Continuous improvement is essential, but it’s merely a ticket to stay in the game.

#1 · September 6, 2019, 5:50 pm

Quote from sudheendra@sudheendra.co.in on September 6, 2019, 5:50 pm
Why is it that the average lifespan of company in the *US* has fallen from 67 years in the 1920s to just 15 years today? And why might 75% of firms now be gone or going by the year 2027 or thereabouts?

In the *UK* it’s a similar story. Of the 100 companies in 1984, only 24 were still breathing in 2012, although average corporate lifespans in the UK were somewhat longer.

*However, with start-ups it’s back to bleak, with almost 50% of SMEs failing to celebrate their 5th birthday.*

The reasons UK start-ups fail are said to include cash flow issues, a lack of bank lending, too much red tape, high business rates and competition.

*The main reason that big companies die* – beyond being consumed by larger or more aggressive companies – is that they fail to anticipate or react to new technology, new customer demands or competitors with new business models, products and services, all of which are often linked and can cause considerable disruption and disturbance.

*Bill Gates once said that “success is a lousy teacher, it seduces smart people into thinking they can’t lose.”*

In other words, nothing recedes quite like success and large companies can become delusional about their fitness, their intellect or the speed and energy with which new ideas and inventions can move.

*If arrogance is one silent killer,* another is that as companies grow and become *bigger management can become distanced from both insight and innovation.*

People working in customer relations, IT, sales or even accounts can be extremely close to customers, and hence to the inception of new ideas, but senior management often writes off these departments as cost centres rather than hotbeds of insight and innovation.

*To sum up, if companies wish to remain healthy and grow old they need to do two things.*

Firstly, they need to *remain young at heart.* Like me loh. They need to remain mentally agile, constantly learn new things and question their own identity and reason for being.

This means repeatedly asking what business they’re really in and how best they can serve both current and future customers using current and future technologies, channels and business models.

Secondly, companies *must look at innovation from a whole business perspective* and make innovation truly cross-functional.

If innovation exists purely at a departmental, product or service level it’s unlikely to proceed beyond incremental refinement.

Continuous improvement is essential, but it’s merely a ticket to stay in the game.

To win the game companies must consider more radical developments including the ground up reinvention of everything they do and also link innovation to strategy.

Why is it that the average lifespan of company in the *US* has fallen from 67 years in the 1920s to just 15 years today? And why might 75% of firms now be gone or going by the year 2027 or thereabouts?

In the *UK* it’s a similar story. Of the 100 companies in 1984, only 24 were still breathing in 2012, although average corporate lifespans in the UK were somewhat longer.

*However, with start-ups it’s back to bleak, with almost 50% of SMEs failing to celebrate their 5th birthday.*

The reasons UK start-ups fail are said to include cash flow issues, a lack of bank lending, too much red tape, high business rates and competition.

*The main reason that big companies die* – beyond being consumed by larger or more aggressive companies – is that they fail to anticipate or react to new technology, new customer demands or competitors with new business models, products and services, all of which are often linked and can cause considerable disruption and disturbance.

*Bill Gates once said that “success is a lousy teacher, it seduces smart people into thinking they can’t lose.”*

In other words, nothing recedes quite like success and large companies can become delusional about their fitness, their intellect or the speed and energy with which new ideas and inventions can move.

*If arrogance is one silent killer,* another is that as companies grow and become *bigger management can become distanced from both insight and innovation.*

People working in customer relations, IT, sales or even accounts can be extremely close to customers, and hence to the inception of new ideas, but senior management often writes off these departments as cost centres rather than hotbeds of insight and innovation.

*To sum up, if companies wish to remain healthy and grow old they need to do two things.*

Firstly, they need to *remain young at heart.* Like me loh. They need to remain mentally agile, constantly learn new things and question their own identity and reason for being.

This means repeatedly asking what business they’re really in and how best they can serve both current and future customers using current and future technologies, channels and business models.

Secondly, companies *must look at innovation from a whole business perspective* and make innovation truly cross-functional.

If innovation exists purely at a departmental, product or service level it’s unlikely to proceed beyond incremental refinement.

Continuous improvement is essential, but it’s merely a ticket to stay in the game.

To win the game companies must consider more radical developments including the ground up reinvention of everything they do and also link innovation to strategy.