Built to thrive: What makes a long-surviving organization successful?

One of my favorite sources of thought and contemplation of business is the McKinsey Quarterly. In case you are not familiar, McKinsey & Company is one of the leading management consulting firms in the world and a top source of global CEO recruits. Many top authors and analysts also have gone through McKinsey’s organization. The Quarterly is a publication of some of their most esteemed thinkers’ works.

McKinsey Quarterly just celebrated its 50th anniversary and in commemoration of this milestone, Ian Davis, former Managing Director, offered reflections on longevity in business. Coincidentally, Kajima Corporation, Austin’s parent company, is celebrating 50 years in the U.S. this year. Davis’ reflections on this milestone include the assessment of those characteristics that make a long-surviving organization successful and enable it to not only survive, but thrive.

In assessing those things that contribute to longevity, Davis explores what causes the demise of companies: from external factors ranging from competition, failure to adapt to technology, and natural disasters, to internal factors that can be more related to the fact that Companies are made up of human beings with their own failings and faults. But what do companies that succeed over long periods of time have in common?

Davis lists many factors, but the ones that I think are most relevant to Austin and Kajima USA include:

• Challenging legacy thinking and legacy mind-sets, encouraging—and tolerating the cost of—internal competition and cannibalization.
• Avoiding hubris, by creating a culture of dissatisfaction with current performance, however good it may be. Andy Grove was right—paranoia is helpful.
• Adopting a predominantly “grow your own” talent philosophy to create a robust and loyal culture, but mix it selectively and judiciously with external hires. In times of fundamental and disruptive change, enduring companies must be willing to change their management.
• Focusing relentlessly on values and constantly demonstrating why they matter—the values of a company, to be meaningful, must be reflected in the key managerial processes, such as performance evaluation and appointments. A company’s values are judged by actions and behavior, not words and mission statements.

These are qualities I see in Kajima and in the organizations that thrive as part of Kajima’s family. As for Austin, there are a few characteristics Davis lists as common among long-standing organizations that we need to get better at. These include:

• Relentlessly focusing on our customers, and not just on our performance with customers, but also on understanding what our best and most innovative customers are doing.
• Engaging our key suppliers to solve problems and identify opportunities, so that these activities also become key sources of insight.
• Avoiding introversion and actively seeking to understand broader trends outside our own organizations and industries.

Thinking about this internally, how does the individual promote longevity to their own careers and to the companies that employ them in their individual professional pursuits? Some of Davis’ characteristics can be insightful for the individual, as well as the organization:

In times of fundamental and disruptive change, how willing are you to change your personal management style and approach?

Are you consistent with your Values and how you demonstrate them in the practice of your daily life?

How satisfied are you with your current performance, no matter how good it might be?

Davis observes and agrees that each of these characteristics has their own risks and conflicts. He quotes former IBM CEO Lou Gerstner, in saying, “There’s a ditch on both sides of the road.” Interesting quote.

My take on it is that like it or not, we’re on that road. We have three options. Move backward, move forward, or stand still. If we stand still, we get run over by those going forward. If we go backward, we get also get run over by those going forward, but the impact is greater. We really only have one option, and we better be working toward that direction if we are going to not just survive, but thrive.

Inherent in organizational longevity, thankfully, is a corporate intuition that “we’ve been down difficult roads before and managed to survive and learn from these experiences.” That confidence is critical in challenging times and can be a differentiating factor for the survivors.