Corporate longevity is dwindling. From an average lifespan of 61 years in 1958, corporations listed on the S&P 500 in 2012 are forecasted to last a mere 18 years. The 33-year difference is significant, marking a shift in business survival rates. This decline in longevity is attributed to the rapid pace of technological change, global competition, and shifts in consumer behaviour.
Companies can survive by adopting two strategies: exploiting existing assets and capabilities for as long as possible, and exploring new opportunities to stay relevant in the future. Exploitation is about efficiency, refinement, and execution, while exploration is about innovation, flexibility, and discovery. A balance between the two is crucial for corporate survival.
The challenge lies in managing the tension between these contradictory processes. A company must be ambidextrous, able to exploit its existing advantages while simultaneously exploring new opportunities. This requires a dual system of management: one that focuses on the efficient execution of the current business model, and another that concentrates on the adaptive and innovative aspects of the firm.
Companies that successfully manage this tension not only survive but also thrive. They are the ones that will redefine industries, set new standards, and shape the future.
Go to source article: https://hbr.org/2015/10/the-future-and-how-to-survive-it