Up to 880 Companies Over 100 Years Old!

The list of public companies over 100 years old that was published by USA Today last week has given me a number of additions to my data base of old companies. A great many of the additions are financial institutions or utilities. My student researchers will be recalculating statistics for quite a while!

USA Today Celebrates 100 Year Old Companies

The June 16 issue of USA Today had a nice article about IBM's 100th anniverary (birthday?). In it they quote Jim Collins of "Built to Last" fame - and me! The reporter had Standard & Poors compile a list of publicly traded U.S. companies over 100 years old, which has given me a number of companies to add to my data base. CBS Sunday Morning also had a segment on IBM's reaching the century mark...as did Forbes...and The Economist...and The New York Times. IBM has done a good job of letting people know about their achievement and bringing focus to what it takes for a corporation to survive over the long term. "One central message," says the Times article: "Dont' walk away from your past. Build on it. The crucial building blocks...are skills, technology and marketing assets that can be transferred or modified to pursue new opportunities. Those are a company's core assets....far more so than any particular product or service."

Perhaps because IBM went through some very difficult times during the 1990s they are especially celebratory now to have made it to the 100 year mark. Whatever the reason, IBM is doing a great job letting the world know about their new membership in the Century Club!

Happy 100th Birthday to IBM

On June 16 IBM turns 100 years old - the same year it reaches $100 billion in sales. An interview conducted with IBM CEO Sam Palmisano by Forbes' publisher Rich Karlgaard reinforces many of the behaviors we have found in companies that have made it to the century mark. Palmisano says Tom Watson Sr., legendary IBM CEO, "believed if you really created value and not just technology you could be around a very long time. That is more enduring than just getting big."

When asked how he balances short-term and long-term financial goals, Palmisano explained: "We don't run IBM in quarterly cycles, even though there's tremendous pressure to do that, to give quarterly guidance within a penny. You certainly have to make your numbers. But I just feel it is wrong for the long term to run a company like that. That's why...we came up with our road map....to communicate to investors, as well as its employees, about the long term."

CEO since 2002, the people on Palmisano's management team are company veterans: "All the people who work for me today have been here 25 or 30 or 35 years," he says - a common profile seen in companies who are members of the century club.

Palmisano readily acknowledges the last 100 years have not all been smooth sailing - the early 1990s were particularly tough - but by refocusing on what they do well ("deep analytics....that's what IBM does....that's what differentiates us") they are proudly celebrating their 100th year positioned well for the second century.

What is the oldest company in the world?

I was being driven around York, England by a real estate agent looking at apartments to rent for the fall when I will be teaching there. We were talking about our jobs and he asked me about my research. When I told him I studied 100-year-old companies he asked me if I knew what was the oldest company in the world. I admitted that I did not. "Well I do!" he says. He had just heard a piece on the BBC about Stora, the Swedish mining company that dates from 1288 and some claim to be the oldest company in the world. Though my research focus is on U.S. companies over 100, I decided to look into this question about the world's oldest company.

Stora may be one of the oldest large corporations, but there are some older institutions - several of them in Japan and many of them in either the hotel or beverage industries. Three of the oldest: Keiunkan, Hoshi and Koman are all hotels (ryokans or onsens) founded in the early 700s.

The Marinelli Bell Foundry in Italy, successor to a company in operation since the early 1000s, is considered Italy's oldest family business. The Goulaine winery in France also traces its roots to the early 1000s and is generally considered the oldest European family-owned business. However, St. Peter Stiftskeller (restaurant) in Salzburg, Austria is said to have been in continuous operation since 803.

Another of the contenders for oldest company is Tanaka-Iga, a Japanese manufacturer of items used in religious shrines and ceremonies, founded in 885. And then there's Genda Shigyo, which has been making paper bags in Japan since 771.....wonder what people carried in paper bags back in the 8th century?

Regardless of how you define "oldest company" these are interesting organizations!

Creating Shared Value: The New "Old" Big Idea

In the January-February 2011 issue of Harvard Business Review, Michael Porter and Mark Kramer published an article saying that we could unleash a wave of innovation and growth by reinventing capitalism. Their proposal is to update our view of the way companies create value from one of optimizing short-term financial performance to one of what they call "shared value." They define this as "creating economic value in a way that also creates value for society by addressing its needs and challenges." By developing policies and practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions of the communities in which it operates, this concept of shared value focuses on identifying and expanding the connections between societal and economic progress. The authors go on to say that the purpose of the corporation must be redefined as creating shared value for the company and society, not just profit for the company.

This "new" proposal for how to reinvent capitalism appears to be very similar to one of the common operating principles of most of the 100-year-old companies I have studied. These companies see themselves as part of an integrated web of relationships with their community and the other partners in their value chain; their purpose is generally described in terms of the broad value they provide rather than profitability. As Danny Miller and Isabelle Le Breton-Miller argue in their book Managing for the Long Run, "The same attributes that have long been vilified as weaknesses of [these] businesses....have actually created formidable competitive advantages for these firms." It seems we have much to learn from these old companies: Even if their practices are not what we have been teaching in our business schools, some of our leading business strategists are now identifying practices very much in line with how they have been doing business for decades.

Can A Company "Die" Prematurely?

This question was asked in a recent Wall Street Journal management blog. The author said that economists generally answer that institutions die when they deserve to die - that is, when they have shown themselves incapable of fulfilling stakeholder demands. But then the blog went on to say that this assessment misses an important point: that just as a person's death can be untimely, so too can corporate death, at least from the perspective of society at large. The author posits that organizations grow and prosper by turning simple ideas into complex systems and that complexity takes time - a reason to encourage organizations to adjust their strategies to pursue a long-term mission.

This blog reminded me of the book that got me started on my study of old companies, Arie de Geus' The Living Company: Habits for Survival in a Turbulent Business Environment. In the prologue to his book, de Geus states that if you look at corporations in light of their potential longevity, most are dramatic failures - or, at least underachievers. The large, multi-national companies, he says, live an average of 40-50 years. Other studies on life expectancy of firms regardless of size indicate an average of 12.5 years. Knowing that companies can survive for well over 100 years, the implication is that a gap exists that represents wasted potential. De Geus maintains that no living species endures such a large gap between potential life expectancy and average realization. Moreover, few other types of institutions (such as churches or universities) seem to have the abysmal demographics of the corporate life form.

Why should we be concerned about premature corporate death? As de Geus comments: "The damage is not merely a matter of shifts in the Fortune 500 roster: work lives, communities and economies are all affected, even devastated, by premature corporate deaths." He, too, speculates that the reason for premature corporate death is because management focus is too narrow and short-term, forgetting that the organization's true nature is that of a community of humans in pursuit of a long-term mission.

"Little Bets" Innovation

I just heard author Peter Sims talk on a business news show about his new book "Little Bets." Little bets, he explains, are a low-risk way to explore and develop new ideas. He maintains that most successful people and businesses in vastly different fields use this basic method of making lots of little bets, rather than bet-your-company, big bets. What caught my attention about this interview was that he was describing one of the common factors my research has uncovered in 100 year old companies. To quote from my presentation at the Forbes Business Leadership Forum earlier this month: "These companies ARE innovative, but they do so in a very interesting way: through constant, small experimentation."

These "old" companies are very aware of their changing external environment and are constantly on the outlook for adaptations they may need to make. These companies are tolerant of (and often encourage) activities "on the margin" - experimentation within the boundaries of the firm's cohesive sense of mission and purpose. When large scale innovation and change are needed, they plan and implement it very carefully based on what they have learned from the "little bets."

Sims says in these "uncertain and rapidly changing times .... little bets must become a way to see what's around the corner, or we risk stagnating." Companies that have survived over 100 years have discovered this is the way to survive throughout the times.