Author: John Ryan

When we step back and view the business landscape, it’s hard to come up with more than a handful of companies that have been around and been profitable for 30, 40, 50 or even a 100 years.  IBM certainly comes to mind.  At times IBM has been an innovation leader and has been able to survive and thrive. Thomas Watson Sr., legendary CEO of IBM is known for many famous quotes that include “It is better to aim at perfection and miss, than to aim at imperfection and hit it.”

But Watson also once said “Computers in the future may weigh no more than 1.5 tons.”  Not even he could predict the future.  IBM has enjoyed decades of success and enormous profitability and survived some terrible years; losing $16 billion dollars between 1991 – 1993, only to turn things around and earn $3 billion in profits in 1994.

It’s easy to focus articles on companies that are doing well today, it’s far more difficult to identify from that list the companies that won’t be around in 10 years.

We believe that companies with “survive and thrive” DNA all have one thing common:  Great leadership teams.  Note that we didn’t say a great leader. Companies need more than just great leaders.  We strongly believe that a robust, effective team is needed.

While there are many qualities that come to mind when thinking about resilient companies, there are 5 that we believe are essential:

1.    Keep your eyes on the prize.  Regardless which term you prefer, they are all the same thing.  Strong teams constantly check the dashboard.  Great people leave companies that are merely drifting from one quarter to the next.

2.    There are no sacred cows.  Companies without team members who ask tough questions have a blind spot.  Most mature companies prefer to stay the course, because it’s worked for them.  But companies that ignore the iceberg become part of the past. Video chains were slow to embrace change.  Blockbuster was started in 1985 and eventually became a multi-billion dollar company with 9,000 stores.  It also turned down the opportunity to buy Netflix in 2000 for $50 million dollars.

3.    You need the right players at the right time.  Sometimes leadership has to make the tough decision to  switch out some team members.  There are differences between people who are good in a crisis and those that can’t make the calls.  Just look at the mobile electronics sector.  Motorola demonstrates the first hand-held portable phone in 1973.  In 1998 Nokia becomes the world’s biggest seller of mobile phones.  Both companies are becoming part of history.  Are your current decision makers just trying to faithfully do the same thing that has worked for the last 8 years?  Is that strategy working?

4.    The only constant is change.  Embrace it.  Build it into your business plan.  Successful companies empower team members to think about the future…  Philco, Quasar, Westinghouse, Emerson, Sharp and Panasonic – What do all of these companies have in common? They all used to be big players in the TV sector.  The Japanese television companies have seen the writing on the wall, and built revenue in other sectors like gaming.  They are trying to survive and reinvent themselves.

5.    Placing 10 small bets is better than one big gamble.  We’d never tell our friends to bet their entire stack on one spin of the roulette wheel, so why run your company that way?  The new Ford F150 has modest styling aesthetics but it’s what’s under the hood that has changed the game.  Through extensive use of Aluminium the new-for-2014 truck is 350 pounds lighter.  That’s a game changing move, expect other manufacturers to follow suit.  Ford has also focused on turbocharging smaller engines as an additional way to increase fuel economy.  So they aren’t disrupting their loyal customer base with major design changes but instead, wow them with bigger modifications under the hood that dramatically increase fuel economy.  Good move.

Companies that thrive today might dive tomorrow.  The only prediction we can make with any degree of certainty is that companies that don’t subscribe to the above values won’t be successful in the future.  It’s key to have the right people in your company because they have to believe and live those same values.  So how would you grade your company?