Richard Watson, Futurist-in-Residence at the Technology Foresight Practice at Imperial College London

Why is it that the average lifespan of an S&P 500 company in the US has fallen from 67 years in the 1920s to just 15 years today? And why might 75% of firms in the S&P 500 now be gone or going by the year 2027 or thereabouts?

These figures come from a study by Richard Foster at the Yale School of Management and echo another from the Santa Fe Institute that found that publically quoted firms die at similar rates regardless of age or industry sector. In this second study the average lifespan of American companies was cited at just 10 years. The reason given for most of these companies dying or disappearing is a merger or acquisition.* A third US study** of S&P companies reports an average company age of 61 in 1958, 25 in 1980 and around 18 today, but the trend toward shorter lives remains regardless of which study you read.

In the UK it’s a similar story. Of the 100 companies in the FTSE 100 in 1984, only 24 were still breathing in 2012, although average corporate lifespans in the UK were somewhat longer. However, with start-ups it’s back to bleak, with almost 50% of SMEs failing to celebrate their 5th birthday.

The reasons UK start-ups fail are said to include cash flow issues, a lack of bank lending, too much red tape, high business rates and competition.

With larger enterprises in the UK and elsewhere the situation can be somewhat different. The main reason that big companies die – beyond being consumed by larger or more aggressive companies – is that they fail to anticipate or react to new technology, new customer demands or competitors with new business models, products and services, all of which are often linked and can cause considerable disruption and disturbance.

This is Darwinian evolution applied to capitalism and the only solution is to keep your eyes and ears wide open for predators and to continually evolve what you do through a process of constant adaption and occasionally accelerated mutation.

The list of corporate casualties is certainly long. Most people are aware of how things developed at Kodak, but the list of companies killed off or seriously injured by new technologies, new competitors or new customer behaviours includes a roll call of previously proud British names including Ferranti, Psion, Acorn Computers, De Havilland, British Leyland, British Steel, ICI, Marconi, Swan Hunter, Armstrong Siddeley, GEC and ICL.

Interestingly, in each case the writing was on the wall long before many of these companies went bankrupt or were taken over, but if there’s one thing that you can rely on with big companies it’s that, like super-tankers, they can take a long time to change direction and the view from the bridge is often partially obscured or heavily contested.

Deaths and disappearances

Acorn Computers, Apricot Computers, Armstrong Siddeley, BNFL, British Computer Rentals, British Leyland, British Movietone News, British Steel, De Havilland, Dunlop Rubber, English Electric, Exchange & Mart, Express Diaries, Ferranti, GEC, ICI, ICL, International Typewriter Company, Laker Airways, London Daily News, Lucas Industries, Marconi Instruments, Meccano Ltd, Our Price Records, Phones 4U, Plessey, Psion, Radio Rentals, Rediffusion, Rootes Group, Swan Hunter, Thornycroft, Vickers, Woolworths and…Psychic News (!)

Note: As with the Yale Study disappearances include the effects of M&A activity and government action as well as bailouts and bankruptcies.

Nothing recedes like Success

Putting to one side new technologies, new competition and new customer demands, a key point is geriatric corporate cultures. Bill Gates once said that “success is a lousy teacher, it seduces smart people into thinking they can’t lose.” In other words, nothing recedes quite like success and large companies can become delusional about their fitness, their intellect or the speed and energy with which new ideas and inventions can move.

If arrogance is one silent killer, another is that as companies grow and become bigger management can become distanced from both insight and innovation. Peter Drucker made this point decades ago, although he used the word entrepreneurship. Managing and innovating are different dimensions of the same task, but most large companies regard them as separate to the point of putting them in different departments or locations. As the urgency to stay alive financially evaporates the focus shifts away from urgent opportunities and threats to lethargic internal issues and a kind of corporate immune system develops whereby new ideas tend to be rejected by the corporate body the minute they form.

If you drop down the organisation chart to departments such as customer complaints this isn’t always the case.

People working in customer relations, IT, sales or even accounts can be extremely close to customers, and hence to the inception of new ideas, but senior management often writes off these departments as cost centres rather than hotbeds of insight and innovation.

With R&D it’s often much the same story with scientists and engineers being regarded as grey-suited bureaucrats offering up ponderous improvements rather than white-coated warriors fighting for discoveries that could transform the company.

The culture of organisations contributes to failure in other ways too. The dominant culture of most very large companies is highly conservative and quite rightly so. Publically quoted firms primarily exist to provide a regular return to shareholders and to keep workers in regular employment. But to do both these things they must also deliver constantly evolving products that create value for customers.

This is like a tightrope that’s not only swaying in the wind, but is being constantly moved and adjusted at one end while you’re still walking along it. Interestingly, Mark Vergano, an executive VP at Du Pont once made a similar point with regard to R&D saying that:  “Research and development is always a delicate balance between maintaining a long-term view and remaining sensitive to short-term financial objectives.”

To sum up, if companies wish to remain healthy and grow old they need to do two things.

Firstly, they need to remain young at heart. They need to remain mentally agile, constantly learn new things and question their own identity and reason for being.

This means repeatedly asking what business they’re really in and how best they can serve both current and future customers using current and future technologies, channels and business models.

Secondly, companies must look at innovation from a whole business perspective and make innovation truly cross-functional. If innovation exists purely at a departmental, product or service level it’s unlikely to proceed beyond incremental refinement. Continuous improvement is essential, but it’s merely a ticket to stay in the game.

To win the game companies must consider more radical developments including the ground-up reinvention of everything they do and also link innovation to strategy.

Three quick ways to extend the lifespan of your company:

1. Constantly look out for and test new ideas that could breathe new life into your company or fatally wound your company if applied by a competitor.

2. Similarly, don’t simply keep an eye on what your closest competitors are doing, also study what small start-ups outside your immediate market or geography are doing. Are they doing anything unusual? Are they doing anything that doesn’t immediately make sense? If so dig into why.

3. Keep a close eye on what your youngest customers and employees are doing. What are they doing that you aren’t? Could such behaviour be an early warning signal of change?

Footnotes.

* A merger or acquisition isn’t necessarily a business failure, but can nevertheless be a sign of weakness or long-term illness.

**Innosight study (US).

If you’re wondering, the world’s oldest limited liability corporation is Enso Stora, a Finnish paper and pulp manufacturer that started out as a mining company in 1288.

By Pedro Rente Lourenço, data scientist at Vodafone Group Data and AI Centre of Excellence and speaker at Imperial Business in the City: Innovating Through Big Data and AI

Vodafone is focusing on artificial intelligence (AI) and Big Data technologies to grow our business, improve internal efficiencies, and contribute to social good, while having as a first priority the privacy and security of our customers. Over the past three years, our Big Data and AI department has grown from a small start-up venture within Vodafone to have global presence in 24 countries.

As food for thought before the Imperial Business and the City event, ‘Innovating through Big Data and AI’, I considered three things I have learnt from our growth journey about how to create value from investments in analytics and associated technologies like AI and machine learning:

1. Create a compelling offer to attract and develop talent

A key barrier to innovation is the availability of knowledgeable talent with a combination of AI and machine learning skills, business insight, and strategic communication skills. With more and more companies realising the hidden value in their data, it is not surprising that data scientists with these skill sets are in high demand.

As a data scientist, what I value is the opportunity to make an impact through my work by solving meaningful problems with high quality data.

A country with a market size of 12 million people might generate over a billion data points per day on the Vodafone network. With this vast data lake, we address business issues like optimising our customers’ experience of Vodafone products. But we also use our data for positive social impact, through aggregations of large-scale pseudonymized datasets.

I recently returned from Mozambique where I was presenting my work on malaria epidemiological studies. We used Vodafone’s pseudonymised network data to model the movement of people across the country, generating insights about how the disease spreads, which the relevant stakeholders can then use to develop elimination strategies.

Companies should be careful not to neglect the people element of their strategy. What makes your company attractive to a data scientist?

2. Combine short-term wins with long-term vision

Our Big Data applications are delivering personalised offers to our customers across the globe, increasing sales and improving customer experience.

As of January 2019, we are using AI learning to underpin over two thirds of our proactive communications to customers, to drive a predictive, proactive, and personalised experience.

But what is this personalised experience? For example, by looking at the past experiences and interactions of customers who have opted in to share their data with Vodafone, we can recommend the best smartphone for their needs, or the correct data bundle based on their previous usage, which in turn improves customer experience.

As an example of the impact of our personalised offers, in 2018 Big Data applications contributed to the sale of 2.3 billion communication bundles to our South African customers, an increase of 51% from 2017.

Companies can focus too much on long term dreams and neglect the latent potential of existing data which, when exposed to the latest analytics techniques, can shed new light on current business priorities.

At the same time, having a solid long-term vision for data science is crucial to fully unpack the value lying in a company’s data. I truly believe in this ‘double-geared’ strategy to power quick wins coupled with longer term, high-reward projects. Striking the right balance between short and long-term goals is hard, but it is something that, in my opinion, needs to be addressed from the start, to have iterative approaches aligned with a long-term strategy.

3. Integrate data scientists into the wider organisation

Data scientists should not be the smart nerds waiting for a specific request to develop a model. Embedding this function into the business is quintessential to properly drive Big Data transformations. At Vodafone, we believe strongly in integrating data science into the day-to-day business of the company.

To have maximum impact, data scientists need to collaborate closely with business units and have an in depth understanding of company goals to deliver work which adds value.

It is not enough to recruit a team of coders and ask them to play with a vast quantity of data, hoping that interesting things emerge.

By Frans Campher

It is 2005 and the chief operating officer of Delta Airlines, Jim Whitehurst, is in Atlanta airport at an impromptu meeting with several hundred of his mechanics. Delta has just filed for federal bankruptcy protection and is in a race against time to avoid collapse. Staff are fearful for their futures. Whitehurst is the self-styled ‘guy with the binders’: renowned for being on top of the data and with an answer to everything. But today he hasn’t been able to plan what to say.

Whitehurst realises that candour is his only option. He talks in detail about the company’s situation and then invites comments from the room. To his surprise, the mechanics ask questions, not about pay cuts, but about the turnaround plan and how they could help. In the following days, word spreads around the company about Whitehurst’s candour and similar meetings with staff are repeated throughout the turnaround process. In a short time, Delta rises to the top of service reliability rankings because staff own the problem and take accountability.

Whitehurst credits this experience for causing a fundamental shift in his leadership approach.

He realised that great leaders don’t need to have all the answers. What great leaders do is lead the conversation, pose the right questions and create a culture where everyone in an organisation is empowered to discover solutions. 

This shift in mindset led to him building upon the open leadership framework which he encountered at tech company Red Hat, recently sold to IBM for USD $34bn. You can hear Whitehurst tell his leadership story in his TED talk. You may also wish to read his book called The Open Organization: Igniting Passion and Performance.

Whitehurst developed what I like to call a coaching mindset.  I believe this mindset is vital for leaders today who are facing increasing complexity, ambiguity, and demands on their time. In our age of rapidly shifting business models and digital transformation, it is simply impossible to maintain a rigid command-and-control leadership style. Leaders must multiply their impact by engaging and empowering others.

From almost sixteen years of leadership development practice, I know that adopting a coaching mindset isn’t easy for executives. Executives can fear relinquishing control and this fear can have a paralysing effect on organisations.  I often meet executives who are stressed and not performing effectively because they are trying to do the jobs of their direct reports as well as their own. They are directing and managing rather than leading and neither the executive nor their team is doing their best work. I work with the executive to help them adopt a coaching mindset so they can expand from being managers who organise to leaders who inspire. I work with them to set vision and objectives which create accountability but also space and conditions for people to grow, develop and be creative.

When discussing the coaching mindset, I often point my clients to Benjamin Zander’s reflections on his role as an orchestra conductor in his wonderful TED talk:

``The conductor doesn't make a sound. He depends, for his power, on his ability to make other people powerful… I realised my job was to awaken possibility in other people. And of course, I wanted to know whether I was doing that. How do you find out? You look at their eyes. If their eyes are shining, you know you're doing it.``

For Zander, great conductors don’t have to be the centre of attention. They don’t even have to make a sound. But if they awaken possibility in other people they are still powerful. This message for me beautifully encapsulates great leadership.

Perhaps you have been on your own leadership journey or there are leaders who have influenced you? What do you think makes a great leader? I would love to hear from you.

Frans Campher is a leadership development coach and the founder and CEO of Integral Leadership Dynamics. He is Associate Faculty at Imperial College Business School and Co-Director of the Leadership in a Technology Driven World executive education programme.

Connect with Frans on LinkedIn and Twitter.

In the 1960s and 1970s Polaroid Corporation was one of the world’s most fashionable technology brands, employing 21,000 people at its peak and selling millions of instant cameras each year. Pioneering creatives like Andy Warhol carried Polaroid cameras around with them wherever they went.

But this success could not be sustained and in the following decades the original Polaroid Corporation declined to such an extent that in 2001 it filed for federal bankruptcy protection.

Along with Kodak, who suffered a similar decline, Polaroid’s fall from its market-leading position is often used as a case study to show how failing to respond to technological innovation can damage incumbent companies.

However, it is too simplistic to say that imaging companies like Kodak and Polaroid failed to appreciate that digital would change the film and imaging industries.

In the 1970s and 1980s Kodak and Polaroid were leaders in the emerging field of digital photography.  The first digital camera was created by a Kodak engineer in 1975. In the late 1980s, over 40 per cent of Polaroid’s research and development budget was invested in digital imaging. By the late 1990s Polaroid was a top seller of digital cameras.

Kodak and Polaroid’s decline was due, not to a lack of technological awareness or investment in R&D, but a failure to achieve sustainable business model innovation.

Why ‘good’ management can hinder innovation in large organisations

Steven J. Sasson, who developed the first prototype digital camera at Kodak, recalls management responding to his innovation by saying “that’s cute — but don’t tell anyone about it.” Getting his idea accepted was hard work, particularly when it threatened the company’s main business in film.

Sasson found that many managers understandably follow the popular maxim "kill not the goose that lays the golden egg". They are unwilling to divert their focus from products and services which are selling well at a good margin, let alone agree to invest in developing products which could eventually undermine their current core business.

This is one of many examples of how structures and management behaviours that organisations have encouraged can hinder the innovation process.

As I explored in a research paper with colleagues in the USA and France, large organisations may have a culture of sharing information on a need-to-know basis to stop trade secrets escaping the organisation. This can stifle the flow of innovative ideas and reduce returns on investment in particular from outsourced R&D.

Emotional attachment to products can also be a powerful barrier to change.

Intel is known today as a leading microprocessor manufacturer, but back in the 1980s their main product was computer memory. Robert A. Burgelman wrote a great paper on Intel’s strategic shift from memory to microprocessors. He describes managers at Intel delaying over a decision to exit the memory market in spite of good evidence to support the move. He quotes a manager likening this move to "Ford deciding to get out of cars". There was a great emotional attachment to the product that had made Intel and this created inertia which hindered the innovation process.

Developing an innovation mindset

Kodak and Polaroid were challenged to adapt their business models for a digital era. Today, companies across sectors face analogous challenges caused by the disruptive potential of technologies like artificial intelligence, quantum computing, and blockchain.

We developed Imperial’s executive education open programme From Idea to Innovation: Inspiring Intrapreneurship to help executives in large organisations change their mindset, overcome barriers to innovation, and thrive in this rapidly changing world.

Anu Wadhwa is an Associate Professor of Strategy and Entrepreneurship in the Department of Innovation and Entrepreneurship at Imperial College London and the Programme Lead for the executive education open programme From Idea to Innovation: Inspiring Intrapreneurship.

Can biology teach us anything about innovation? The essence of Darwinism is that progress is created by adaptation to changing circumstances. What starts off as a random mutation often spreads throughout a population to eventually become the norm through a process of natural selection. The same is surely true with innovation. New ideas are mutations created through chaos and adaptation, especially when two or more old ideas combine or reproduce in unusual or unexpected ways. In short, innovation = inheritance (history) +  variation + selection.

Serendipity clearly plays an important part in this process and the list of things created by accident is certainly impressive; Aspirin, Band-Aids, credit cards, DNA finger printing, dynamite, inoculation, Jell-O, Ferrari, Lamborghini, microwave ovens, penicillin, ink-jet printers, X-rays, nylon, heart pacemakers, Coca-Cola, Teflon, Vulcanised rubber, Nintendo, Lego, Smart Dust, matches, dynamite (yikes), safety glass, Corn Flakes, Super Glue, Viagra and Velcro to name quite a few.

Pursuing experiments – and tolerating the inevitable failures that result – is therefore one practical way to make an organisation more innovative. But is there is another option? Is there a strategy, process or even a culture that will embed innovative thinking at the very core of an organisation’s being? I think there is.

Think about when individuals and institutions are at their most innovative. You might think about the cross-fertilisation of disciplines and experience. This is indeed one way to kick-start innovative thinking and it’s not that difficult to design spaces where diverse people will bump into each other in a random manner. Office kitchens and staircases immediately spring to mind. Lunch is even better. A Harvard Business Review article once claimed that P&G had attempted to “systemise the serendipity” that so often sparks innovation. When the Hollywood producer Brian Grazer heard about this he commented: “that’s what we call lunch.”

Another route is to combine the energy and naivety of youth with the wisdom and cynicism of old age. This can work too. Reverse mentoring is a very practical idea championed by the likes of former GE boss Jack Welsh. Or there’s the thought of recruiting both the newest and the oldest members of staff for brainstorms. Diversity in terms of skills is key, but so too are age and experience.

And, of course, there’s the idea that if you generate enough ideas one will surely be good enough to use. This does occasionally work, although in my experience not very often. I prefer the opposite, which involves thinking inside a small box rather than thinking outside of one. Read, for example, Adam Morgan’s book called A Beautiful Constraint.

So, what’s my big idea for generating big ideas? What’s my million- dollar idea? Death. That’s right, demise, departure, disappearance, extinction, the grim reaper. Hold on, am I seriously suggesting that we kill companies and organisations just to reinvent them? Sort of.

It strikes me that true clarity only arrives occasionally and generally it’s when we think we are going to die. If we are looking down the barrel of a gun – or a microscope – we tend to see our death (and with it our entire life) in high definition. This creates a tremendous sense of urgency to put it mildly. This might not be of much use if we have seconds to live, but if we are given weeks or months we’re often able to focus on the things we really want to do and separate what’s merely urgent from what’s actually important. Relationships are rekindled, ideas are hatched, things get reinvented.

Sometimes we are fortunate. We think we are going to die, but we don’t. The tests or the analysis were wrong. The threat failed to materialise. We were lucky. Sometimes the change resulting from serious threats is enduring, although more often than not we revert to our bad old ways once the grim reaper has gone elsewhere. This is true for institutions as much as it’s true for individuals.

One of the reasons that Apple, sometimes cited as the world’s most valuable company, is so innovative might be to do with the fact it was 90 days away from being bankrupt back in 1997. Similar near death experiences abound, ranging from Telsa, SpaceX and KFC to Airbnb, FedEx and IBM.

So, the second million-dollar question must surely be this…can you fake your own death in order to think straight or to become more innovative? Believe it or not a company in South Korea once tried to do precisely this, although it backfired somewhat.

Back in 2008 there was a South Korean craze called ‘well-dying’ in which employees would write and then read out their last words in fake funeral services. Organisations such as Samsung and Hyundai sent their employees on courses organised by Korea Life Consulting in order to question their life paths and priorities. The idea got a lot of bad press at the time, partly because people were required to get inside a real coffin, but it wasn’t a wholly bad idea.

Asking people what they’d do if they had a day, a week or a year left to live can be a good way to reveal what they really think about things, including themselves. Asking a leadership team inside a large organisation to do the same is a similarly good way to reveal not only priorities, but potentially to revaluate strategies too. What might you do differently if you didn’t have to worry about regulation, unions, governments, quarterly earnings and so forth?

After all, if you have absolutely nothing to lose you will behave very differently than if you do. You will try things that are riskier and be far less concerned with what others might think of you. In short, you will be brave and be led by your heart as much as your head. You’ll dream big and be less inclined to get stuck on practicalities. And, of course, we only truly appreciate what we have been given when there’s a real chance that these same things will be taken away. It is only through death that we really learn to live.

As Charles Darwin said: “It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.” Try using a narrative of rapidly changing circumstances and ultimately the imminent extinction of your organisation to radically revaluate where you are going and how you might get there.

Write an obituary for your organisation and then treat it as a strategy for reincarnation.

Carpe diem.

***

Richard Watson is Futurist in Residence within the Foresight Practice at Imperial College London. He is founder and editor of nowandnext.com, a website that documents global trends. He has worked extensively on scenario planning projects, and has written five books about various aspects of the future.

– Daniel Rowles, Programme Director of our Digital Transformation Strategy course and CEO of TargetInternet.com

When leading digital transformation, a thorny patch you are likely to encounter is securing buy-in from senior stakeholders within your organisation. Whether through a lack of understanding of the benefits of going digital, or sometimes out of personal interest (some stakeholders will cling to the status quo on which their careers were built), you are likely to meet some opposition in your work to drive digital transformation.

This is why we put participants on our Digital Transformation Strategy short course through a Digital Strategy ‘dragon’s den’ on their final day, where they pitch their strategy proposals to a panel of industry and academic experts.

Here are five simple strategies to help you leverage your diplomatic skills and gain that crucial buy-in:

Over 100 HR directors and senior leaders shared their experiences of coaching at Imperial Business in the City: Coaching as a Leadership Style.

The conversation was led by three speakers with decades of experience of coaching and leadership development: Frans Campher, CEO of leadership development consultancy Integral Leadership Dynamics; Brian Murphy, formerly Head of Learning and Leadership Development for Citi in EMEA; and Professor Nelson Phillips, Abu Dhabi Chamber Chair in Innovation and Strategy at Imperial College Business School.

Here are three takeaways from the evening’s conversation:

1. Leaders who coach increase their personal effectiveness and have more motivated staff

Frans Campher argued that to be successful leaders must ‘expand’ beyond middle management tasks like problem-solving and organising, and multiply their impact by creating the context for others to succeed.

Coaching can play a key role in this transition. By empowering others through coaching a leader can unlock the time they need to be strategic, clarify their vision, and think about the longer term.

Moreover, as Imperial’s Professor Nelson Phillips noted, “leaders who develop people are leaders people want to follow”.

2. Coaching isn’t a cure-all

However, Campher cautioned that coaching is not a panacea. Coaching must happen at the right time, in the right context, and the recipient must be receptive. The ability to assess people and situations and judge what kind of conversation is appropriate is a key leadership quality.

For example, if a staff member is resistant to change or not willing to engage with a process, then coaching is not appropriate for them. Similarly, a crisis situation may demand a ‘command-and-control’ leadership style.

3. Coaching delivers the best returns in these three areas

Brian Murphy identified three areas where coaching can be deployed most effectively within organisations:

To support leaders and managers through transitions

For Murphy, leaders are most open to coaching when they are going through an important change like taking on a new role or major project.

To create a high-performance culture

Coaching conversations can be a highly effective means of driving performance in organisations. Murphy shared how Citi encouraged managers to structure their one-to-one conversations with staff around three questions:

• What have you done since we last met?
• What have you learnt from these activities?
• What would you do differently next time?

Adopting a coaching approach like this is a cost-effective and simple way to promote accountability and continuous improvement.

To build leadership capability

In Murphy’s experience, coaching is one of the most effective leadership development tools money can buy, with returns on investment often seven-fold.

Frans Campher and Nelson Phillips are the programme co-directors of our executive education programme Leadership in a Technology Driven World.

Building on Imperial’s unique positioning as a leader in both technology and business research and education, this programme gives executives stepping up to senior level management positions the tools to lead in the rapidly changing technological context of modern business.