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Why even successful companies die
It’s one thing to climb the mountain. It’s quite another to live up there.
It’s a fact. In the end, most companies die. If you don’t believe me, look at the top 50 companies 25 years ago , and then look at the list from last year. Sure, product life cycles come and go, mergers and acquisitions happen all the time, but there’s no natural or market rationale for business extinction. Rather, companies do themselves in. Blinkered by their own success, with cultures characterized by hubris and self-certainty, they succumb to new competition or changing market dynamics that everybody else but them can see.
Take daily newspapers for example. For 50 years the holding companies that owned them were prized value stocks because they were seen to be stable monopolies that reliably posted healthy profits year over year, with gross margins that often exceeded 25%. But predictable profitability is almost always fatal without leadership committed to constantly testing the assumptions on which it is based. When challenged in the past, very few newspaper companies had successfully migrated from one media platform to the next. Most had dismissed radio. Then they missed television. Then cable. They always simply assumed they were in the newspaper business… forever. Permanently. Even when the internet came along and unpacked their…
