Secrets To Longevity

Innovative, resilient, focused and adaptable describe companies that stand the tests of time.

Window manufacturer Andersen Corp. traces its roots back 100 years to 1903, when Danish immigrant Hans Andersen and his family founded the Andersen Lumber Co. in Hudson, Wis. The firm, now with headquarters in Bayport, Minn., says it plans a year-long centennial celebration.

Automaker Ford Motor Co. also reached the century mark this year, while 3M Corp. passed that milestone in 2002.

Du Pont & Co. extends back even further. The Wilmington, Del.-based manufacturer celebrated its 200th anniversary in 2002, and it's been more than 300 years since Paris-based materials company Compagnie de Saint-Gobain began existence as part of a plan by King Louis XIV and Jean Baptiste Colbert to restore the French economy in 1665.

At a time when many companies are best characterized by "here today and gone tomorrow," these companies stay. They last. They endure. They also raise the question: How do they do that? Are there characteristics in common among companies that demonstrate great staying power? Anecdotal evidence, research and expert opinion suggest that there are underlying characteristics common among companies with long-lasting legacies.

Neatly sidestepping missteps and sailing imperviously through rough economic waters aren't among them, however. For example, few would argue that the 79-year-old IBM Corp. wasn't struggling when Louis V. Gerstner took over the reins of the Armonk, N.Y., firm in 1993. In its early days, 3M tried and failed as a mining company and jettisoned efforts to become a grinding wheel manufacturer before finding firmer footing.

Unfazed By Change

But enduring companies do demonstrate resilience and adaptability. Ken Seel, federal tax partner with KPMG LLP, New York, says they exhibit "business agility," which he describes as "the ability to outlast and outperform less nimble competitors." Such companies, he explains, maintain a continual focus on value and profitability; understand their central priorities; remain committed to communications that start at the top; have a performance culture; share decision-making; quickly obtain and filter important information from and to key constituents; and rapidly adapt to change.

"These qualities provide agile businesses with an edge that allows them to react to market changes in a way that fosters continual cost and growth refinement, thereby creating an environment to achieve consistent measured growth and sustained profitability," Seel says.

The notion of being resilient and externally focused "in the face of ambiguity and change is a theme that extends across industries and across life cycles" among enduring companies, adds Rabia de Lande Long, practice leader for WJM Associates Inc.'s organizational effectiveness practice and founder of Chartwell Advisors Inc., both in New York.

To those traits she adds several others, including clarity of purpose coupled with internal and external processes aligned to reinforce that purpose. "When change comes, [enduring companies] say, 'Things are different, we don't know what's going to happen tomorrow, but we know what we stand for, we know what we don't stand for, and -- even if we sell something different or we have a new distribution system or a new alliance -- our core is still the same," she explains.

Her words echo those of executives who lead several of those long-lasting firms. "The willingness to undertake profound change to remake the company is in the 'DNA' of Du Pont," said Chairman and CEO Charles O. Holliday Jr., last year as the manufacturer of such diverse materials as Corian, Kevlar and Tyvek heralded the start of its third century. "The constants have been our core values -- safety, health and the environment, ethics and respect for people. We believe that our commitment to science and our core values will help to create the blueprint for an exciting and profitable future."

Saint-Gobain says both the company's commitment to introspection and keeping an eye on the future contribute greatly to its lengthy existence. "Over the years Saint-Gobain has reviewed what it does best and re-examines its core businesses and competencies -- and then makes adjustments. Companies that are going to survive in the long run need to have the courage of knowing when to shift to new areas," states Jean-Francois Phelizon, president and CEO of Saint-Gobain Corp., the holding company for the U.S. and Canadian-based businesses. Additionally, he says, "We don't limit our thinking to the status quo. Instead we try to look ahead in both our organization and in our markets, and also to anticipate our customers' future needs so that we can expand our focus areas."

To illustrate, Phelizon points to a decision by Saint-Gobain to move away from being almost exclusively a materials manufacturer to garnering a significant portion of its sales from distribution. The company implemented the change due to the "compelling" potential for growth in the distribution arena, he says. "Companies that wish to survive need to be open to change and to be willing to adapt their processes, organization, business and services according to the changing needs of their customer," Phelizon concludes.

Built To Last

A wealth of business books, including the best-selling "Built to Last: Successful Habits of Visionary Companies," add perspective to what defines an enduring company. First published in 1994 and updated several times since, "Built to Last" examined what authors James C. Collins and Jerry I. Porras identified as "visionary" U.S. companies -- firms defined not only by their longevity, but companies that also were highly admired by their peers and boasted a long track record of significantly impacting the world.

The authors of this exhaustively researched tome reached a startlingly prosaic conclusion: "One of the key elements of being a visionary company is strikingly simple," they note. "Good old-fashioned hard work, dedication to improvement, and continually building for the future will take you a long way."

Collins and Porras identify two over-arching characteristics that propel visionary companies. Such institutions articulate a core ideology comprised of core values and a purpose that extends beyond simply making money. Changing times and changing strategies do not change that core ideology, they state. At the same time, visionary companies drive progress.

Innovation With A Purpose

St. Paul, Minn.-based 3M drives progress through innovation, says David Powell, vice president of marketing. 3M's products include such well-known items as Post-it Notes, Scotch tape and O-Cel-O Stayfresh sponges, which employ antimicrobial technology.

"We focus a lot on innovation, and that focus has allowed us to reinvent ourselves many times," he explains. "If a business is not doing well, our people look at that business and say, 'Is there another way of doing this?' or 'Is there another technology that would help us redevelop this business in another direction?'"

Innovation, he adds, is not simply developing new products. It extends to developing more productive ways to conduct business.

"We look at it as purposeful innovation," Powell says. A 32-year veteran of 3M, Powell is an example of a characteristic he also believes has helped 3M thrive: a focus on homegrown talent.

"We have always had a very strong culture of promotion from within. So people who have been successful in jobs have moved up to the next level, and they've taken their knowledge and their skills and their experiences to that level," Powell says. "That's helped to provide a lot of stability also."

Interestingly, 3M CEO W. James McNerney Jr., who joined the company in January 2001, is the first person to hold that position in 3M's long history who wasn't homegrown talent. However, as a former GE executive, McNerney comes from another company strongly identified with developing in-house talent.

Learning From Others' Mistakes

Just as it may be possible to pick up useful information from companies that endure, valuable lessons may also be gleaned from failure.

"We always see mistakes, we always see failures. That in and of itself is not interesting. That's part of business," says Sydney Finkelstein, a professor of management in the Tuck School of Business at Dartmouth College, Hanover, N.H. "But we also almost always say that we [can] learn from mistakes."

To that end, Finkelstein conducted about 200 interviews among 50 companies over a 5-year period to learn the underlying reasons that cause failure, either of an entire company or of an effort within a company. His conclusions are detailed in "Why Smart Executives Fail" (2003, Penguin Putnam Inc.), scheduled for release in June. The title lays the ultimate blame for failures in the lap of executives because, says Finkelstein, "executives are behind the four critical areas." The Dartmouth professor identified four critical underlying reasons for failure:

  • Strategic or organizational mindset failures. "Many companies have stumbled when they pick up or develop an inaccurate view of reality," explains Finkelstein. For example, they see opportunities where none exist or growing markets that simply aren't there.
  • Cultural bias of close-mindedness. In other words, the culture of the company keeps people from questioning faulty assumptions. It usually goes hand in hand with strategic or mindset failures.
  • Serious informational breakdowns due to communication failures at different levels of a company. "For example," he says, "why did the various clues before 9/11 never get picked up and acted upon?"
  • Leadership mistakes. Leaders simply take on perspectives that get them into trouble. The "illusion of preeminence" is an example of this failing, says Finkelstein. Executives begin to believe they know best and fail to consider other points of view. The DeLorean Motor Co., which burned brightly for a few years in the early 1980s, is a classic example of this illusion, says Finkelstein, with the company and its leadership virtually indistinguishable. Often times, he says, "a leader, often a CEO . . . believes that the company is an appendage to themselves rather than they being one cog in a company."

In the end, however, there is a no simple list of do's and don't's that executives may follow step by step to build an enduring company or avoid miscues. WJM Associates' de Lande Long says it's not that easy. "Like those Rubik's Cubes, when you move one piece you also have to move other pieces. [Companies] that can play and move all the pieces so there is congruence and alignment are more successful," she says.

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Taking The Long View: Here is a list of manufacturing firms that were founded 100 years ago or more. It is not meant to be a comprehensive overview.

Company Year Founded
Du Pont & Co. 1802
Deere & Co. 1837
Proctor & Gamble Co. 1837
Siemens AG 1847
Coca-Cola Co. 1886
Johnson & Johnson 1886
Wm. Wrigley Jr. Co. 1891
General Electric Co. 1892
NEC Corp 1899
The Timken Co. 1899
The Gillette Co. 1901
3M Corp. 1902
Andersen Corp. 1903
Ford Motor Co. 1903
Harley-Davidson Inc. 1903

 

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