Change is not a once in a while thing anymore

May 22, 2015 Torben Rick


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Change is not a once in a while thing anymore

It’s becoming increasingly clear that change is not a once-in-a-while thing but something that is going to be happening all the time.

Change is accelerating, to the point where it will soon be nearly continuous. Periods of sustained competitive advantage are getting shorter. It’s not just something that is happening in technology, either. It’s happening in every industry.

Lifespans of top companies are shrinking, according to an Innosight study of the S&P 500 Index:

  • US corporations in the S&P500 in 1958 remained in the index for an average of 61 years.  By 1980, the average tenure of an S&P500 firm was 25 years, and by 2011 that average shortened to 18 years based on seven year rolling averages. In other words, the churn rate of companies in the S&P500 has been accelerating over time
  • At current churn rate, 75% of the S&P 500 will be replaced by 2027

 

Average company lifespan on S&P 500 index

Average company lifespan on S&P 500 index

 

40% of companies will be dead in 10 years

At a customer conference CEO John Chambers (CISCO) outlined his vision for the future. A speech, filled with fire-and-brimstone predictions:

40% of businesses in this room, unfortunately, will not exist in a meaningful way in 10 years. 70% of companies will “attempt” to go digital, but only 30% of those that try it “will be successful.

He warned companies that they could not “miss a market transition or a business model” or “underestimate your competitor of the future – not your competitor of the past”. “Either we disrupt or we get disrupted,” he said.

Change the way companies think about change

If change is a constant, then the only real sustainable competitive advantage is to be able to grow and evolve continually, to stay ahead of the competitive pack.

What companies requires today is  an organization that are agile, that can adapt and evolve on a continual basis; an organization that can generate new businesses, that can sprout and branch into new categories and new industries, that can recover quickly from failures and move on.

Interesting times ahead!

 

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Torben Rick
Change is not a once in a while thing anymore

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