Oldest US City - Oldest US Company?

I just returned from a trip to Florida which included an interesting day in St. Augustine. Most people have heard St. Augustine's claims to being the oldest city in the U.S. but how many know what the oldest company is in the U.S.? It could be the King Arthur Flour Company, established in Boston in 1790 and now an employee-owned company out of Vermont. Or - depending on how one counts - it could be Ziljian (the musical cymbal company) which was established by Avedis Ziljian in 1623 in Constantinople and moved to the U.S. by Avedis III in 1929. Run by the 15th generation of Ziljian heirs, it is generally considered the oldest family-owned business in the U.S. I'd love to hear from people who know of other candidates for oldest U.S. company!

Profits: Goal or Fuel?

There seems to be two schools of thought regarding the purpose of a business and the pursuit of profits. The traditional financial management approach teaches that the primary goal of a business is to make money. Many, if not most, business leaders unapologetically state this as their purpose. After all, if you're not profitable you won't stay in business for very long.

Most of the 100-year-old companies, however, appear to have another view regarding the role of profits in their business: they see profits as the fuel that keeps their company running rather than as their purpose or reason for being in business. As Max DePree, former CEO of Herman Miller, Inc. writes in his book Leadership Is An Art, profits are the result of the company achieving its goals. Companies that have survived longer than most tend to define their purpose in terms of what they do and how they do it; and they often admit to making decisions that sub-optimize profits in the short term. But make no mistake, these companies are astute managers of their financial resources. In fact, being conservative in their financial management (evidenced by practices such as maintaining low debt levels and building cash reserves) is one of the common traits that has enabled these companies' long-term survival.

My study of old companies indicates that in these organizations profits are seen as the fuel that enables "living" a long corporate life; core purpose is described more broadly as the value they add to society, not simply the money they make for investors or owners.

1911 Was A Very Good Year

The stars must have been aligned in 1911 to provide the right conditions for company start-ups that last: I mentioned earlier that IBM is in their 100th year. This morning I received an email from my student researcher, who is at a 2-day interview process with Whirlpool, about an announcement at the opening session that Whirlpool is celebrating their 100th anniversary this year (which they call "Countdown to 11-11-11").

It looks like we will have a whole new group of companies to add to our data base - it will be interesting to see what these 'younsters' have in common with each other and whether they differ from those companies established prior to 1900. Companies such as King Arthur Flour, founded in 1790! Headquartered in Norwich, Vermont, King Arthur Flour is now an employee-owned company using open book management methods. They report the qualities that have enabled them to survive - and thrive - for over 200 years are:

• honest enthusiasm and for what they do, which results in earned respect from all those with whom they do business;
• a culture of inclusiveness that empowers everyone in their organization as partners; and
• viewing making money as the by-product or result of doing things well, not the focal purpose of their business.

IBM to Hit 100

While many local companies over 100 years old that I have interviewed are small, often family-owned businesses, a number of large, very well-known companies have been hitting the century mark in the last few years. IBM is celebrating their centennial year in 2011 and I have been invited to speak about my research on 100-year-old companies at the IBM Impact Conference/Forbes Business Leadership Forum in April. It is so interesting to see how a specific company exhibits the common traits that have emerged from the research!

Successful "Cultures"?

One of my students made a presentation last week on corporate cultures. His literature search was trying to find out if there were cultural behaviors that led to a company being more successful. So far he hadn't found any specific behaviors, though some literature does indicate certain generic cultures seem to lead to more company success over the long term than others. He's still working on it (the paper isn't due for two weeks). But his presentation reminded me that there has been research on very old companies which identifies some common behaviors that would appear to help these organizations survive for the long term. Though these studies were done mostly on very large, publicly-owned companies (only the Japanese study included small-to-medium sized, private companies), they did uncover some similar results:
1. The presence of a strong core ideology, corporate culture and values (Collins and Porras, Iwasaki and Kanda, de Gues, and Stadler)
2. The ability to drive for change while protecting these core values (Collins and Porras, Iwasaki and Kanda, de Gues, Stadler)
3. Conservative business practices (de Gues, Stadler)

In the next phase of my research, I plan to survey U.S. 100-year-old companies (regardless of size, industry or ownership) to see if similar items are identified.

Industry "Clusters"

When I first presented a paper on West Michigan companies over 100 years old that we had surveyed, one question I received from a colleague was whether certain industries lent themselves to longevity. Perhaps some industries are less affected by economic downturns, global competition, etc. It certainly is the case that many local old companies are retail stores or otherwise service-related. Therefore, I was very surprised when we analyzed our national data base of 100 year old companies to discover that over 40% of the companies were in manufacturing! This is even more remarkable when we note that only 4% of U.S. businesses in general are classified as manufacturing.

Of the 18 U.S. Bureau of Labor Statistics NAICS industry classifications, "old" companies clustered into six: Manufacturing, Mining, Utilities, Information, Finance & Insurance, and Management Services. These were the industries where the old companies had a significantly higher representation than in the U.S. business population overall. (Including the Management Services category in this list is misleading since there was no number reported in the U.S. Census data.) The highest percentages of old companies are found in Manufacturing (41.95%), Finance & Insurance (17.8%) and Retail (12.44%). All other categories were less than 6%.

Old Companies DO Grow Large!

Because so many of the 100-year-old local companies I had interviewed were small (less than 100 employees), I had surmised that many old companies tend to remain small - a result, perhaps, of an emphasis on survival rather than growth. However, once we assembled our data base of U.S. companies over 100 years old, we discovered that only about one-third of the companies would be considered "small" (under 100 employees). We know that we are missing many small local companies that simply haven't come to our attention and are not in any of the state records we have been able to find, but this still is a far smaller percentage than for U.S. companies overall (where over 95% of the companies have under 100 employees).

However, over 50% of the companies in our data base are "large" - over 500 employees - compared with only 1% (or less) of U.S. companies overall. The only size category where old companies and all U.S. companies appear to be similar is that of medium-sized businesses - those with 100-500 employees.