Going extinct: why corporate giants die

Who wants to live for ever? For those of us who don’t, a long, healthy life – of 90 years, say – is enough. In the mid-1920s, 90 years happened to be the average lifespan of a leading company. Ninety years for us, 90 years for our companies: a neat mirroring of our own existence in what we made manifest in the world.

By the 1950s, the average company lifespan was down to 60 years. Today, it is a mere 17 years. Why are our companies dying young?

Take Kodak – founded in 1888, ubiquitous in the 1970s and 1980s. The former photography giant declared bankruptcy in 2012. Kodak had decided to cling on to the film-and-paper business model in the throes of the biggest ever disruption to its industry: digital. Incredibly, Kodak invented digital photography in the first place. They even set up a separate division to drive it. But they said it couldn’t be monetised and hoped it would go away. Kodak is one of the best examples of what happens to a corporation if it refuses to change with the world around it.

We’ve noticed a four-stage pattern in the lives of companies that cuts across all sectors and industries. Even the most successful megaliths of the corporate world are not immune from its pull. In fact, many of them exemplify it.

Stage 1: The maverick founder

Every famous corporation has a legendary founder. A maverick who knew what the people of the time needed and how to give it to them in a way that revolutionised their whole industry. Look at Ray Kroc, who founded not just McDonalds but the whole concept of takeaway food. Or Anita Roddick, who founded the world’s first ethical cosmetics megabrand, the Body Shop. People like them go down in history. But who is creating history today?