If you look at the Fortune 500 list today, and compare it with the Fortune 500 list from 50 years ago, you’ll see just how much has changed in a few decades. Sure, there are a few companies remaining, like General Electric and Exxon, but the turnover has been massive. It’s all about creative destruction.
The average lifespan of a large company is just around 50 years, and a third of Fortune 500 companies no longer exist within just 13 years. These are the biggest, most successful businesses in the world: what is happening?
Businesses are forced to continually innovate and change. And they have to innovate and change not just to grow, but to survive, even among the biggest companies. When things look successful, with huge numbers of sales and accolades and praise, it’s easy to become complacent. We think we’ve figured it out, and are untouchable at the top of the ladder. And that might be true today—but what about tomorrow, and the next day?
Companies that dominated their space can become irrelevant and disappear. That’s what happened to Kodak, Montgomery Ward, and many more. Others survive, but fall behind more innovative, creative competitors. Creative destruction is the process where businesses continually reinvent themselves, finding new ways to solve problems and create better customer experiences. Anyone who doesn’t keep up—no matter how big and successful—will fall behind and court disaster.
Today, Walmart is one of the biggest, most successful companies in the world. As a growing disruptor, they innovated many older competitors right out of business. But now, for example, they are in turn under pressure from online disruptors like Amazon. So to stay in the game, Walmart has had to go to Silicon Valley to figure out that culture and find ways to stay relevant tomorrow. As big as they are, they could be put out of business if they don’t keep up.
Creative destruction actually gives small businesses an edge, because small businesses have an easier time adapting and changing. In a big business, with thousands of employees and millions of dollars all directed in doing things a particular way, it is very hard to suddenly change course and reinvent. There are people resisting change, fighting to defend their own turf, and standing in the way of improving. We in the small business world can make those changes more quickly. But whether you’re expanding product lines, looking for new platforms, or whatever else you might be doing, you have to look for ways to reinvent yourself every day.
