple idea became an enduring principle of my leadership philosophy.

Rigor and non-defensiveness in examining both successes and failures is essential to future success. Too often, organizations settle on tidy narratives that oversimplify complex events. I have always been obsessed with understanding outcomes—not to assign blame, but to uncover root causes others overlook.

We love reliving successes while avoiding failures, but both deserve analysis, more so the latter. The following cases—two failed joint ventures, a major credit loss, a lost large customer, and a lost talented employee—show how disciplined learning transforms organizations.

Creating a Culture That Learns

Learning from failure requires both structure and psychological safety—principles Harvard Business School Professor Amy Edmondson describes in The Fearless Organization. My own “rules of the road” evolved from experience.

Be selective in terminating people.

Accountability matters, but indiscriminate punishment kills candor. When Pitney Bowes suffered a major credit loss in Germany in 1993, the CEO fired the Financial Services President because he seemed unable to recover. I succeeded him, but retained the rest of the leadership team, because their involvement with the failure was marginal. However, if they feared termination, honesty would vanish, and with it, truth.

Discourage finger-pointing and promote reflection.

When many contributed to a failure, I reducing annual incentive payouts to those guilty of finger pointing and increased payouts to those who took initiative to analyze and share lessons. Learning begins with self-examination and transparency.

Be skeptical of simple narratives.

The neatest explanation is usually wrong. Deeper truths hide in messy details.

Case 1: Why Joint Ventures Failed

One of Pitney Bowes’ worst disasters pre-dated my employment: a 1970–73 joint venture in the electronic cash-register business with Alpex. A decade later, Monarch Marking Systems’ retail anti-theft device venture (1982–85) failed similarly. I had to get documents on the Alpex disaster from law firm archives. I served as a legal advisor to Monarch, so I had better access to those who knew why it failed.

Afterward, a myth emerged: “Pitney Bowes should avoid joint ventures.” That was convenient—but wrong.

Avoid over-enthusiasm.

In both cases, we partnered with smaller innovators, assuming our marketing strength would ensure success. The markets weren’t ready. Incumbents—NCR in Alpex’s case, Sensormatic in Monarch’s—framed innovation as risky. Consultants told us what we wanted to hear. Enthusiasm blinded us to resistance.

When I became CEO, we created an Acquisition Review Committee that reported quarterly to the Board, focusing on business-plan progress, integration, and culture, the usual roots of failure, for acquisitions, joint ventures and partnerships.

Plan the exit.

Every partnership agreement must spell out a process for unwinding in the event of failure. In Alpex, Monarch and a 15-year Japanese joint venture we exited in 1995, neither side had agreed on exit mechanics, causing costly disputes, including a costly and embarrassing jury verdict against us in the Alpex case. Governance discomfort today prevents crises tomorrow.

Case 2: The German Leasing Losses

In 1993, we uncovered over $100 million in credit losses at Adrema Leasing, our German subsidiary. CFO Carm Adimando led the wind-down; I replaced the Financial Services division head. In 1996, as CEO, I ordered a full post-mortem. It revealed a convergence of flaws—a perfect storm of structure and culture.

Risky market.

German privacy laws made it nearly impossible to vet creditworthiness or repossess leased assets. Germany superficially resembled the US in its business rules, but was not a viable equipment leasing market for us.

Misaligned incentives.

Our businesses originated with leasing brokers, who were paid on volume, not profitability, encouraging reckless deals.

Isolation.

German business norms granted the Geschäftsführer (CEO) near-absolute authority. The CFO reported only to him, shielding problems from oversight. My Division President predecessor compounded the problem by discouraging his senior team from providing oversight.

Weak oversight.

Auditors raced deadlines and relied on sanitized reports instead of reality checks. The illusion of stability persisted until losses became undeniable.

We exited the German leasing market permanently and, in 1998, sold Colonial Pacific Leasing, our U.S. broker-based leasing business, to GE Capital—who later shut it down after facing the same issues.

We redesigned governance: division CFOs had dotted-line accountability to the corporate CFO, ensuring tighter oversight. Auditors had to engage informally with staff to surface hidden problems. Finally, before entering new markets, we performed deeper due-diligence on local laws and business culture.

Case 3: Losing Bank of America

In 2001, our Management Services Division lost its largest customer, Bank of America. Early explanations blamed the competitor’s relationships or “low-ball” pricing. The bank’s debrief—that the rival better understood “partnership”—seemed plausible.

Months later, our Southeast Regional VP Dave Hutchinson revealed a deeper truth in a private conversation with me: a year earlier, the bank had asked us to restructure its contract to reduce costs. We appeared inflexible, eroding trust long before renewal. We lost long before the bidding process through rigidity.

That insight changed our renewal strategy. Relationships are continuous, not single point in time events; we learned to trace every loss back to its earliest fracture, and look for early warning signals to detect vulnerability.

Case 4: Losing—and Regaining—a Top Sales Professional

Soon after I became Financial Services President, a Group VP told me his top salesperson was leaving for a higher-paying job with a promotion. When I asked why he’d taken the initial recruiter call that culminated in this offer, he admitted that he felt disrespected and unheard, an insight he had not shared with HR or his supervisors. Money mattered less than respect.

I promised that disrespect would stop and left the door open for his return. A year later, he came back—and stayed until we sold the business in 2006.

That episode reshaped my views on pay and culture. Competitive compensation matters, but inclusion and respect sustain loyalty.

Broader Lessons

Stimulate and reward curiosity over arrogant self confidence..

Leaders who keep asking “why” discover patterns others miss. Those who cling to tidy narratives repeat mistakes.

Structure shapes behavior.

Incentives and culture can defeat even sound strategies. Design systems that reward long-term learning, not short-term volume.

Governance is foundational to foresight.

Strong oversight isn’t bureaucracy; it’s an early-warning system that preserves trust and capital.

Learning requires seeking out front-line manager and employee insights.

The best insights come not only from consultants or dashboards or the most senior leaders, but also from people closest to the work.

Final observation

Santayana’s warning still applies. Progress depends on tapping institutional memory—not just applying narratives, but learning from the past by digging deeply into why things went wrong and having the courage and discipline to prevent recurrence.