Trend by Mary Kier, Chief Executive Officer, Executive Search
The chances of a company surviving 50 years are dauntingly slim. In fact, data from the U.S. Department of Labor shows that, of all private sector businesses started in 1994, only 24.6 percent were still in business sixteen years later in 2010. Getting to 50 will not be easy for these companies or any others aiming for long-term success.
Beating the odds will take more than marketable products or services, committed leaders and employees, a sound business model and strong financial support. As important as these basics are, long-term success comes down to core factors that shape every decision a company makes. From my 27-year career in executive search and more recently as CEO of a company celebrating its 50th year, I’ve discovered five secrets to corporate longevity:
The Customer:
Customer "satisfaction" not the goal
I remember a customer telling me that he was delighted with our work. That was a revelation to me in this era of customer satisfaction. I decided then that to become a great company, our goal should not be to satisfy the customer, but to delight the customer. Customer delight starts with the hard work of creating customer intimacy. Customers tell us what they want, what they wish for, what we must fix to keep their loyalty.
Customer service starts at the top of the company as an expressed value instilled in every employee at every level, no matter how big that company gets. When companies get lulled to sleep with the success of their latest hot technology or become wedded to strategies that are no longer relevant, they miss, or choose not to hear, what customers are trying to tell them. The challenge is to be so close to customers, so genuinely interested in knowing them and understanding their businesses, that we can take them not only where they want to go now, but to where they will want to be in one, two or five years. If we are students of the marketplace —if we listen to our customers for the cues not said out loud – we, like Wayne Gretsky, will "skate to where the puck is going, not to where it is."
Character:
Doing what’s right when no one is watching
Every company proclaims its commitment to values, ethics, integrity and honesty. Yet, living up to high standards is hard in a world where what rules is stock price, growth and profit. A company, public or private, that lasts 50 years has likely seen its values tested more than once. Most have proven themselves, but we all know of instances where an ethical or similar lapse brought down a company, or nearly an industry. The character of a company is visible in the everyday actions of its leaders and employees, and it starts with management, the quality of the talent they hire and the behaviors they reward.
Character shows up when leaders keep their composure in the midst of crisis or invest their own money to keep their company afloat. Employees show character when they make the right decisions when no one is looking. Everyone shows character when they stand up what is right, whatever the risk.
Courage:
Make-or-break decisions
Every company faces make-or-break decisions about wrenching changes that could risk the future of the business. The success of a big bet on a new product or a major global investment can’t be predicted with absolute certainty, so leaders step up and make difficult calls with imperfect information. Experience, judgment, instinct – and the insight of trusted advisors – have to compensate for lack of certainty.
Courage comes in all forms; a founder stepping away from the CEO role because the company is entering a new phase that requires different skills; a company selling off a business unit despite years of commitment and millions of dollars invested; a CEO battling withering shareholder criticism and holding true to conviction; an employee telling management what it clearly does not want to hear; a proud leader saying, "I was wrong." Courage doesn’t guarantee results, but success doesn’t happen without it.
I have always admired companies whose leadership is courageous in decision-making. Having just gone through turbulent economic times, we’re reminded that it is certainly easier to run a company during a strong economy. Making difficult and sometimes unpopular decisions and choices, many times in a vacuum without the consultancy of others, demands true courage.
Culture:
The daily pursuit of perfection
Corporate culture sets the framework for the ways a company operates in good times and bad, the ways employees view their roles, and the ways decisions get made every day. There is no one right culture, but our business has thrived because we push responsibility, power and authority down to the lowest level in the organization still responsible for decision-making.
The result is that people feel accountable for their success, they feel that they are worth more -- and they are right. In a culture that holds employees personally accountable, everyone thinks more broadly, fostering a team spirit that encourages thinking beyond the job description, avoids turf issues, and embodies the spirit of seamlessly combining efforts for the betterment of the company.
Cultures that are inclusive and foster ideas help leaders stay relevant to their employees, at the same time generating new and innovative ways to help the business. Cultures that stress agility, innovation and readiness for change keep a company fresh and nimble. Silicon Valley created fabulous environments and perks to encourage employees to eat, sleep and breathe technology. The cliché of an aggressive, take no prisoners mentality on Wall Street is pretty much the reality.
Whatever the culture, hiring managers need to take great care to hire employees who can thrive in it. A free-wheeling individualist may be disruptive in a culture that prizes teamwork. A deliberate thinker may not work well in a company that makes decisions on the fly. Someone who feels hemmed in by authority won’t make it in a power culture. A creative thinker might struggle in a process culture.
Something that pervades the most effective cultures is the idea of the daily pursuit of perfection. No company, even one that has thrived for 50 years, can rest on its reputation – good today may not be good tomorrow. A strong culture builds in the goal of getting better and better all the time.
Change:
Readiness and reinvention
Change doesn’t always come bearing gifts, and sometimes the hardest thing about staying in business is embracing change – seeing the priceless opportunities that can come if we adapt to the speed of change by positioning ourselves correctly and taking personal responsibility for our future.
Jim Collins (author of Built to Last and Good to Great) said that the biggest mistake CEOs make is to see no evil: "The key sign – the litmus test – is whether you begin to explain away the brutal facts rather than confront the brutal facts head on." Facing the brutal facts implies the need for change, and great companies are always anticipating, training employees to be ready, and performing a real service when they can help customers see coming market shifts, industry trends or the potential impacts of new technologies.
Sam Palmisano in a Forbes interview talked about the price of missing the indicators of change when, in the 1990s, IBM nearly went bankrupt: "IBM invented the PC but viewed it incorrectly. Unlike Intel and Microsoft, we didn’t see it s a platform."
Palmisano is committed to the importance of reinvention, and IBM in 2011 is celebrating its 100th year in business. We jeopardize our future is we cling to old expectations about how our business should operate. The ability to change is one of the biggest indicators for a company’s success.
The five secrets to corporate longevity are easy to describe but extraordinarily difficult to put into place. The companies that make it to 50 work at it every day, are not the companies they were when they started and won’t be the same in 10, 20 or 50 years. For those that make it, knowledge is the real secret to their success.