Would it sound strange to you if we compared life expectancy of humans Vs companies? Because if we did, you’d be surprised how immaturely companies die – and I’m talking about the Fortune 500 category here. With life expectancy of 45 years on average (this is how long humans lived for in the 16th century), the biggest and brightest American companies proudly grow huge and die early. And while growing, most of them ignore the fact that there are over 5 thousand companies out there today who survived at least two centuries. Some even a thousand years or more. Learning from these strange papa smurf companies may sound silly though as they are usually small – most of them haven’t grown larger than 300 heads. Too small to be taken seriously, ha?. Is there still hope for a life-extending diet for the F500 though? Well, let’s see it …
Startups – the future F500’s
Looking at the future of F500’s, startup survival rates are not that strong, either. I’d classify the real survivors of this category a rare breed – like the big grey humpback whale. If you see one on the street, be sure you hug him or post a photo on your facebook timeline: me and my new friend, Moby Dick. Stats show that once a startup business is established, the clock starts to tick and by the end of year one, 25% of them is gone already. By the end of year four, 50% disappeared. Comes year ten and 71% is gone. What makes this even more depressing is to realize how many startups survive the initial idea-to-business act, so that they can start their risky year 1. No wonder where the word “venture” comes from in the term “venture capital”.
It’s you who create the statistics
OK, enough from the depressing facts: do I have to remind you that these are only statistics? And who creates these statistics? Yes, we are. You are. We create our own statistics with our decisions, with our deeds. How do you structure your team? How do you hire people? How do you craft your product, service, business model, company culture? How much autonomy, freedom of choice you give to people? These questions and many more will shape your business and set its life expectancy. Whether you’re at a multi-national, a small business or a startup, let you be the CEO, a team leader, an advocate, sales or receptionist – you have an impact and it’s never too late. If you make an impact as a CEO, board member or investor, you’re called an entrepreneur. If you make the impact in a larger company further down in the food chain, you’re called an intrapreneur. Either way, similarly to your own health, the way you do your business contributes to your company’s life expectancy.
Kongō Gumi: a business that survived 1,400 years
The picture below was taken at the beginning of the 20th century. At which point the company was already 1,300 years old. It’s the first photo of the company though as previous visual records were only paintings since the company has been established in 578. It’s a pity to operate in times with no computers, camera and electricity … but for 1,300 years?
The founder of this construction firm in Japan established the company for building a Buddhist church in 578. Instead of taking orders from the prince, he insisted on establishing his own business. Most probably, he was one of the first known entrepreneurs to the world. Over the centuries, Kongō Gumi participated in the construction of many famous buildings, including the 16th century Osaka Castle. Not losing focus, they specialized in building Buddhist temples until in World War II, the temple building industry stalled for a while. That’s where they needed to change and adapt quickly, so this company started making coffins instead for a while. At this point they demonstrated one of their survival skills: adapt to change. 50 years after WWII, the company fell on hard times in 2006 as a result of the Japanese economic crisis. So, they got absorbed by a larger construction company at which point, they had 100 (!) employees and annual revenue of ¥7.5 billion ($70 million). The last president was Masakazu Kongō, the 40th Kongō to lead the firm. Today, they are still operating as Kongō, but a wholly owned subsidiary of Takamatsu – the company who acquired them.
If you’ve ever been to Prague in the Czech Republic or you’ve read the amazing book Svejk the Brave Soldier, you surely heard of this pub called U Fleku. In case you didn’t, I created a little brief for you:
Established in 1499, this pub today is a 500-year old business and it went over change after change, got acquired, then nationalized in World War II, then privatized. What hasn’t changed is the taste of the beer and the atmosphere.
Lloyd’s from café house to insurance to a legend of good faith
Let’s have a look at Lloyd’s as an example in the modern world. Today, Lloyd’s is the world’s leading insurance business with headquarters in London. London was growing in importance as a global trade center, which led to an increasing demand for ship and cargo insurance. In 1688, Edward Lloyd’s Coffee House became the place to purchase marine insurance. 300 years later, they become the world’s leading insurance specialists in a wide range of areas.
In America, Lloyd’s most famous moment came at the time of the San Francisco earthquake of 1906. After the earthquake, Lloyd’s underwriter Cuthbert Heath said: “Pay all of our policy holders in full irrespective of the terms of their policies”. This message has since passed into insurance legend – although it was an expensive decision ($50 million in 1906, the equivalent of about $1 billion today), they knew what they were doing.
Re-inventing the wheel?
Looking at these amazing companies, what strikes me is that they all did something remarkable but they never came up with a new invention. Most of these oldest businesses do commodity services: hotels, restaurants, breweries, financial services. They remind me to Marcel Proust, who suggested that instead of re-inventing the wheel over and over again, why don’t we simply buy a new pair of glasses to see the world in different colors?
“The only true voyage of discovery is not to go to new places, but to have other eyes” – Marcel Proust
Looking at the biggest inventions, most of them have been around for tens of years if not longer. Take fax machines for example. Giovanni Castelli already did a successful fax transmission in 1860 while fax became commercially available only in the 1970’s. Could Proust’s advice be an important ingredient for success? If it is, then William Gibson is also right when he says:
“The future is here. It’s just not evenly distributed yet” -William Gibson
Who’s to distribute it? Again, us – you, my friend.
Is long life good for me?
This question comes up every time when discussing this topic. You might say that you wouldn’t care how long your company survives as you’d like to exit 3 years from today, anyway. Keep in mind that living a healthy life means feeling well every day. You can make those 3 years more enjoyable and more successful by setting up your business for a long and healthy life now. Looking at the startup stats, making 3 years isn’t easy, either. Even the funkiest parachute business will benefit from having a strong base and setup for potential long-term success.
If you liked the topic, do read the book The Living Company from Arie de Geus and you’re welcome to post your comments and thoughts here.