The Three Secrets of Long-Lived Companies

The law firm I belong to, Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P., recently celebrated its centennial. Our chairman gave some brief but meaningful comments on this milestone. He touched on the right points as he reminded us why we have prospered all these years and what it will take to continue to do so; both the “why” and the “what” directly result from the sturdy values that are the foundation of the firm. But what I found particularly instructive were his reminders of various historical events that the firm has weathered during the past 100 years.

Coincidentally, I recently came upon an article, “Generational Business,” that describes several family-owned businesses that have prospered for over 100 years. Remarkably, some of the companies described in the article have lapped the century mark. A cutlery business established in 1861 is into fifth-generation proprietorship. The Yuengling beer company (my son’s favorite brew) has been brewing beer under the family’s supervision since 1829.

But here is the topper: the article profiles the Hill and Carter families now in the eleventh generation–nearly 400 years–of tending their company as it grows corn, cotton, and tobacco crops. This enterprise was 160 years old at the outbreak of the Revolutionary War. WOW! As a frame of reference, it is estimated that there are only about 1,100 family-owned businesses over 100 years old. So whatever the mission, interest, and product/service of a business, if you make it to the century mark, you have accomplished a rare feat, worth celebrating.

What do we learn from these companies’ longevity?

Much has been written about long-lived companies. One of my favorite reads is The Living Company,by Arie de Geus (Harvard Business Press, 1997). De Geus writes of companies that have survived for centuries and finds that long-lived companies share common traits. The characteristic I find most intriguing is suggested by the title of his book: living. He notes that companies can’t be seen as machines but as living beings. Why? Only living beings can learn and improve. Think about it–if you look at the top 100 companies in 1900 then fast forward to 2000 only sixteen of those still exist. Sixteen companies that survived two world wars, the Great Depression, numerous recessions, and unimagined changes in technology and social norms. Surely any such company is an extraordinary learner, a remarkable adapter to change!

But here is another point that surely strikes at the heart of any organization that hopes to prosper in the long term. First, remember that across the Northern Hemisphere, the average life expectancy of a company is less than 20 years. Therefore, you must be a committed internal communicator of your goals, the plans you have to reach those goals, and your value system and beliefs. The last point is really important. Why? Not everyone shares the same values. That doesn’t mean that there are right-thinking people and wrong-thinking people. I am talking about values that are subtle–not often at the front of our consciousness, but really important in guiding the progress of lives nonetheless.

One such value is having a surgical attachment to believing in a job well done. Anyone reading this note knows that a company cannot survive if it turns out products of marginal quality or if it provides services that are just “OK” in the spectrum of how jobs in that field are done. Think about it in this way: when the author of the article spoke to the head of one of the family-owned companies above, its president said that his company wasn’t merely providing a service, he was representing his family. “My name is on the sign,” the owner told him.

It is interesting how our identities are wrapped up in the particulars of the job we do and the company we work for. How often the first question someone asks of you at a cocktail party is “What do you do?” or “Where do you work?” Being identified in this manner, of course, has its pluses and minuses. Putting that aside, though, here is something you may not have considered: if you tell someone that you work for Acme Plumbing and the person you’re speaking with had a nasty experience with plumbing done by Acme, what does that make you?

The owner, executive, or employee of a substandard company? Yep. Your work should elicit a more complex analysis than that, but most often it does not. Working in a company that values its reputation is that important. My friends, if you work for a company that doesn’t inspire its employees to revere its reputation above any other value, then you need to find something else to do, and soon!

One more subtle yet important attribute of long-lived companies is that they honor the past. This can be a little tricky. Some people and organizations attempt to live in the past, sometimes getting stuck there. Yet while we cannot cling to the past on the false premise that it is preferable to suffering through the present, we need to honor those who went before us. Great nations and organizations know this to be a cultural necessity. Why? It makes for a strong sense of societal and organizational identity. It bonds individuals into a working whole, one that strives for the good of each and the good of all. It reminds us that what is important is who we are, not the perceived status of what we do. Organizational identity brands us in important positive ways.

Last weekend my wife, Jean, and I visited Ocracoke Island, a small sliver of land off the coast of North Carolina. During World War II, German U-boats sank countless ships off its coast. At one stage of the war, the toll was nearly one ship a day. Our British allies sent over ships and sailors to battle this threat. One such ship, the HMT Bedfordshire, was sunk off Ocracoke in May 1942. The bodies of four British sailors eventually washed ashore. Three of these souls were never identified. The locals buried the sailors with full military honors and a stone cross erected on each grave. The graves have been maintained all these years by the coast guard and the townspeople. How can any group of people, regardless of how it is constituted, hope to have a sense of where it is going without honoring where it has been. As a close friend once told me, “Our bodies will die away but our stories should not.”

My friends, remember the secret of long-lived companies—they realize success because they havelearned to manage change better than most, they continue holding and practicing values that are the foundation for outstanding performance, and they honor the past so that every person involved takes pride in being identified with the organization’s longevity and success.

No one in an established company wants to be left behind or left out.

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About Santo Costa

Sandy Costa is an internationally respected speaker and business leader. Check out Sandy’s website at www.SantoCosta.com
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2 Responses to The Three Secrets of Long-Lived Companies

  1. By a longshot, the majority of books, articles, seminars and blog posts herald innovation, not longevity. It’s a sexier topic, after all: we want to know about companies and leaders driving change, not longevity.

    Why? Perhaps it’s American preoccupation with shiny new objects. Perhaps it’s our creative desire to learn new things. Or it may be our struggle to manage a rapidly changing business world.

    Mr. Costa here quietly reminds us that there is something to be celebrated in our most enduring companies. As he says, companies that last have figured out how to manage change better than most, and there are lessons to be learned by those with enduring principles.

    I couldn’t agree more.

    • Santo Costa says:

      John, it is so good to hear from you and thanks for the kind words! I have been thinking of you of late and meant to write. How are you doing? Is there anything I can do to help you. I also want to know how mom is doing. With warmest wishes, your friend, Sandy

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