Unlike organic life, a business’ lifespan has no ceiling. Humans, for example, have a maximum life span of about 120 years. People can’t grow to be much older than that because our cells can only divide so many times. But brands aren’t made of cells, they’re made of people. So in theory, a brand can survive so long as there are people to embody it. To put this in perspective, there are several Japanese businesses that are nearly 1,500 years old.
American businesses aren’t as long-lived. For example:
In 1920, the average lifespan of a Fortune 500 company was 50 years. Today, the average leading US company stays at the top for about 15 years.
In 2005 the average lifespan of a small business was about 8 years. In 2007, that number dropped to 4 years. Now, in 2012, the average American small business might last for about 2-3 years.
Over the years, the life-expectancy of the American business has grown smaller and smaller. Why? As people, we’re living longer every year, but as CEO’s and employee’s we’re attending more corporate funerals than ever before.
BBC News put together an article called, Can A Company Live Forever?, which focused on the habits of the oldest companies in the world. Their position is that innovation and reinvention are the fountains of youth for businesses everywhere:
Nokia was a pulp manufacturer before it got into electricity and then mobile phones; at some point its brand name was even used on galoshes. Or take Berkshire Hathaway, which began as a textile mill in Rhode Island.
However, innovation for the sake of it is not the goal, says Vicki TenHaken, a professor of management at Hope College. It is a focus on “little bets” that helps companies grow and keep up with the competition, she says.
In fact, the world’s oldest limited liability corporation, the Finnish paper and pulp manufacturer Stora Enso, first started out as a copper mining company in 1288. Now the company is looking into expanding into bio-energy and green construction materials, areas that it has spent several years developing.
You’d think that the brands with the most capital and the most resources would be the pinnacle of innovation, but time and again we’ve found this not to be true. We’ve seen brands get too big, too stubborn, and too safe to innovate and save themselves, and it begs the question, is close-mindedness what’s killing our businesses?
No matter how old or how big, modern businesses need the agility and mindset of the young to be successful. The young think big and act small. They aren’t afraid to experiment because they’re going to live forever (right?), and that’s exactly how you, as a small business owner, should be thinking.
Finance’s Fountain of Youth
It’s no secret that certain aspects of the finance industry are lagging. In general, a shift towards transparency and simplicity is in order. We need to communicate more clearly, and to take down the barriers to access that are currently in place. These are the reinventions that will shape the future of finance.
The future of finance? The future of finance:
But in order to make any of these changes, you’ve got to believe in their benefits. Right now, the big brands in the space are slow to change. Sure, some are heading in the right direction, but as an independent advisor you are in the rare position to work with smaller companies that share the capacity, ideals, and mindset to shape the future. The next generation is growing up, and they’re not like their parents. Be prepared to innovate and reinvent, but take it step by step–that’s how your firm can live forever; that’s your practice’s fountain of youth.