Guest post
from Sam Hua and Nan Hua:
Business
people talk all the time about wanting to build ‘hundred-year companies’. But a
hundred years of what? A hundred years of growth? A hundred years of
development? Or a hundred years of survival?
The
key should be survival, so the company will be alive and kicking in a hundred
years, passed on across generations. This is the ultimate achievement in
business. As for a hundred years of growth – well, no company has yet managed
to do that.
Most
public companies see their strategy as being entirely dictated by growth.
Balance sheets, income statements and cash flow statements are
Now
let’s talk about development.
What
is development? Growth means more money; development means more capabilities.
Development is the process of gaining the capability to survive in the future.
When
a company’s revenues reach a peak, it could very well be the eve of its
destruction. Why? Because this year’s success is the result of inertia from the
past. If you don’t develop the ability to continue to survive next year, you
might be gone by then. If you have piles of cash on hand but your company faces
the risk of failure, that shows you don’t have a scientific outlook on
development – all you’re focusing on is growth. This was Nokia’s problem.
Many business people, the most
successful ones, often say that their companies are 6-18 months away from
failure. These people are said to be ‘always focusing on the next crisis’.
Sometimes they’re accused of faking it to keep their employees in line. But
it’s really none of these things. They are not guarding against sudden crises,
they just have a clear understanding of how companies survive and develop –
everything a company has today is the result of good decisions yesterday. But
if good decisions aren’t being made today, then the company won’t survive
tomorrow. It’s a cause and effect dynamic.
What’s
an even higher achievement than development? Survival. When we talk about
building a 100-year company, we don’t mean the company is going to grow for 100
years, we mean the company will still be around in 100 years. The ultimate
achievement in business is sustainable operation – the company always survives
and never disappears. How do you do this? By always having new cards in hand.
If you never want to be left behind by society, you need to be always useful to
it so that it keeps you around. You have to always think about your killer
products, authoritative expertise and dreams come true for the next year, next
five years, next decade. This is the foundation of our strategy.
Sam Hua and
Nan Hua are founding partners of
Shanghai H&H Marketing Consulting
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