How Some Companies Beat the Competition…for Decades and Even Centuries

By: Howard Yu and Jialu Shan

The average lifespan of companies is becoming shorter. For them to survive the competition it is important to learn to jump across knowledge disciplines and create new knowledge about how a product is made or a service is delivered. Using the Leap Readiness Index, the authors measure the readiness of financial institutes to leap to a new frontier of know-how to prepare for the future.

 

It’s common knowledge among executives that while humans now live longer, companies die faster. In 1958, the average lifespan of companies listed in Standard & Poor’s 500 Index was 61 years. Now it’s less than 18 years, according to a study conducted by McKinsey. Others have suggested that nearly 50% of the companies currently in the S&P 500 Index will be replaced over the next 10 years. These companies will be bought out or merged or go bankrupted, like Enron and Lehman Brothers and Polaroid and Kodak. And those who escape may still struggle to restore their former fortune, such as General Electric, Panasonic, Sony, ABB, Citigroup, UBS, and the like.

Automakers are on the cusp of making a major leap in their know-how from mechanical engineering with combustion engine experts to that with electric and programming experts—the same kind who build computers, mobile games, and handheld devices.

Every CEO is presumed to understand that, and also every executive, whose c-suite office either is or isn’t situated at a current S&P 500 company. It’s therefore no surprise to these executives that in 2019, the impetus is to leverage connectivity and artificial intelligence as part of their corporate strategy. No carmaker, for instance, will speak to investors without mentioning “future mobility.” BMW is a “supplier of individual premium mobility with innovative mobility services.” General Motors aims to “deliver on its vision of an all-electric, emissions-free future.” And Daimler, the maker of Mercedes, sees the future as “connected, autonomous, and smart.” In fact, automakers are on the cusp of making a major leap in their know-how from mechanical engineering with combustion engine experts to that with electric and programming experts—the same kind who build computers, mobile games, and handheld devices. In contrast to personally owned, gasoline-powered, human-driven vehicles that dominated the last century, carmakers realise that they have to transition to mobility services based on self-driving electric vehicles that will be paid for by the trip, by the mile, through a monthly subscription, or through a combination of all three.

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About the Authors

Howard Yu is the author of LEAP: How to Thrive in a World Where Everything Can Be Copied (PublicAffairs, 2018), LEGO professor of management and innovation at the IMD Business School in Switzerland, and director of IMD’s signature Advanced Management Program (AMP). A native of Hong Kong, he earned his doctoral degree from Harvard Business School.

Jialu Shan is a Research Associate at The Global Center for Digital Business Transformation – An IMD and Cisco Initiative.

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