Codes and principles of Corporate Longevity: Unveiling the Secrets of Sustainable Success and long lasting organization

Is the endurance of corporate longevity significant, and if so, what enables certain companies to continually create value and persist for decades or even centuries, while others face a gradual decline or a swift fizzle after a brief period of creative productivity?

Corporate longevity, while not an end in itself, ultimately becomes the ultimate performance metric. However, defining longevity in a business context is a relative concept. Some industries, such as professional services, private banking, insurance, and luxury watches, naturally lend themselves to long time frames, especially when customer trust is paramount. Conversely, industries like technology or fashion experience rapid change and lower entry barriers. Hence, measuring longevity in innovation cycles, rather than years, offers a more accurate perspective.

In the past, strategic planning cycles and the concept of "strategic pacing" played a crucial role in ensuring alignment with industry cycles and stakeholder expectations. Unfortunately, these practices have diminished, leading to complications when there is a misalignment between industry cycles and investor, customer, or employee horizons. For companies aspiring to corporate longevity, strategic management should involve a continual evaluation of the fit between their enduring mission, industry and business cycles, and evolving strategic priorities.

The importance of corporate longevity often faces skepticism from free-market economists who champion Joseph Schumpeter's concept of "creative destruction" as a messy yet effective way to deliver valuable innovations and progress. In a free society, they argue, hindering innovations that render existing products and companies obsolete would be counterproductive, as it brings prosperity and benefits to the broader population. Allowing new managers or owners to utilise existing assets more productively is deemed essential for economic vitality.

While there is validity in this argument, it is crucial to continuously scrutinise and challenge it to prevent potential misuse. Not all destruction is inherently creative, and not all creativity leads to destruction. The demise of a company can have broader economic repercussions, disrupting established assets such as R&D know-how and strong consumer and supplier relationships. A company that adeptly adapts to market demands not only avoids the trauma of decline or an unwanted change of ownership but also steers clear of genuine transaction and disruption costs.

Why do some companies with corporate longevity endure while others vanish? Business demise, well-documented at a general level, results from factors such as failure to adapt to market changes, human failings, loss of operational competitiveness, and an inability to cope with technological innovations. Legacy assets and mindsets can also pose a challenge, as some companies grapple with escaping a successful past and accepting the costs of responding to seismic change.

Observations of organisations with corporate longevity that successfully adapt over multiple product and innovation cycles reveal key characteristics:

• Unwavering focus on understanding and satisfying customers, including innovative ones.
• Active engagement with key suppliers to identify opportunities and solve problems.
• An outward-looking approach, understanding broader trends outside the organisation.
• A willingness to challenge legacy thinking and foster internal competition.
• Avoidance of hubris through a culture of dissatisfaction with current performance.
• A "grow your own" talent philosophy mixed selectively with external hires.
• A refusal to tolerate extended tenures in top-management roles.
• Relentless focus on values reflected in key managerial processes.
• Meaningful engagement with younger generations for innovation and avoiding generational barriers.
• Active, supportive boards challenging priorities and the status quo.

While these themes involve risks and conflicts, successfully navigating them can lead to enduring strong performance, supporting corporate longevity.?