1. A Decision That Had Long-Lasting Consequences
About twenty years ago, I worked in the energy industry. Electricity prices were high and continued to rise. Almost all major European energy companies assumed that additional generation capacity would be needed and were planning new power plants, particularly gas- and coal-fired ones.
At the time, a green energy provider - which I would join a few years later as Head of Corporate Development—decided to purchase a significant share of its required electricity volumes on a long-term basis. The rationale was understandable: If prices continued to rise, securing favorable conditions today would pay off in the future and allow the company to offer its customers competitive prices.
Things turned out differently. The financial crisis of 2008/2009 reduced demand, while increasing amounts of renewable energy entered the market. Wholesale electricity prices fell significantly. For years afterward, the company suffered from electricity volumes that had been purchased at prices that were now too high, making it difficult to reduce its retail prices as quickly as its competitors.
It was a painful experience. And the lesson seemed obvious: Never buy electricity on a long-term basis again.
2. The Right Lesson from the Wrong Decision?
A few years later, the situation had changed completely. Electricity prices had fallen to very low levels. Once again, the question arose whether at least part of the required volumes should be secured on a long-term basis.
This time, there were very strong economic arguments in favor of doing so. But the discussion was heavily influenced by the previous experience. Many of those involved had personally witnessed the consequences of the earlier decision. The proposal to buy long-term again therefore triggered not only a rational debate, but also strong emotional resistance.
Looking back, I believe the wrong lesson had been drawn from the earlier mistake. The conclusion should not have been: “Never buy electricity on a long-term basis.” It should have been: “Do not make long-term decisions based on a single expectation of the future. Think in different scenarios instead.”
That may sound similar, but it is something entirely different.
3. The Experience Prison
At the time, I came to think of this phenomenon as the “experience prison.”
We usually regard experience as something entirely positive. And, of course, most of the time it is. If you have encountered a situation several times before, you recognize patterns more quickly, assess risks more accurately, and do not have to make every mistake yourself. That is precisely why companies deliberately look for experienced executives for many important positions.
But experience has another side as well: It does not only expand our range of options. It can also restrict it.
Negative experiences in particular can stay with us for a long time. An acquisition failed - so the next one is viewed with extreme skepticism. An international expansion cost a great deal of money - so the next foreign market suddenly appears particularly risky. An executive with a certain profile was hired and disappointed - so next time, the instinct is to look for exactly the opposite.
The problem is that the new situation may be entirely different.
4. Experience Is Not a Law of Nature
Perhaps this is precisely where the danger of extensive experience lies. The more often we have experienced something, the more quickly we believe we know how a situation will turn out. We transfer patterns from the past to the present without always noticing that the underlying conditions may have changed.
This is particularly relevant for leaders. As experience grows, so does the number of situations we can draw upon. But at the same time, so does the risk of filtering new decisions through old experiences.
Experience is therefore particularly valuable when it does not merely provide answers, but helps us ask better questions: Is today's situation really comparable to the one I experienced before? Which underlying conditions have changed? And am I drawing a rational conclusion or am I primarily trying to prevent an unpleasant experience from happening again?
Especially in the age of artificial intelligence, many truths from the past need to be radically questioned. Experience is not always the best guide in this process - or at least it should not be the only one.
5. So, Can You Have Too Much Experience?
I do not believe that experience itself becomes a problem. It becomes problematic when experiences turn into fixed rules.
“We've tried that before.”
“That doesn't work in this market.”
“We've had bad experiences with candidates like that.”
Statements like these can be a sign of extensive experience. But they can just as easily indicate that someone is trapped in their experience prison.
Perhaps good leadership therefore means more than learning from the past. It also means being able to let go of it when the circumstances have changed.
6. My Impuls
Which experiences have the strongest influence on your decisions today?
Are there decisions you would no longer make because you once had a bad experience with them?
And are you sure that what you learned back then really applies to the situation you are facing today?
Experience can help us make better decisions. But it can also prevent us from making the right decision simply because the same decision hurt us once before - under completely different circumstances.
