Companies (Usually) Die Young
December 15th, 2009 | by LaSean Smith
Windows Killer! iPhone Killer! Radio Killer! The media loves to write about the new thing and how it’s going to kill the old thing. Sometimes that happens. Schumpeter’s creative destruction is very real. However, our fascination with products and/or companies killing each other is somewhat misplaced. More often than not companies either kill themselves (suicide?) or they simply die.
While reading this article on who killed radio I started thinking. Hmph. Nobody killed terrestrial radio. It just got old. Side Note: It’s ironic that record producer Terius ‘The-Dream’ Nash has a label called Radio Killa Records and is also one of the most popular producers on urban radio. He probably means “killing” it as in doing great, but hilarious nonetheless. Anyway, back to the point.
Arie de Geus wrote a book called the ‘The Living Company’ (1997). In it he reports that the average life expectancy of a multinational corporation – Fortune 500 or its equivalent – is between 40 and 50 years. He also states that one-third of the companies listed in the 1970 Fortune 500 vanished by 1983 (were either acquired, merged or broken up). Think about that. Makes you wonder if Collins and Porras should have gone back further than 1950 when they wrote ‘Built to Last’ (1994). All very fascinating stuff. This is especially true for me since I work in the tech industry. A place where 24 months seems like an eternity. And maybe that’s it. We’ve become so shortsighted as a society that 40 or 50 years seems like forever.
The Simpsons are on season twenty. Some folks in the media are questioning whether it’s time to wrap things up. There they go – championing demise and death. But I get it. Death creates anxiety and conflict. And in Hollywood it’s the conflict that sells. That’s at the essence of drama. The media (old and new) have also made drama their focus. Paul Newman got a a bit of press when he died last year. But nothing compared to Heath Ledger. I guess this makes me less surprised that we apply a similar approach to products and companies. Some of the giant corporations of today will still be around in fifty years. But most won’t. And in most cases, no competitor will directly kill them. They will just lose their vigor, drive, and foresight. They won’t understand how radically the world has changed around them. They’ll be wise, but not compelled to fight like they once did. And when they realize this has happened they will call it a day.
Bottom Line: We frame corporations as immortal. They aren’t. Billy Joel has a song called ‘Only the Good Die Young’ (1977). When it comes to capitalism, none of them actually live for very long.
