Expiration Date for Companies Shorten
- Businesses are dying at a much younger age than the people who run them.
- Few companies make it to their 50th or 60th anniversaries.
- Companies are more likely to die at any point today. One-tenth of all companies fail each year, a four fold increase since 1965.
- Dynamic industries like technology are perishing even more quickly.
BCG provides some advice for companies looking to hang on longer and make it to the next century.
- Look for those early warning signals. They say it is imperative to have an external orientation. I have to agree. Reputations can easily be upended by threats that are lurking in the shadows and rise up to surprise a company. Keeping an eye out for changes in the industry, other regions and online are critical today to being agile.
- Adapting to the current environment. Strategy and reputation must be aligned with what is happening now. Reputations must be fine-tuned to fit with consumers’ or customers’ present needs. The focus today on companies having a purpose is a good case in point. Values-based companies are rapidly gaining favor among the general public, particularly the younger generation.
- Run and reinvent. By that they mean, keeping pace with the rapidly changing environment and reinventing oneself all the time. Sounds like a mad dash or else. Innovate or evaporate.
They have other smart strategies outlined in the article about focusing on information gathering, building a clear mission, stress-testing plans regularly, connectivity and baking sustainability into all business planning. All good.
However, these stats sound ominous for companies who intend to build organizations to last. How do you bake longevity into your organization? Is it even possible? How does a company stay on its toes all the time, 24/7? Are reputations built for the long-term or do they need to be revamped all the time too? After reading this article, I wonder how companies last beyond five years. We already know that the average CEO tenure is five to seven years. Sounds like companies are expiring as quickly as the bosses.