3 Things You Must Know If You Want to Build a Business That Lasts a Century and Beyond

Across the world, there is an alarming long-term trend: Companies are struggling to survive. An analysis by Statista shows that companies have been losing their lasting power since 1965. Companies on Standard & Poor's 500 Index were analyzed during 2020, and it was found that the average lifespan of a company was 21 years, a stark contrast to 55 years ago when it was an average of 32 years. The statistics platform then concluded that this number is likely to continue falling throughout the 2020s.

An EY report in 2023 shows that, in fact, the average lifespan of an American S&P 500 company used to be 67 — now it's only 15 years. The report suggests that even some of the most well-prepared companies are not guaranteed to last, and that is worrying. These figures made me wonder how one can build a business that lasts well beyond a century.

As part of a centennial company that was passed to me as the fourth-generation heir in 1993, the Kowloon Motor Bus Company (KMB), founded by my grandfather in 1921, will officially be 104 years old in 2025. In the current climate and having survived the Japanese occupation during World War 2, the global financial crisis and more recently, the 2020 pandemic that shook the world, I am proud that we have reached such a milestone. From my personal experience and further research, I have identified the key qualities to help businesses last a century and beyond.

1. "Adapt or die"

The famous words of Charles Darwin, written in The Origin of Species in 1859, ring true even here in the business world. Staying relevant within an ever-changing world requires companies to adapt to customers' needs and market requirements through thorough analysis, teamwork and rational thinking. I find the example of how LEGO stayed relevant quite inspirational, and many will agree that it is a company that will achieve its centennial status in less than a decade.

Founded by a Danish carpenter in 1932, LEGO began its building blocks with wood and then plastic, with the latter helping it become a brand that is synonymous with children's toys. But LEGO almost faced bankruptcy from over-innovating at the turn of the millennium, as technological advances created a myriad of other flashy competitors. This was when the iconic company analyzed its own errors. Instead of creating new ideas, it began adapting. It modified existing prototypes but with the help of new collaborations with the likes of Harry Potter and Star Wars.

Eventually, it entered the movie business with them. LEGO's adaptability reminds me of how KMB survived crises in the past. Just years after its founding, World War 2 struck, rendering most of the then fleet unusable. While replacement buses were being purchased, the existing routes were supplemented using lorries, which were used as temporary buses. Over more than a decade now, KMB has consistently used this adaptation rule to evolve itself with the times.

2. Balance innovation with stability

In business, innovation usually means risk-taking and sometimes requires one to venture into the unknown. Without innovation, you lose your competitive edge in the market. But too much innovation, and you risk spreading yourself too thin and potentially losing to your competitors. So, how can innovation be part of your 100-year plan? The trick is to balance innovative ideas with the smooth running of the business at hand.

A thorough, data-based risk analysis should be deployed as a core strategy where innovative measures are considered. The culture of the company should be innovation-led but in a steady manner so that good ideas are in constant supply and in use wherever possible. A good leadership strategy within the company should also include a collaborative approach when approaching innovative ideas. You should work internally with your team, as well as use external resources and customer insights to ensure you are continuously, consistently improving. And with intent — never innovate for innovation's sake.

3. Be socially responsible

Business is all about people, be that your own team members, your customers or the wider community the company engages with. Having clear social goals within a company makes up its raison d'être, clearly signaling that the organization is here to stay long-term and to serve the people around it, not just its shareholders.

There is logic to embracing social responsibility within a company, too, so that customers are happy to pay a premium for the goods and services of a company that's perceived to be doing good to society. This point aside, customers are also seeking companies that are accredited for being socially responsible.

A survey conducted by Sezzle shows that among its respondents, more than half being millennials, 81% said it was important for them to purchase from brands that align with their social values. Not all B-Corp companies are new either — Gibsons Games is a 104-year-old jigsaw puzzle business that has survived and thrived using its commitment to serving families worldwide since its inception.

This reminds me of my own company's ethos. From the very beginning, KMB set itself apart by remaining a privately owned company offering public transportation without receiving any subsidies from the government. I personally am proud to say that we are helping 2.8 million people move around Hong Kong by continuing to make commuting affordable, accessible and available to all. As part of our commitment to society, I have also helped establish Friends of KMB, Hong Kong's first volunteer group organized by a public transport company to encourage civic engagement.
But at the heart of it, social responsibility is an innate characteristic that should be embedded into your company from the get-go, and it should have a far-reaching, sincere and long-term impact.




Source: https://www.entrepreneur.com
Image Credit: Photo by Photo By: Kaboompics.com via Pexels.com

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