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In 2001, while interviewing executives at Nokia, I was introduced to the Finnish word nöyryys. It meant humility, I was told, but humility with a quiet self-assurance. That self-assurance seemed well-deserved. Nokia was then the giant of the mobile phone world, controlling 35 per cent of the global market.
Could it last, I asked in the articles I wrote at the time. We now know that it did not. After being eclipsed by Apple’s iPhone and by Android-based Asian handsets, Nokia last year handed over its much-weakened mobile phone business to Microsoft. But Nokia has not disappeared. It is now a mobile networks operation, has a digital mapping business and owns a host of patents.
Reinventing itself is not new to Nokia. It has done so repeatedly since it began life in 1865 as a paper manufacturer. It has since been a maker of rubber boots, raincoats, cables and television sets. It has been an electricity generator, was once Ireland’s leading producer of toilet paper and the world’s only supplier of studded bicycle tyres.
This is unusual. Few companies change their businesses as dramatically and only a minority last as long. In an influential book, The Living Company, first published in 1997, Arie de Geus asked why some companies endured while others died young. The average multinational company lasted less than 50 years, but some, such as Nokia, were well over 100 years old. Royal Dutch Shell, where Mr de Geus worked for 38 years, began in 1833. A few had been around for centuries, he wrote. The Sumitomo Group of Japan could trace its origins to a copper casting shop founded in 1590.
In no other type of organisation, whether universities, armies or churches, was there such a disparity between the shortest and longest-living institutions.
Does it matter whether companies live centuries or not? Is not the death of companies and the birth of new ones the way economies and societies progress – through what Joseph Schumpeter called “creative destruction”?
Yes. Companies can become complacent, as Nokia was about the arrival of the smartphone. Many are replaced by quicker, more alert competitors. But Mr de Geus and others have argued that long-living companies perform a valuable role.
They lay down roots. They establish links with communities, provide employment and memories to successive generations of workers and act as an important social glue. As families have become more fragmented and people more mobile, long-living companies provide a sense of cohesion and communal solidarity.
When they die, neighbourhoods are often left desolate, longstanding suppliers lose business and former employees and their families are deprived of their workday memories.
So why do some companies manage to last so long?
In his book, Mr de Geus pointed to four characteristics of long-lived companies. First, they were sensitive to changes in the business environment and in their societies. Second, they had a strong sense of identity. Third, they were “tolerant”, by which he meant that they were not over-centralised and allowed experiments and eccentricities among their staff. Finally, they were conservative in their financing – “they knew the usefulness of having spare cash in the kitty”.
There are other questions we can ask.
Is ownership important? Some companies survive because they are family-owned, educating each new generation to take a role and become executives. But family ownership is no panacea. It is difficult to instil hunger for success, hard work and managerial savvy in successive generations. And not all of the oldest companies are family-owned.
Does the industry matter? Is it easier to survive in the resources business, say in mining, than in the tech industry? It is difficult to judge. The technology industry is too young for us to know whether, for example, Apple, Microsoft or Facebook are going to show real staying power. Certainly, companies that were once big names in technology – Wang and ICL, for example – are no longer around.
And, most important, can large companies keep innovating or are they inevitably undermined by new arrivals with smaller bureaucracies, no pension liabilities and less of an investment in older technologies and ways of operating?
Over the next few months, the Financial Times (which itself is 127 years old) will be examining what helps some companies last so long – and how they can fend off decline. We will be running events and broadcasting videos from the leading business cities on four continents: Hong Kong, Johannesburg, New York and London.
Each of these financial and commercial centres has companies that have been around for decades or centuries, as well as thriving start-ups. We will be interviewing executives from both types of companies, as well as academic experts.
But we also want to hear from you, the FT reader. Do you think long-living companies are valuable to our societies and, if so, what do you think helps them endure? Do you work or for a company that has been around forever, or do you work for a recent corporate arrival – or perhaps you have worked for both? How do you think the most successful older companies have done it? Please join in the debate by posting your thoughts here or follow #FTLongevity.on Twitter.
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