Is the Life Expectancy of Companies Really Shrinking?


There is a prevailing narrative that the life expectancy of large companies, faced with the challenges of technological disruption, has been reducing for some time. Work done (PDF) by Professor Richard Foster of Yale University (above, and which I talked about here) in particular, seems to show that the average lifespan of a company in the S&P 500 index has decreased from 61 years in 1958 to just 18 years today, a run rate that would mean that by 2027, more than three-quarters of the S&P 500 will be companies that we have not yet heard of. 

Yet perhaps the picture is actually more nuanced. This analysis by Boston Consulting Group looking at the patterns of entry, growth, and exit for 35,000 publicly listed companies in the US since 1950 shows that over the long-term company lifespans have indeed decreased, yet in the recent past they have plateaued and may have actually slightly increased. Whilst human lifespans have increased markedly since 1950, say BCG, company life expectancy has almost halved:


This is also reflected in the five year company mortality risk (which, for public companies traded in the US, is now at 32% compared with a 5% risk 50 years ago):


But as Bloomberg point out, the data incorporates not just bankruptcy and liquidation but also merger and acquisition, and shows that whilst there was a dramatic decrease in corporate lifespan (and increase in mortality risk) during the 1970s, 1980s and 1990s this has, since around the turn of the century, actually stabilised. What's more, analysis of the annual rate of turnover in the Fortune 500 by the Kauffman Foundation appears to support this picture - whilst the long-term trend line is up, the recent short-term one is down:


It's difficult to navigate through all the myriad factors to identify what might really be behind this picture, but perhaps the real story is less about the impending death of large businesses and more about their need to adapt - to move through business and product life cycles more quickly than before, to be more focused on systematic experimentation and organising swiftly around opportunity.

Performance Firestarters 9: The Power of Feeds


For the ninth in our series of Firestarters events for the Performance Marketing community will be focusing on Feeds and APIs, which are changing the advertising landscape in a unique and potentially powerfully way. As well as talking about how the smartest agencies are using feed data to improve campaign results and bring new levels of contextual relevance to messaging, we'll also thinking about the future and where the application of this kind of data might lead us, including how AI and machine learning might be used to adapt approaches to marketing. So plenty of interesting stuff to talk about, and to help us we have three excellent expert speakers: 

  • Alistair Dent, Head of Product Strategy at iProspect (the UK's largest performance agency)
  • Visar Shabi, CTO at Brainlabs digital, the 'scientific' PPC agency
  • Kris Tait, business director for Croud, one of Google's fastest growing Search agency

The event takes place on September 2nd, 6.00pm at Google Central St Giles, London. I have some free passes to give away to readers of this blog so if you'd like one, message me direct or leave a comment below.

Do Not Follow Your Passion

I liked what VC Ben Horowitz (who wrote the excellent Hard Thing About Hard Things which I really enjoyed) has to say in this commencement address about why 'follow your passion' (something that has become a very popular convention) may not actually be the best career advice. 

Whilst doing what you love may work out for some, it likely won't for everyone and may be less successful than you think. Passions are hard to prioritise, may well change over time, might be in areas that you're not actually good at, and it's a pretty egocentric way of approaching the world. Instead, says Ben, we should focus on what we can contribute and align that with our passions:

'Find the thing that you’re great at, put that into the world, contribute to others, help the world be better and that is the thing to follow'.

I'd also add that it's not always as easy as it seems to find what your real driving passion is. I'm not sure that I ever really knew what it was in my early career but I'm lucky enough to have found something that I'm good at and that I find fulfilling. Which has been less about following a passion, and more about developing one.

More is Different

"At first, poaching stars from competitors or even teams within the same organization seems like a winning strategy. But once the star comes over the results often fail to materialize...What we fail to grasp is that their performance is part of an ecosystem and removing them from that ecosystem — that is isolating the individual performance — is incredibly hard without properly considering the entire ecosystem."

An excellent post from Shane Parrish on making decisions in complex adaptive systems (like organisations). I like what he says about the perils of extrapolating individual behaviour to understand the likely behaviour of a system, being wary of systems becoming too tightly coupled through lack of individual diversity, and the values of using simulations (or tests and prototypes perhaps) to aid learning. Makes a lot of sense thinking about organisations in this way.

The Modern Blight of Overwork


'...the long hours...may be the byproduct of systems and institutions that have taken on lives of their own and serve no one’s interests. That can happen if some industries have simply become giant make-work projects that trap everyone within them.'

Lots of truth in this New Yorker opinion piece about the modern blight of overwork, and how many industries become victim to 'arms races that create work that is of dubious necessity'. Whilst the promise of technology has for so long been about greater efficiency leading to a surfeit of leisure time for us all, somehow we've ended up with the opposite becoming a reality.

One of the great enigma's of modern working is that despite having more workers and being more productive than ever we are still working longer hours. Rather than focus on workers’ decisions and incentives, Tim Wu is suggesting that we should instead focus on the system - how technology is removing the kind of limitations that created natural boundaries and barriers to excessive working, and how white-collar work in many industries seems to expand infinitely through the creation of 'false necessities' - practices that evolve and develop and become entrenched ways of working yet create little value.

Overburdensome processes that cultivate over time, avoidable meetings, reply all emails, needless reporting, work that feeds systems that have become outmoded. Like Tim, I think there has to be a better way.