Why do companies die? It seems like an easy question. Nevertheless, most companies do not find this answer. There is a small number of companies around the world which survived for 100 years, even lesser survive for 200-300 years. Why is it so? You can compare the growth of men with the growth of a company. Until men are young; they are fast learners, they are keen to acquire knowledge and skills. One can stop – one needs to learn until he is living. You can notice the same patterns with a company; it can‘t stay in the middle. Some company’s stop‘s at being an adolescence stage and dies. The breakthrough is either reached, either companies decrease. Companies which pass through this stage evolve into complex organisms, which become hard to manage; in most cases, they aren’t able to see rogue structures which sabotage the company for a long time. Successful ones have found a way to identify such structures. Afterward, they either eliminate or restructure them. I believe that companies which have developed an open culture, where employees can freely say what they mean and are feeling important can better adjust their business processes. Such companies are free for new good things, and they develop a kind of nanotechnology which is looking for diseases and eliminates them from inside. In this article, we will analyze companies which are operating for 100 and more years. Furthermore, we will underly characteristic patterns which distinguish them from the competition.
Oldest companies which are operative today
Today‘s statistic‘s do not show mercy for new companies. According to research conducted by CRAINS Detroit business portal (Prof. Vicky TenHacken), the average life span of a company is 12-15 years. Furthermore, only 10 percent‘s of total companies established reach the 5th year. Moreover, this Indicator is continuously going down. For example, in the USA by the year 1920, the average companies life span was 67 years. It‘s hard to find an answer why it‘s happening, but I think it‘s deeply related with the changing mentality of the society, we are getting more open for the changes, we consume in a fast pace and huge volumes, moreover the rapid technology development impact‘s moves as well. All this sums up into the super fast-changing business environment, and it becomes challenging to adjust business models to it.
Before I outline the key features of a company that has been around for a hundred and more years, I will provide you with a list of the ten oldest companies that are operational today.
If you look at the table above, you will notice that more than 50 percent of the ten oldest companies location – Japan. Furthermore, all of the listed companies are operating in a niche market, and we can say with confidence that they are doing the same thing year after year. What does this finding say? First of all, traditional niche businesses which are essential to the companies culture tend to survive longer. It‘s hard to imagine England and Ireland without a Pub, as it‘s hard to imagine Japan without a traditional hotel. Of course, it would be fascinating to get the possibility to analyze they’re accounting books and evaluating their business decisions, in such way we could get a more in-depth view concerning the origins of their success. Of course, it’s doubtful that the millennium data will be secured and remembered by the predecessors. If hypothetically someone would remember such information or pass from one generation to another, it‘s doubtful, that this information would have a lot of credit, as people are tending to put more bright colors to their stories. Moreover, it‘s also not clear how these companies would withstand the current culture of rapid business change and how this change would have impacted the lifespans of those companies. Therefore, my conclusions are based on the fundamental belief that it is the narrow area and the compatibility of the country’s culture and business that encourages these companies to count their millennium.
What are the characteristics and principles behind companies that count for 100 years?
Most successful companies have the focus on customer need‘s which need to be fulfilled (and this can be confirmed by any business consultant), as strange at it might sound, but the 100 years old companies don‘t do so. They are shaping the world in which they operate around themselves. Furthermore, such companies share the knowledge they have acquired, arranging events. Their top priority is not the bottom line of the company but to dominate and to be the best one around. Those businesses are tradition based, passing the knowledge from generation to generation. This core of stability leads them forward and allows them to develop their business model of constant improvement.
Harward business review in they‘re article „How Winning Organizations Last 100 years“ (Harward business review, September 27.2018) has analyzed companies which operate for a hundred year or more; those companies were: Royal Academy of Music, Royal College of Art, Eton College, NASA, British bicycles the other companies. They have found out that those companies are very alike to each other, and determined following universal principles
The stable core: Purpose, stewardship, openness
They are strategic, looking 20 to 30 years ahead, to understand how society is evolving, how they can shape it, and how they can get the talent to do this. But they do not just wait for the ability to show up, such companies are working with youth and are helping them to acquire needed skills.
Most organizations change their leaders every five years, but the Centennials they have studied keep them in place for more than 10, and we are talking not only about the “C” but “V” level as well. And they carefully manage leadership transitions, so nothing is lost along the way. They typically appoint a successor more than four years before they make a change and spend at least one-year handing over. It’s crucial to underline that they don’t employ leaders with massive egos. Instead, they find humble stewards, who are keen to learn from the previous leader, and who are more concerned about the organization they’ll leave behind than how it looks while they’re there.
They are sharing information with employers and society; they are writing books, developing movies about the things that they are doing. Such companies are requiring the highest level of devotion and motivate everyone to work with their most top capabilities.
The Disruptive Edge: Experts, nervousness, accidents
While most companies strive to own talent and reduce staff turnover, the Centennials do the opposite. They employ up to 70% of staff part-time, deliberately, to stay fresh and create a continuous flow of new ideas. Furthermore, they are employing for a short term the best specialist’s from the world so they would bring new ideas and that the person could learn from them. Moreover, they use staff from different backgrounds to get new ideas as well. They promote close relationships between employees.
While Most of the companies in the world will proudly tell you how much they grew up in a year, but not centennials, they are saying that of course, we need to be big enough to achieve financial stability and to be able to make an impact, but not enormous large which is threatening with lesser Control. Research shows that 89% of centinels employ fewer than 300 full-time employees. They carefully analyze what action to take and how to control it. Moreover, they also accept success differently. Instead of being proud of it, they look at success very carefully, find out what they did not do and do better.
They do not try to increase efficiency by bringing similar people to their usual projects; they encourage them to leave their comfort zone and work on a variety of projects. They are doing this to ensure that people from different fields interact regularly, ask questions, share problems and ideas.
How today‘s companies can use the experience of sentinels in their operations?
Of course, not all of us want to work for 100 years; most do not even want to think about such a distant future; they care about earning and achieving their goals here and now. It’s especially prevalent in today’s culture. It is also likely that it would be difficult to imagine that companies with a broad and extensive business model would be able to reduce and no longer focus on economies of scale. However, I think most companies, no matter what field and what their goals are, can learn from these companies. Therefore, we will name the essential accents that can boost the performance of each business, regardless of the size of the company, the life cycle, and its goals.
Creating goals and conveying them to employees. All the classic management textbooks talk about this, but unfortunately, the vast majority of companies do not apply it in their activities. Go to any company and ask the typical staff the following questions: What does the company at which you work do in a broad sense? What is your company’s strategy and vision? What are the company’s short-term and long-term goals? Often, you will not get answers. If a company fails to properly communicate their goals, strategies, and visions to its employees, it does not prevent them from pursuing these goals, and in the long run, these companies lose their meaning.
Create a great story for your employes. If your company’s sole goal is to make a profit, you do not have a motivator which could benefit you while you are at sleep; Nowadays, you have to create a bigger goal than making a profit, especially for the next generation of employees who, if they don’t see the meaning, will not work for you.
Educate your employees. The business training market is booming; it’s driven by the fact that companies are no longer able to figure out everything by themselves; that‘s why they employ coaches to do this. Some companies think it is a waste of money. I think the main reason for such an opinion is the wrong choice of coaches and lectures. However, companies which are looking at the knowledge of their employees conscientiously know that investments in the skills and knowledge of they’re employees are paying off in a fast way.
It is promoting employees relationships after work. The company’s microclimate is very important – a united, friendly team that forgets its ego and pursues common goals is an irresistible driving force. Therefore, it is essential to encourage employee communication in an informal environment, which helps to build close relationships.
Freedom to create and act. More and more companies are aware of the need to encourage employees to develop and implement the projects they have in mind; this does provide not only fresh ideas but also new products. As an example, I would like to give Google, which allows employees to work once a month on any project they want. That’s how the latest and greatest Google projects emerged: Maps, Gmail, and more.
Ideas from aside. When people of different thinking and education come together, new ideas are born. Encourage the emergence of ideas from other environments for your business, including the organization of various training, the recruitment of consultants, and the promotion of learning new things in general.
Allocating portion of time for proper reflection. It is becoming increasingly clear that the vast majority of meetings within a company do not create added value, and only wastes time. Instead of meeting for analysis of the current situation, focus on reflection meetings where the team will analyze the projects in detail, ask questions: What can be done better next time? What things have you done great? What would you do differently? What made the project unsuccessful or successful? How other team members could help each other to achieve their goals better next time.