Comparison amongst three global centurion organisations reveals that corporate longevity is not a product of chance but of deliberate strategy and adaptability. Certain qualities are common to all such resilient companies.
Three Centenarians of the Corporate World
Let’s do a summary case study of the transformation of three centurion organisations– PricewaterhouseCoopers (almost 200 years old), IBM (nearly 111 years), and Ericsson (close to 150 years) to understand that their longevity is not a product of chance but of deliberate strategy and adaptability.
Some of the sterling qualities that are common to all such resilient companies are:
- Embracing Change:Successful long-lived companies often embrace change before it’s forced upon them. They invest in research and innovation, adapting their business models to the currents of the market.
- Strong Corporate Culture:A robust corporate culture that fosters employee loyalty and a shared sense of purpose can provide a stable foundation through fluctuating market conditions.
- Diversification:Diversification of products, services, and markets can spread risk and open new revenue streams, providing a buffer against sector-specific downturns.
- Financial Prudence:A conservative approach to finance with a focus on long-term stability rather than short-term gains can help companies endure economic cycles.
Ericsson’s Commitment to Innovation
Ericsson’s dedication to innovation is the cornerstone of its enduring success. From its early days of manufacturing telegraph equipment to pioneering mobile phone technology, Ericsson has consistently invested in research and development. This commitment ensures that it not only keeps pace with technological advancements but often leads the way. Ericsson’s development of the AXE telephone exchange system was crucial to its success, becoming the world’s best-selling telephone system and significantly contributing to their position in mobile telephony
PwC’s People Power
PricewaterhouseCoopers (PwC), with a heritage that dates back to the 19th century, has demonstrated corporate longevity through a series of strategic decisions, innovative approaches, and time-tested practices. The firm has emphasised the empowerment of its workforce, fostered a flexible and agile mindset, and created an inclusive environment. PwC’s commitment to social mobility and diversity in its recruitment strategies has also contributed to a more dynamic and adaptable corporate culture.
IBM Driven by R&D
IBM, a venerable giant in the tech industry, has demonstrated remarkable longevity, thriving for over a century. IBM has continually evolved its business model in response to market trends, shifting from hardware and software manufacturing to a current focus on cloud computing, AI, and blockchain technology. This ability to reinvent itself has kept IBM relevant and competitive. IBM’s substantial investment in R&D has been a significant factor in its success. With one of the world’s largest corporate research organisations, IBM has consistently been at the forefront of technological advancements. This is evidenced by its record of holding the most patents generated by a business for 28 consecutive years as of 2020.
How some Indian organisations have thrived
The survival and success stories of Indian business groups like Tata, Godrej, Birla, Bajaj and Dabur offer valuable lessons that are applicable not only in the Indian context but globally. These lessons encapsulate strategies for long-term success, resilience, and adaptability in a rapidly changing business environment.
One of the standout features of these groups, especially the Tata Group, is their unwavering commitment to core values and ethical practices. Upholding principles like integrity, responsibility, and community welfare fosters trust and loyalty among customers, employees, and stakeholders. This ethical approach to business is crucial for long-term sustainability.
Companies like Dabur have thrived by deeply understanding consumer needs and preferences. Adapting to these needs, whether through product innovation or market strategy, is essential for maintaining relevance and growing the customer base.
A strong commitment to CSR, particularly in the case of the Tata Group, has helped build a positive brand image and deep respect among the broader public. Engaging in activities that benefit society aligns with their business ethos and helps in building sustainable communities.
Mortality rate of Indian companies & a pause in the Start-up Boom
The mortality rate of Indian companies, particularly startups, presents a complex landscape. As of 2023, new business failure statistics in India indicate that 20% of projects fail by the end of the first year, 30% by the end of the second year, 50% by the end of the fifth year, and 70% by the end of the tenth year. Notably, 9 out of 10 new businesses in India fail, and this rate is even higher for venture-backed firms, with a failure rate of 7 out of 10 times. For first-time entrepreneurs, the success rate is a mere 18%.
Examining the case of Byju’s provides insight into the struggles faced by some of India’s largest startups. Byju’s reported revenue of $429.18 million for the financial year ending March 2022, which was significantly lower than its projected unaudited revenue of $1.25 billion. The company also faced setbacks such as missed revenue projections, delayed account filings, and the departure of key executives and board members. These issues were compounded by the criticism from one of its major investors, Prosus, for not evolving sufficiently and disregarding the investor’s advice. Additionally, Byju’s had spent about $2.5 billion acquiring various firms in 2020 and 2021, and is now looking to sell many of these businesses to clear dues to its lenders.
These examples highlight the challenges Indian startups face, including high expectations, rapid expansion, and the complexities of managing growth and innovation in competitive and evolving markets.
In this end, organisations that thrive and survive through the centuries have always put values above valuations, and this will continue to hold true regardless of the tumultuous changes that the future will bring.