Every Great Company Dies
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Politics and Activism

Every Great Company Dies

Why and when are the only unanswered questions.

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Every Great Company Dies

Change is inevitable, and it is something that is consistent throughout life. Those who deny change tend to look back at the past with a clear sense of where an inflection point took place. Companies are like people; they are born every day, while others pass away. Many great companies have come and gone, and many of the good ones today will one day be gone too. Companies like IBM, Tesla, Macy’s, Amazon, Apple, and Netflix will one day fade and be a thing of the past. In science, there are proven states in the growth of an organism called growth phases, which include the lag, log, station, and death phases. These same phases can represent a company's life, as represented by the graph. Although many companies experience long periods in the log and stationary phase, there is always a catalyst that leads to their death.

The many inflection points where there is a change in the business direction that leads to a complete self-destruction oftentimes spring from management. It is said that if the head is drunk, the body will be directionless. For companies to continue going strong, they must often change leadership. The leader must constantly reinvent themselves, or they will become stuck in a cycle of repeats. An inability of senior management to bring fresh ideas and energy to their company can inadvertently lead to the aging of the company. While management can be an issue, companies that rise to become too big tend to either get in their own way and self-destruct, or they are met with government intervention to regulate them or deregulate them, causing segmentation in that industry, but preventing economic damage. An example is Amazon, a company that could one day become obsolete. Believing that drones are the future of delivery is an example of failing to realize potential hazards and miscalculation of the future.

Companies get caught up in the noise of what other companies are doing and try to imitate. They forget about the employee who aims to push the company forward with original ideas while senior management is engrossed in politics. Companies like Blackberry and Nokia were once leaders in their field, but the recycling of their products led to their fall from grace – the formula that Apple is now following.

As the world becomes more globalized, companies that refuse to bring change to their company board and upper senior management will reach their death phase that much more quickly. Companies, such as Apple, that refuse to place proposals on diversity in senior roles on their proxies for voting by investors will, sooner or later, be met with adversity. Not to mention, Apple has been lacking in innovation since the death of Steve Jobs. The company can be seen as a “follower” as opposed to a leader in the industry. Their recent ISO system, “OS X El Capitan,” was released with numerous bugs showing a lack of quality, as their success has made them comfortable – the fruit that brings death to many companies.

“Assume that nothing lasts forever. There is no more difficult and dangerous decision than to ditch a proven business model for an unfamiliar alternative, but good companies have to do that. The business landscape is littered with the wreckage of companies that clung to what used to work.”
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This article has not been reviewed by Odyssey HQ and solely reflects the ideas and opinions of the creator.
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