Enduring business practices – What helps some companies endure longer than others? … was the question asked by FT’s Michael Skapinker (April 2015). Is it periodic reinvention? Nokia went from paper manufacturer (1865) to mobile networks equipment (2015) via rubber boots and rain-coats, cables and tv-sets, electricity generation, toilet paper, studded bicycle tires and most recently mobile phones. Or by becoming a trading conglomerate like Sumitomo?
Arie de Geus, 38 years at Shell Oil and ending his career there as Corporate Planning Director, wrote a book about it: “The living company” first published by the Harvard Business School Press in 1997. In his book he arrives at four key attributes that long lasting businesses have in common:
- Sensitive to changes in the business environment, and organised for learning and adapting
- A strong sense of identity; shaping their ‘human community’ and putting people ahead of assets
- Tolerance of new ideas, experiments and some eccentricity at the margins; not too overly centralized
- Conservative in their financing; spare cash in the bank that allows them to snap up opportunities
While for most companies the first decennium is closer to home than their second centenary, the principles of sensing and adapting to change, valuing people and giving them some freedom to explore, and prudent financial management remain equally relevant. And may eventually bring the 100-year celebration in sight.