KINGSTON, Jamaica – Mayer Amschel Rothschild, who lived in Frankfurt, Germany, in the 18th century, had a 400-year life plan for his family. He started a banking business and trained all his sons to open branches in different European countries. Centuries later, the Rothschild banking and investment dynasty still stands strong with a net worth of 70 billion euros.
Key Strategic Planning
Organizations don’t last long by default. Without a strategic plan, their lifespan is cut short. The key to longevity is careful long-term strategic planning. Research shows that organizations without a long-term plan usually fail once the founding members die. However, organizations with a strategic plan tend to last longer and maintain their competitive advantage.
The average lifespan of an S&P 500 company has significantly decreased from 67 years in the mid-1960s to around 15-18 years in the 2020s. This reduction can be attributed to many factors, but the lack of strategic planning is a key reason.
Main Factors of a Centennial Organization
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Purpose
Organizations built to last never lose sight of their core purpose. They remain focused on why they were established and the problems they solve. Sometimes, organizations grow too large and lose their sense of purpose, chasing revenue and trying to increase shareholder value.
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Leadership
When Alexander the Great was on his deathbed, one of his generals asked who should succeed him. Alexander raised his clenched fist, indicating that all power belonged to him. After his death, there was no successor, and his generals fought to divide his kingdom.
Organizations that last a century have a solid succession plan. They carefully select and mentor their leaders to ensure the vision and values are passed down, maintaining the organizational culture. Leadership transition is handled carefully, with outgoing leaders mentoring incoming leaders. Succession planning is not just for the top but also for middle managers and supervisors, where the organizational culture is maintained.
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Innovation
“He who worships the past will live in it.” Organizations decline and fail when they try to live off past successes. Blackberry went out of business because it tried to live off past success, while competitors like iPhone and Samsung innovated to meet changing consumer demands. An organization will thrive when it innovates and remains on the cutting-edge; lagging is a sure way to go out of business.
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Establish Governance for Continuity
Human Resource executives and other top leaders should implement systems and structures for continuity. These systems and structures ensure an organization can maintain its essential functions during transitions, crisis, or disruptions. They preserve the longevity of an organization and prevent its demise. Without these structures and systems, an organization will not survive for long.
Planning is one of the main keys for centennial organizations. If you want your organization to be around for many generations, plan like the Rothschilds. As Grandma would say, “If you fail to plan, you plan to fail.”
