Living Company

Arie de Geus has written an excellent book on change, organizations and survival called the “Living Company”, published in 1997, Harvard Business School. He was the head of corporate strategic planning for Royal Dutch Shell and spent his 38 year career with the Company. He wrote this book after his retirement and it is the culmination of his life’s lessons in business as well as considerable research.

In 1983 Royal Dutch Shell, one of the largest companies in the world launched an extensive study. The Study defined the commonalities of 27 major companies that survived one hundred years.

The average Fortune 500 Company survives 40 to 50 years. Many studies in the United States and Europe have found the average lifespan of companies is 12.5 years. Royal Dutch Shell had been around for a century and desired to know why some companies survive and most do not. The 27 companies were from all over the globe. One Swedish company traced its roots back 800 years. Several companies lasted 400 years. To have survived one hundred years in 1983 when the study was done a company had to survive two world wars, the great depression, multiple recessions, plagues, financial crisis, energy crisis and myriad market changes.

The study found four common characteristics of the 27 companies who prospered and survived the centuries:

1) They were sensitive to their environment. They had their feelers out constantly gathering information about the world they lived in. This gave them the ability to react and change in a timely manner and to stay in harmony with the world they functioned in.

2) They had a strong sense of identity; were cohesive; had strong cultures and internal advancement was a shared feature.

3) They were tolerant of outliers, experiments and did not squelch creativity with the company.

4) They were all conservatively financially managed, had an aversion to debt and valued cash. This gave them flexibility, financial freedom, the ability to change, ability to weather storms and the position to seize upon opportunities.

There are many faddish business books out there purporting to give the latest and greatest theory on how to be a stellar company. This is a book that deserves to be read and studied as the lessons will be valid in all decades and business cycles. Arie de Geus is also a great public speaker, has a real international sensibility and well worth hearing.