How long will your company last?
As our 21st birthday passes by, some folks look surprised when I state that we are going to create a 250 year multi planet legacy at Transaction Focus.
This may be because it is unusual these days for company directors to take such a long term business view; most directors in the Western business world focus readily on a retirement goal or exit date.
Society almost pre-conditions us to think this way.
Both McKinsey and Simon Sinek (in his book The Infinite Game) point out that the average lifespan of a S&P 500 Company has dropped from an average of 61 years in the 1950’s to 18 years today.
This is a huge and significant decrease :-
Intense global competition, Consolidation, investment community and Director greed are clearly contributing factors.
After 9/11, we were all required to report on a quarterly rather than annual basis, as the World supposedly became a less secure place. A much shorter term business view ensued.
In the 1990’s, triple line index and CSR reporting was brushed aside in favour of shorter term shareholder returns.
FTSE, NYSE and NASDAQ quoted companies increasingly sell partial shares or break off divisions of national household companies for short or medium term financial gains. In Scandinavia, France, Germany and Japan, this is less common place.
Few companies focus enough on creating a deep, meaningful culture that inspires future generations who are increasingly purpose and impact driven.
More flexible, innovative collaborative and co-operative shareholder models are appearing, albeit less investor friendly !!
Some even suggest that the traditional shareholder model created by Kodak in 1921 is broken.
Management buyouts are growing. Talent acquisition is more time consuming and costly since the Covid induced “Great Resignation”, hence new innovative remuneration approaches are required.
Although start ups are arguably leading the way with a keener focus on purpose driven missions, sadly only 5-10% of European start ups survive more than 5 years. Only 10% of this 5-10% survive another 5 years according to Hiscox business insurers. The Start Up sector of the economy is far more precarious and less glamorous than politicians or the media make out.
Black Swan events (i.e. Covid-19 and the Ukraine War) seem to be coming along more frequently, so this start up rate of survival does not look like improving.
Fortunately, family companies buck the trend as generational custodians arguably have a greater responsibility to safeguard the family legacy and crown jewels and hence opt for more cautious long term strategies.
Japan also bucks the trend : According to Statista, five of the oldest companies Worldwide are Japanese and nine out of twenty oldest companies still in existence today are Japanese.
As a student of Japanese long term Corporate business modelling this comes as no surprise.
Maybe now is the time to focus on Sustainable Sustained growth as COP 30 Brazil new ESG initiatives become common place in larger and medium sized enterprises.
As Professor Brian Cox and Elon Musk and Jeff Bezos articulate the importance of multi-planet existence (even initially by humanoids) and are making significant strides in this direction, we at Transaction Focus simply aspire to connect countries (and maybe planets in the future) and enable the ambitious to prosper peacefully and sustainably.
We are always inspired by long term alliances and partnerships like the British and Portuguese trade partnerships that have withstood the test of time over 500 years.
This said, our day to day focus is on enabling our clients and partner to thrive by simply providing revenue growth.