Corporate longevity

5 ways to keep your company alive

March 7, 2011: 1:05 PM ET

Think about it: Rare is the company that manages to live long into its golden years. Here's how a company can improve their odds of survival.

The Shell Mex House, Shell's former headquarters in London. Photo taken in 1955.

By Christian Stadler, contributor

(ManagementInnovationeXchange) -- Some companies have the knack of turning in stellar performance decade after decade.  To be sure, they may lose their way for a year or two, but somehow they overcome the setback and resume their relentless progress. General Electric is one such company. So is Shell. Understanding what sets these companies apart from their rivals is arguably the holy grail of managers and business scholars alike.

For the last six years, I have led a team of eight researchers in a study of some of Europe's oldest and best companies.  We asked:  What distinguishes companies that managed to perform at a very high level over very long periods from others that do not perform as well? To answer this question we selected a sample of companies that had turned in an extraordinarily high performance over the past 50 years (our gold medalists outperformed the stock exchange by at least the factor of 15) and compared each with another old company, whose performance was still good but which was well behind the very high performer (we call them silver medalists). Fifteen years after Collins and Porras' Built to Last, our work incorporates fresh insights from management science and provides the first non-U.S. perspective on long-range success.

Reading through corporate histories, collecting material in archives, and interviewing 34 CEOs, chairmen, and board members, a counterintuitive story emerged: the greatest companies do not excel through radical innovation or daring transformations, but adapt to a constantly changing environment by being intelligently conservative. They religiously apply what we call the "five principles of enduring success." While there's no guarantee that the companies we studied will never fall on hard times, we believe there is much to learn from their history. More

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