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The Secrets of Corporate Longevity

In an age when Microsoft can pile up tens of billions in cash in a little more than two decades, one might well argue that firms should live fast and—having served their purpose—die young. But more and more theorists now argue that companies with staying power tend to be market-success stories, as well.

In an age when Microsoft can pile up tens of billions in cash in a little more than two decades, one might well argue that firms should live fast and—having served their purpose—die young. But more and more theorists, including Arie de Geus, a former strategist for Royal Dutch Shell; Jerry Porras of Stanford University and James Collins, a well-known consultant, now argue that companies with staying power tend to be market-success stories, as well. In fact, when Collins and Porras teamed up to study 18 corporate centenarians, they found that the group collectively outperformed America’s stock market by a factor of 15 since 1926.

Longevity is, of course, a relative term. Autenrieder, a German brewery, is the oldest-known commercial establishment, having been founded in 1650, the same year in which Japan’s two longest-living, sake-makers Kaganoi and Yukawa were founded. The Dutch porcelain maker Royal Delft was established a few years later in 1653. America, too, has its share of 300-plus-year-old entities. Shirley Plantation,
the oldest active plantation in Virginia and one of the oldest family-owned businesses in North America, dates back to 1614.

In terms of oldest continuously operated businesses, the U.S. can cite Cigna (1792), State Street (1795), Crane & Co. (1801), DuPont (1802), Colgate (1806) and many more (see table, p. 5).

What accounts for these impressive lifespans? Achieving this degree of longevity “doesn’t happen by accident,” answers Mary Kier, CEO of Chicago-based search firm Cook Associates, who has written extensively on the subject. “It happens to companies that have character. It happens when owners or CEOs or chairmen know how to keep their composure, even in times of economic crisis, and how to invest their money wisely to sustain the long term. It happens when employees feel it is their company, too. They do what’s right all the time. If they do that, they have a better chance of longevity and sustainability.”

About William J. Holstein

William J. Holstein