In 2017, only 60 companies remained in the Fortune 500 that had appeared on the list in 19551 . In 1965, the average tenure in the S&P index was 33 years, by 1990 it was 20 years and it is now forecast to shrink to 14 years by 2026. Carpe Diem has never been a more apt phrase.
That this has happened should come as no surprise. In 1942, Schumpeter described a process called creative destruction, calling it industrial mutation. He wrote that it:
“incessantly revolutionises the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism.”
This isn’t a new phenomenon, so why is the pace of destruction increasing? What is going wrong in today’s companies? Is there an elixir of youth that businesses can take to ensure their eternal life? Some companies re-invent themselves. The IBM of today is completely different from that of 1955. Others are more familiar, but have diversified, such as DuPont. Some broadly operate in the same space with the same product, Coca Cola for example. All, however, have evolved in some way.
Teese and Pisano wrote about the dynamic capabilities of firms. Dynamic refers to the changing environment and capabilities to the organisation’s ability to cope with that changing environment. There is little doubt that the pace of change is increasing. The average life span of an S&P entrant is testimony to that. It is the complacent company that will go out of business. The difference is that, whereas historically companies lost the battle to survive because of a single reason, there are now more pressures than ever everywhere.
This white paper looks specifically at four areas for companies that are important to review in the ever-changing economy. They are: supply chain, routes to market, innovation and the competition.
White Paper Table of Contents…
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Avoiding The Cost Of Complacency: Four Key Areas To Address In A Dynamic Economy
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