Saturday, December 19, 2009

Why Study Old Companies?

For several years I have been interested in learning about very old companies (those with at least 100 years of independent operation) to see if there are any common behaviors or strategies they employ which have led to their longevity. My curiosity regarding "old" companies began while I was the Executive Vice President of Strategy at Herman Miller, Inc. I attended a conference where Arie de Gues spoke about his time in strategic planning at Royal Dutch Shell and was able to have a conversation with him about research they had done on very large, old companies. (In 1997 de Gues published The Living Company: Habits for Survival in a Turbulent Business Environment describing the results of this work.) de Gues maintains that the average life expectancy of a Fortune 500 company is 40-50 years and asks why some are able to "live" for 200 years and more.

Once I left corporate America to become a college professor, my interest in the question of why some companies are able to live very long lives whereas others "die" young was renewed. While leading a group of students on a May Term in Japan, we heard a lecture from a Japanese professor on research he had done on very old Japanese companies. (The Japanese even have a word for such companies: shinise.) Unlike de Gues' research, Makoto Kanda's work focused more on small to medium-sized companies rather than very large enterprises.

I am now engaged in research on 100-year-old companies in the United States. I have student researchers working on building a data base and have developed a survey instrument to use with identified companies. Preliminary results indicate there are advantages not only to the company owners and investors when a company survives for a long period of time: employees, customers, suppliers and communities all appear to benefit from company longevity. I will publish progess on our research on this blog.

I am also very interested in hearing about companies readers know of that are over 100 years old. Are there things new companies can learn from the "century club" that might ensure their own survival beyond the average company lifespan? What do you think - does age matter?

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