“Fools,” said Bismarck, “Say they learn by experience. I prefer to profit by other people’s experience”[1].

The British military historian and theorist B.H. Liddell Hart began his short and thought-provoking book Why Don’t We Learn from History by asserting that individuals tend to repeat mistakes and usually ignore key lessons from history. This is also true in the arenas of politics, business and academia, in which some people claim to have superior wisdom and decision-making processes due to their age, experience and intuition. However, the American political scientist Philip Tetlock conducted a robust experiment to track the accuracy of predications made by political experts. His results indicated that the average expert was no more accurate than a chimpanzee throwing darts[2].

The on-going health crisis has confirmed these results, with governments around the world battling to cope with the magnitude of this preventable pandemic; in particular, news of companies being forced to retrench thousands of citizens has become the new norm, echoing the events that took place during the financial crash a decade ago. A second example of a faulty predication was the collapse of WeWork ahead of its initial public offering (IPO) in 2019, which saw the company plummet from its valuation of $47 billion into a verge of bankruptcy.

In the last few weeks, the business world has witnessed yet another scandal in the form of the collapse of the German payment processor and financial services provider Wirecard, after it admitted a €1.9bn ($2.1bn) gap in its capital account, This amount was almost a quarter of the company’s balance sheet. The company was once hailed as the fintech ‘champion’ of Germany. In 2016, German regulators brushed off allegations of corporate fraud and imposed a temporary ban on shorting the company’s stock, while big banks such as Deutsche bank invested heavily in the company.

By early 2020, various short sellers -who bet against listed companies’ stocks – as well as extensive reporting by the Financial Times sounded the alarm that the company was heavily involved in accounting fraud, corruption, market manipulation and allegations of money laundering. As pressure on the company mounted, it finally confirmed these accusations, thus discrediting the reputation of giant accounting firms such as Ernest & Young, which issued an independent auditing report of the company’s financial transactions. These events revealed that prudent business experts, such as equity analysts, asset managers, auditors and even the German government’s regulators, had completely misjudged the scale and scope of this company.

The Wirecard, WeWork and Woodford debacle has cast a deep shadow on mainstream corporate governance, as evidenced by unrealistic growth projections and the astonishing level of ‘management via soundbite’ that has recently dominated the business sphere with phrases such as ‘ecosystem’, ‘strong’ and ‘scale’. Furthermore, it has been shown that simply wearing a black turtleneck like Steve Jobs or the CEO of Twitter, Jack Dorsey, does not automatically make one a legendary tech maverick. By contrast, outfits should bear little resemblance to achievement or ‘good’ decision making. This was particularly true in the case of Markus Braun Wirecard CEO, as well as in the case of Theranos (an American blood-testing technology company that collapsed after revelations of fraud in 2018[3]), the CEO of which, Elizabeth Holmes, imitated Steve Jobs’ outfit to influence her high-profile investors and project a persona that did not match the reality of the business that she was heading.

From an academic point of view, these financial debacles have shed a critical light on shareholder theory and the broader aspects of the market economy. As seen in the notable examples mentioned earlier, markets alone are not capable of or willing to deliver societal value. Hence, there have been calls for stronger government regulations on mainstream corporate governance, as well as new frameworks to hold limited-liability companies accountable. In essence, what is needed is ‘business unusual’.

Finally, the humbling reality of the coronavirus pandemic can set the scene for an alternative way of teaching future undergraduate business students by redesigning the business curriculum[4] to incorporate the key tenet of criticality and critical thinking, in conjunction with the basic tenets of moral philosophy to suggest alternatives to mainstream corporate governance. For example, curricula could ask fundamental questions such as, ‘What are the consequences of this business decision for communities and people’s lives? What is the ‘right’ thing to do in this case?’ Such questions have the potential to change thinking and decision-making processes from a purely business-based perspective (usually based on profit or loss, market share and stock value) to wider and more inclusive decision making that can be reflected in the health of the local community.

[1] Why Don’t We Learn from History? (1944), B.H. Liddell Hart (p. 19)

[2]Read more about these results in Expert Political Judgment: How Good is it? How Can We Know? (2005, Philip E. Tetlock.

[3] See Bad Blood: Secrets and Lies in a Silicon Valley Startup (2018) by John Carreyrou

[4] While this is simply a hypothesis, I believe it would be valuable to test it by running some experiments and randomised control trials (RCTs) to determine whether the key points of moral philosophy can play a role in enhancing the decision making of future business managers.

Sherif Youssef is a Doctoral Researcher at the Centre of Enterprise and Entrepreneurship Studies at Leeds University Business School and The Bauman Institute at the School of Sociology and Social Policy. Sherif is an organizational theorist with a background in marketing and public policy. His research focuses on hybrid organisations such as social enterprises in the emerging markets, which aims to address societal challenges while creating some financial revenues. He has a broader research interest looking at the economics of innovations, patient finance and economic growth. His research was funded by The Open Society Foundation, Economic and Social Research Council and UK Government. Twitter: @ShfYoussef