How companies get to celebrate their 100th birthdays

May 22, 2022 Management, Strategy

Large corporations don’t really have long lives. It is estimated that the average lifespan of a large American company is under 20 years these days. Many enjoy short-lived success, and then just fail and go bankrupt. Others get merged or acquired.

Why should this be? As I wrote in my book The Bigger Deal, corporate demise is most often a case of suicide, not homicide. Companies kill themselves. They fail to adjust to changing customers and markets; they are made irrelevant by new technology; they fail to make important transitions in their evolution; or weak corporate governance exposes them to internal plunder.

Here in East Africa we have seen plenty of examples of once-dominant companies tumbling to the ground. So when one of our own makes it to 100 years, it’s time to sit up and take notice. East African Breweries celebrated its centenary this week. Having started life as a one-beer company in 1922, it is now a hundred-year-old with a hundred-plus brands in its stable, spread across the region.

So what does it take to make it the magic 100 number of years? Corporate longevity, in my observation, should be thought of in terms of two boxes. There is a box in which you place the things the organization must cherish forever; and another box into which you throw those things that must be left behind. Knowing the difference between the two boxes is where the secret of long life lies.

Box one—the things we have to protect—houses our values and principles, and our standards as an organization. The simplest way to collapse is to fail to protect the ethos on which your business succeeded. If you are known for your product quality, or strong business controls, or great bonds with your employees, or principled corporate citizenship—you relax those things at your peril. Every new generation of leaders must be sensitized in what really matters to your organization—and they must also spread the good word onwards.

In box two a great company places things like products that may once have been very popular, but no longer connect with fast-changing consumers. Strategies that were hugely successful, but have run their course. Workplace practices and norms of yesteryear. In short, this is the box that ensures you evolve and change with the times, and do not stay stuck in the certainties of the past. If this box is not filling up as the years go on, you are not doing enough to keep up with your environment—let alone lead it.

Box one keeps you grounded in your values and safe from internal pathogens; box two ensures that you refresh yourself as the world changes.

Making a good return on investment in as many blocks of those 100 years is of course an imperative; but profit alone is not the measure of long-lived success. Profit merely gives you the right and privilege to carry on doing the work you do; it is not the end in itself.

A sure way to fall is to fail to protect box one—principles and controls—while failing to put anything in box two. If you treat outmoded strategies and approaches as sacrosanct; and values as not; then the corporate graveyard beckons.

How has our brewing-and-spirits giant done with its two boxes? EABL saw long ago that responsible drinking was the only road to a sustainable alcohol business. It has never made compromises on quality—both in its products and its boardrooms. Standards have been kept high. And something else that keeps the organization resilient: ecosystem thinking. Value is created and spread across a wide range of partners, from farmers to distributors, suppliers to retailers. A wide range of stakeholders are invested in the success of the enterprise. To its credit, EABL survived an 18-month shutdown of Kenyan bars without laying off a single employee.

Lots has also changed, though. EABL is recognisably not the company it was 25 years ago. It now offers a widely diversified range of brands, for consumers of all tastes and lifestyles. It leads the way in rethinking its workplace and culture. Do you know many listed companies, anywhere in the world, where the group CEO, CFO, CHRO, and CMO are all currently women? This new inclusivity is driving a great deal of acceleration, in fresh digital channels to new customer segments, and in a cultural overhaul that is redefining the where and when of work.

Did the company make mistakes along the way? Of course it did. Will it make more? Also yes. Human or corporation, you cannot get to 100 without some episodes of misplaced priorities or strategic missteps. The point is to learn and adjust as you go—and that perhaps is the single best way to live long. Own your mistakes as well as your wins, and keep raising your game.

(Sunday Nation, 22 May 2022)