Category : 2018
What can an executive looking for career longevity learn from companies that found their way through repeated cycles of change, disruption, and competition?
Start by looking at those who lost the game. Only 74 (15%) of the inaugural Standard and Poor’s (S&P) 500 companies remain on the list today. A mere 12 of those companies have outperformed the S&P index. Only 11% (54 companies) of the original Fortune 500 are still contributing to the global economy.
Woolworth’s, Eastern Airlines, Blockbuster, General Foods, Kodak, and maybe soon-to-be-added Sears-were names on the marquee of corporate success for decades. Their failed strategies make them footnotes in business school case studies. In 2018, 126-year-old GE became a S&P used-to-be.
What causes the great to fail? A Credit Suisse study, cited in an August 24, 2017 article in Money concludes, “the disruptive force of technology is killing off older companies earlier and at a much faster rate than decades ago, squeezing employers, investors, and other stakeholders.”
The survival or demise of a transnational enterprise has more to do with decisions than disruption. The forces of change in our global economy are unavoidable. How executives respond to those dynamics determines the lifespan of a company-and the longevity of the leader. Executives in companies that employ those forces thrive. Those that fail to adapt are quickly forgotten. Netflix, Amazon, Twitter, and Salesforce.com enjoy places of prominence on the S&P today. They, like all of the long-term S&P companies must make prudent, forward-thinking decisions to remain viable contenders.
The difference is determined by decisions. Though slightly dated, a 2010 McKinsey survey of 2,207 executives, found only 28% rated their strategic decisions as “generally good.” Sixty percent saw bad decisions made as frequently as good. McKinsey concluded, “the proclivity of bad decision making is usually intensified by poor decision-making systems in organizations.” Executive development firm Navalent’s 10-year longitudinal study on executive leadership concluded that 61% of executives appointed to senior leadership roles were not ready for the challenges they encountered. Perhaps that helps explain why over 50% of executives fail within the first 18 months in the role.
The decisions an executive makes to ensure his/her longevity closely parallel what companies must do to survive in an unpredictable and unprecedented market.
Recognize and engage disruptive forces. When executives and the companies they lead encounter the unexpected, they do well to take a chapter from the playbook of Jujitsu. “Ju” means to be flexible, pliable, yielding. Jitsu is an art or technique. Combined, they create a method of using an opponent’s force rather than confronting it with an opposing force. This does not mean executives and enterprises accept the “resistance is futile” message of a Star Trek Borg. It does mean leaders who want more than a shooting star career trajectory must give serious attention to assessing and adapting both the impact and nuance of business evolution. We manage change no more than we manage time. All we do with both is manage the choices that determine our outcomes. Industry changing innovation is disruptive. Downsizing, rightsizing, offshoring, and unexpected terminations are realties of the 21st century. Leaders and companies that thrive in disruption do so by engagement not avoidance.
Release what worked in the past. A powerful mantra for any executive wanting longevity is to look at any situation remembering, “This is not that.” When an acquisition opportunity looks like one completed successfully in the past, it isn’t the same and should not be managed as if it is. Quaker Oats’ highly successful acquisition of Gatorade in 1988 prompted their purchase of Snapple in 1993 for $1.7 billion. Multiple unanticipated factors made this one of the worst acquisition stories in history, and Snapple was sold four years later for $300 million. An effort to replicate a past success in a new environment is an inadequate response to today’s market dynamics. The same job title in a different context, demands a fresh approach.
Re-invent. Re-invent. Re-invent. Western Union used to send telegrams-now it sends money. Gaming giant Nintendo started as a playing card company. IT services company Wipro began by manufacturing and selling vegetable oil to Indian housewives. American Express morphed from serving banks, to offering money orders, to creating the first traveler’s checks, to the global financial services and travel company it is today. Executives with successful long game strategies learn how to market their contributions more than their experience. They speak of their capabilities in industry-agnostic terms. Leaders positioned for ensuring success are willing to move out of a comfort zone of familiarity to the unknown of opportunity.
No stranger to opportunity, failure, and innovation, Richard Branson wisely reminds us “Every success story is a tale of constant adaptation, revision, and change.”