Companies follow a life cycle of starting up, growing, and dying. The average life expectancy of a multinational corporation is between 40 to 50 years. Arie de Geus, in The Living Company, says that companies die because their managers mainly focus on processes and products while forgetting what made them great, their people capital. How does a large corporation survive for more than a century? According to de Geus, they share four common traits:
- They are in tune with the environment in which they operate and know how to change with the times.
- They have a strong sense of organizational identity which management nurtures and stewards.
- They generally avoid centralized control, tolerate experimentation, and continually stretch their boundaries.
- They are fiscally conservative.[i]
[i] De Geus, Arie, The Living Company, Harvard Business School Press, 1997.