Industry executives are keen to develop a realistic and practical roadmap to activate their digital strategies. In
the diffusion of innovations, early adopters can gain significant advantage. On the flip side, they can also bear the brunt of strategic mishaps. The fear of being left behind, technologically, operationally, and in the hunt for next-generation talent is a powerful motivator. History, as well, should be noted for those languishing in the status quo.
Mark J. Perry, a scholar at the American Enterprise Institute and a professor of economics and finance at the University of Michigan’s Flint campus, is also the creator and editor of the popular economics blog Carpe Diem. The headline of his October 20, 2017 blog post should be instructive for skeptics: “Fortune 500 firms 1955 v. 2017: Only 60 remain, thanks to the creative destruction that fuels economic prosperity.”
“In other words, fewer than 12% of the Fortune 500 companies included in 1955 were still on the list 62 years later in 2017,” Perry wrote, “and 88% of the companies from 1955 have either gone bankrupt, merged with (or were acquired by) another firm, or they still exist but have fallen from the top Fortune 500 companies (ranked by total revenues). Many of the companies on the list in 1955 are unrecognizable, forgotten companies today (e.g., Armstrong Rubber, Cone Mills, Hines Lumber, Pacific Vegetable Oil, and Riegel Textile).”
He cites the consulting firm Innosight (represented as a keynote speaker at Smart Industry 2016) in his reference to a similarly disturbing trend across S&P 500 companies, and it’s just as compelling. “According to a 2016 report by Innosight (“Corporate Longevity: Turbulence Ahead for Large Organizations“), corporations in the S&P 500 Index in 1965 stayed in the index for an average of 33 years. By 1990, average tenure in the S&P 500 had narrowed to 20 years and is now forecast to shrink to 14 years by 2026. At the current churn rate, about half of today’s S&P 500 firms will be replaced over the next 10 years.”
The status quo is always upset by awareness and understanding of a problem. It’s what happens next that will set a company up for success or failure.
In a recent Harvard Business Review article, “Why So Many High-Profile Digital Transformations Fail,” authors Thomas Davenport and George Westerman remind us that “digital is not just a thing that you can you can buy and plug into the organization.” Further, they advise, “instead of ramping up quickly, only to ramp down painfully, it would be much better if companies can make steady progress toward the right end state.”
That right end state will ensure that your company continues to maintain a leadership position, and that you do not experience the fall that so many companies have—or will—suffer, as predicted by Mr. Perry.
We are busy organizing our 4th Annual Smart Industry Conference, to be held Sept 24-26, 2018 at the Loews Chicago O’Hare. Our speakers will address the steady progress they are making and will share ideas and concepts that are successfully moving them forward on the path to digitalization.
Join us then, and continue to be a part of our community at www.smartindustry.com for knowledge sharing and idea generation.
Tony D’Avino is publisher of Smart Industry.
Want more from Tony? Join him this September at the 2018 Smart Industry Conference. Click here to learn more.