Hey SEO, It's Up To You; Websites Are Ranked On Their Current State
While it can be easy to think that Google is an often malicious and vindictive digital overlord, just waiting for its opportunity to crush the virtual dreams of search engine optimization professionals, there's little evidence of that actually being the case.
In a recent video from Google Webmaster Central, John Mueller indicated that if a website was penalized in the past (e.g. as a result of a Penguin or Panda algorithm update) it's not necessary for that site to work any harder in the future. Google ranks websites based on their current state or what they know about it at the time of crawling, indexing and after processing the hundreds of signals that are used to determine rank. Essentially, rank is based on the current state and its history does not influence what will happen to it in the future (even if it was a penalty).
That will be an important revelation for many SEOs, who often question whether it's easier (or better) to simply shift to an entirely new site or concentrate their efforts on creating the best possible experience for Google and consumers.