If you think classic United States businesses are represented by Procter & Gamble, which started in 1837, or Coca-Cola, whose iconic bottle was patented in 1915, you could be forgiven for assuming that the average business lasts a long time. Both those two, after all, have been around for more than 100 years — and Procter & Gamble will close in on 200 years in a few decades.
But in fact, business longevity in the United States has fallen precipitously in the last eight decades. Eighty years ago, the average S&P 500 company lasted 67 years. Now, the average company lasts just 15 years, according to a recent article in the Harvard Business Review.
What do long-lasting organizations share in their approach that gives them such longevity? How do they do it? The authors of the HBR study wondered as well, and set out to survey organizations that had passed the 100-year mark.
Because corporations that last past the century mark are in fact rare, the authors looked at organizations that had passed the mark, ranging from Houston’s NASA to the United Kingdom’s Royal College of Art. They found a number of precepts and practices that business leadership does in common, no matter what the sector.
Overall, the organizations have a stable core business strategy and mission. But they combine these with methods that keep them on the cutting edge of what is disruptive and innovative in their fields.
The core business strategy and mission is often to shape society overall. NASA, for example, is on the leading age of space exploration and attendant scientific research. The RCA wants to be global innovators in art and design, and note that its designers helm the departments at every leading automotive company except for BMW.
Each organization also has an active outreach program for younger generations, from NASA’s 10-week summer programs for high school students to RCA’s annual art competitions for school-age students, starting at four years old and going up to 18.
In keeping with the stability of core mission, business leadership is stable as well. Organizations that have been around for 100 years or more change their leadership, on average, after 10 years. The average organization does so every 5 years. Not only that, but Centennial leadership changes are announced well in advance — sometimes years before the change becomes official — and leadership transitions are managed in detail.
Innovation is fostered by encouraging people to work at two or more places.
Despite this stability, though, the 100-year-old organizations strive to be innovative. One way is their hiring practices.
While employee retention is a basic tenet of many companies, it is not at the Centennials. They hire people who are likely to work elsewhere, on the theory that those employees can bring disruption and innovation in.
Seventy percent of employees, for example, are part-time. They are encouraged to work elsewhere. The leader of the RCA’s Intelligent Mobility Program, for example, was also head of design at Ford Motor. The idea is that working at both places can hone business strategy in each, and foster cross-organizational collaboration on the most innovative ideas in the field.