When you start a company, it’s more an art than a science– Brian Chesky
These companies have made every Fortune 500 list for 61 years
Allow us to host the Magnanimous 57. That’s how many companies have accomplished the exciting feat of making the Fortune 500 every year since the list’s commencement in 1955.
These companies have battered economic turbulences and quick innovation in their industries. They’ve endured boardroom conflicts and insolvencies. All the while, they’ve upheld a spot among the élite of the corporate crop, year after year, for six decades.
At first blush, little seems to have altered since 1955. General Motors topped the Fortune 500 back during at the pinnacle of the Eisenhower era when a new Chevy only cost around $2,000. Today, GM is still near the top of the list. Sure, the car maker momentarily fell out of the top 10 few years ago during its bankruptcy. But it never came close to stumbling out of the list completely.
General Electric also holds a top position this year, only a tad lower the No. 4 ranking it had in 1955. The revered industrial conglomerate has also seen its share of ups and downs during the past six decades. Like GM, General Electric received a government bailout during the last financial crisis to help sustain its lending arm. And like GM, the company recoiled after a few lean years.
One of the most exciting things about this list of permanent Fortune 500 members is how some of them have matured. For instance, 1955’s top 10 included two of the “Seven Sisters” originated from Standard Oil’s fragmentation by the U.S. Supreme Court. Those two corporations became Exxon and Mobil, whose merger 45 years down the line would produce what is now one of the biggest company in the Honorable 57. Chevron, another Standard Oil offspring, is the second-largest.
A case of long lasting companies
GE, on paper the most revered company in America—and the world—may not look all that distingué. It isn’t the largest or the most commercially profitable; it’s not the fastest growing or the most valuable. Its stock has been virtually torpid for years. Accusations of managed quarterly earnings keep showing up in the press. What’s to idolize?
The businesspeople working in the same hard environment as GE respect it the way golf pros elected Tiger Woods Player of the Year in 2003, when he didn’t win a major tournament or top the money list: Through good years and bad, GE unswervingly does things the rest only hope they could.
For the past century or so, for example, GE has incessantly set the agenda of management ideas and practices that other companies will trail. Virtually everybody in business comprehends this. GE’s record of being ahead of the game is astonishing.
It’s hard to find any other organization that so energetically destroys its own creations. GE does one more great thing: develop people, gauge them, and act on the results. The company takes a lot of heat for getting clear of the bottommost 10% of its employees every year, but that’s only the end point of a process of constant appraisal. The fired ones are not shocked when the axe comes down. And the result is an astonishingly high-performing business. The knack to demand high performance without being callous, has been a part of GE for a long time.
What Makes A Company Great?
Greatness, like, many objectives, is in the eye of the beholder. One simple test for prodigiousness is how a company is viewed by its constituents – its customers, its associates, its owners, and business partners.
Assessing stocks comprises two types of analysis: fundamental and technical. The first is all about number munching while the second uses up-and-down squiggly lines to chart a stock’s direction. In the end, it’s all about being right more often than wrong. Investment professionals are relentlessly looking for that slight edge over the competition. One place they might easily oversee (but shouldn’t) is within the domain of qualitative analysis, a subjective area that is sometimes stated to as soft metrics. This refers to aspects of a public company that aren’t quantifiable or easily explained by numbers. In general, it’s an underappreciated and underutilized side of fundamental analysis.
“Performance and health” is an analogy that stems its power from a simple comparison with the human body. Just as people may seem practically well today but may not have the physical state for the rigidities of a long and active life, so too establishments that are lucrative in the short term may not have what it takes to do well year on year. Managing companies for success across a range of time frames—a precondition for attaining both performance and health—is one of the harshest challenges in business.
Companies that attend to (at least) these five different facets of performance and health can construct the resilience and the organizational capability not only to deliver but also to sustain both.
Customer service
It can take decades to build a brand and just a handful of poor customer experiences to destroy it.
Fortune 500 companies know that ‘blameless’ customer service is a keystone of a prosperous business, and their customer-focused stratagems demonstrate it. Smaller businesses may have the leverage of the personal touch. On the other hand, the most successful large establishments give customers what they need when they need it with highly skilled & a devoted customer service staff. Fortunately, you don’t have to have a Fortune 500 budget to outshine in customer service strategies stirred by the big guys.
Every company will tell you clients are their #1 priority, but few “walk the walk” when it comes to providing the kind of outstanding service that keeps customers coming back for life. Customer service is snubbed in many companies. Often, it is the after-sales service that can decide the course of a company and it’s vital that it spans far beyond one department. Time and again, the best of the companies have demonstrated why it makes a lot of sense to deliver their customer the best.
The main difference between “good” and “great” customer service is that, in the first, you are doing the bare minimum to keep the customer pleased. Whereas with great customer service, you are not only doing what it takes to make them satisfied – you are going above and beyond to keep customers loyal.
Great customer service not only brings a smile on the customer’s face, it helps you cognize your customer, express your company, and eventually affects your bottom line.
The White House Office of Consumer Affairs found that on average, loyal customers are worth up to ten times as much as their first purchase and that it’s six to seven times more expensive to acquire a new customer than it is to keep a current one.
Unique Products
An exclusive selling proposition is what a business stands for. It’s what makes your business distinguished from others because of which your business makes a stand about. Instead of striving to be known for the entirety, companies with a unique selling idea stand for something definitive, and it becomes what you’re known for.
Many businesses make the fault of trying to stand for everything when they first get underway. They want to do the whole thing well, and they want to provide all things to all people. They wish to be known for having the premier quality products AND the deepest prices. They want to have the best food AND the discounted prices. They want to be known for the best hamburgers AND the most tempting salads AND the dripping steaks and ribs.
The problem is this:
When you attempt to be known for everything, you don’t become known for anything..
In order to have a unique selling proposition, you can’t attempt to be known for everything. You have to make a stand for something, be it a product, a services, a way of servicing, packaging or anything else. You have to choose what your business will stand for and what you’ll be known for. By making a stand and picking somewhat that makes your business inimitable, you’ll become known for that exclusive quality and stand out from the crowd.
If you are not able to create a unique product, even a unique way of servicing your clients will do.
Contrary to “grasping an Olympic gold medal, where the problem situation is clear-cut”, building a successful company is actually “more like discipline, where you need to follow the trail wherever it leads.” While plethora has been written about healthy startups in general, negligible has been discussed about companies that flourished by altering their strategies instead of adhering to those they started with.
A prosperous & a successful organisation is like a great white shark. In its prime, it nibbles its competition, but if it dares to be seated for too long, it dies. Some of the world’s most lucrative and lasting companies have attained their long performance history of success by relentlessly reinventing themselves.
Cell phone maker Nokia started off selling rubber boots. The oil giant Shell used to import and sell actual shells.
We live in an era of risk and instability. Globalization, new technologies, and greater transparency have combined to upend the business environment and give many CEOs a deep sense of unease. Since 1980 the precariousness of companies’ operating margins, generally static since the 1950s, has grown twice, as has the size of the gap between champs (companies with high operating margins) and duds (those with low ones).
Today, a rising number of adaptive competitors are using a range of new methodologies and technologies, particularly in simulated environments, to generate, test, and duplicate a larger number of inventive ideas faster, at lower cost, and with less risk than their competitors can.
The speed of adoption is a function of the cycle time of decision making. In a fast-moving environment, companies need to accelerate change by making annual planning processes lighter and more frequent and sometimes by making episodic processes continual.
The adaptive approach is no universal panacea. If your industry is unwavering and relatively foreseeable, you may be better off sticking to the customary sources of advantage. But if your competitive industry is uncertain and quickly fluctuating, as is true in a many industries nowadays, you need a vibrant and sustainable way to stay ahead. Your existence may depend on building an institute that can exploit the capabilities behind what we think of as adaptive advantage.
Employees working towards a common goal
Organisations do not exist in seclusion. Entrenching a sense of the purpose of the organisation, its values and its role in the community can mean as much to staff retention as a generous benefits package.
To focus your staff’s minds on a common vision, you need to clearly communicate your goals and the benefits of achieving them. “Teamwork is the ability to work together toward a common vision, the ability to direct individual accomplishments toward organizational objectives,” according to the industrialist Andrew Carnegie. If your employees don’t know what your vision is, they will have trouble uniting around it.
Most companies follow this process in accomplishing it:
Communicate Your Vision
Set out your goals to your workforce. Explain where you want to be and how you plan to get there. Goals are long-term visualizations, but comprehending them requires setting short-term goals toward their accomplishment. Set convincing milestones toward execution of the goals, and keep your employees regularly informed on the team’s development in making the vision a reality. Communicate the successes you attain and the hindrances you experience in realizing your goals, and how these impact on your timetable.
Clarify Roles
Make sure each member of your team has a distinctly defined role and knows what they have to do to attain your common vision. Set performance targets for each role that can be measured and tracked statistically, not by personality or rumor, and explain the consequences these not being met. Make sure your workers know they have the full confidence of your management team to carry out their duties and that your door is always open if anything is unclear.
Consensus
Ask your staff to furnish ideas and take part in regular discussions about how you can make your common vision a reality. Solicit feedback on your strategies and processes and encourage constructive debate about how you can move forward. If your employees feel they are being listened to, they’re more likely to feel like stakeholders as opposed to just workers.
Benefits
Explain the awards of triumphing your goals. This doesn’t have to be restricted to wage rises and stock options. If you’re working on a project that’s going to help people, elucidate how your work will improve lives. If you need to bring in a certain amount of proceeds to expand your business, communicate the opportunities this will open up if achieved.
Constantly Innovating
Whatever challenges may be battering business—political ambiguity, market volatility, and international turbulence—there are always pockets of exceptional accomplishments. The marketplace is constantly evolving and changing. To be successful, you need a system that incessantly monitors the marketplace, gathers feedback in real time, scrutinizes the feedback, reports the undistorted truth to decision makers, and takes remedial action. What worked yesterday, may not work tomorrow, and the information about tomorrow is often obtainable today. Companies need the right telescopes and microscopes to see what is going on and respond expeditiously once the information is properly analyzed and triangulated.
The innovations do not have to be revolutionary or the exclusive domain of new or improved products. The progresses can be incremental as they are at Toyota, or they can be in business systems and systems as they were at Dell. Innovations can also be in marketing as they have been at Procter & Gamble. Some may recollect that the company invented the “soap opera” to sell its soap.
Wherever inventions come from, however they are done, and in whatever part of the business they befall, companies need to endlessly innovate or risk dying.
Conclusion
The same forces that disrupted so many businesses, from steel to publishing, are starting to change the shape now. As the world’s online interactions continue to grow, the needs of a large proportion of clients have changed.
In today’s rapidly changing business environment, multinational companies must be agile, resilient, flexible, and adaptable. The digitalization of the global economy, for example, is transforming core business practices everywhere—from supply chain management to ever-evolving consumer preference behaviors and experiences to retraining and recruiting top talent.
In earlier days, companies faced a host of issues, which may cripple their functionality, or in some extreme cases render the organizations obsolete. These challenges were dependent on the nature of operations of the company but broadly, these were common challenges, which were faced by a majority of organizations. Technological advancements today are on the rise, more than in the previous century. For an organization to offer services, which are relevant, cost effective and compatible with society’s needs, modern technology has to be employed.
The factors discussed above have remained the reasons for the sustainability & growth of companies for decades now. However the caveat is that the pace of technological disruption has increased than ever now and the changes in the business models happening now is significantly faster than what they used to be few decades ago.
What made sense yesterday may not make a sense tomorrow but here on a company should eye these factors as the basic minimum requirements to remain the part of top-notch 500 global companies.
Tomorrow will be relatively tougher and each type of business will continue facing its own unique challenges, but knowing that other businesses are going through the same thing can make it easier to cope. Peer networking opportunities can be a great way to discuss these challenges and learn how others are tackling them. Whether your business is grappling with government regulations or seeking to bring in more money, it can help to have support.
Jeb Bush, former Governor of Florida said, “When businesses go through hard times, through down markets, what do they do is they challenge every basic assumption of how they operate. They innovate. They create disruption for a while that leads them to even greater heights when the economy turns around.”
The underlying policies of the 57 survivors of All Fortune 500 lists have kept them afloat till now but amid rapidly changing world, this may not hold true. No wonder, the strategies that pushed them higher on the list so far become the ones to drag them out of the list.
Looks scary? Who knows if this becomes a reality in this ever changing world!
