Over the years, the average lifespan of a company has shrunk consistently. If in 1965 the average tenure of S&P 500 companies was of around 33 years, that number reached 20 years in 1990. What’s more, it’s forecast to shrink to less than 14 years by 2026. Some businesses manage to beat the odds and pride themselves with over 100 years of activity.
The matter is that most businesses focus too much of their attention on servicing their customers, increasing their efficiency, owning their resources, and growing. Interestingly enough, however, 100-year-old companies such as Eton College, NASA (only 60-years-old), or the Royal Academy of Music, among others, do not. They, instead, focus their efforts on continually getting better, not bigger, thrive on their disruptive edge, and have an unshakable core, among several other such factors.
Any long-lived business can attest to the fact that a clear vision and purpose helps them thrive over the decades. A long-term strategy is what allows them to look 20 or even 30 years ahead and comprehend how society will evolve during this time so that they can remain relevant.
Be it the raising on the nation’s profile, the education of disadvantaged children, or even helping humanity as a whole, each of these goals gives these companies the necessary purpose to continually look ahead.
With time, a company also gains prestige. And as a consequence, top talent is naturally drawn to them. Nevertheless, these multi-decade companies don’t wait for this talent to fall into their lap. What they do is to work with children, sometimes even as toddlers, helping them form the necessary skills and vision that will help them in the future. It is for this reason why NASA holds annual programs for school graduates, or why New Zealand’s All Blacks invented Rippa Rugby, in the first place.
Most businesses change their leaders roughly every five years, or so. And when they do, it happens more or less overnight. It is not the case with the old companies. The average turnover here is over ten years. And when such a transition is expected to happen, they plan it and choose the successor several years in advance.
Even more so, they allow for one to two years’ time for a proper handover, ensuring that nothing is left behind. Probably as important, is that they pay special emphasis on the successor’s character, making sure that he or she doesn’t have a big ego and will be eager to learn from their predecessors.
A high turnover rate is something that most businesses try to stay away from, and with good reason too. But instead of trying to own this talent and keep it all for themselves, these centennial companies employ roughly 70% of their staff on a collaboration-style basis. It allows their employees to spread their wings and come in contact with new and innovative ideas.
As for the companies, themselves, this disruptive collaboration not only gives them access to a much larger talent pool, but it also brings them in contact with these ideas and innovations.
As one would expect, these strategies are the result of decades of trial-and-error and experimentation. Some of these may even be counterintuitive or even hard to put in practice. They are, nevertheless, elements that most long-lived businesses have in common.
Question to reflect: for how many years are your organization going to last?