Innovation and Imagination at Work 2004

It can be said that survival in the corporate world is similar to the survival of animals in the wild. Darwinian analogies regarding the corporate jungle and survival of the fittest are quite appropriate in the competitive environment in which organisations find themselves today.

Companies, like animals, are most vulnerable when they are young (new), unwell or old:

• New companies are inexperienced. Recent statistics suggest that 60% of them will fail within the first five years .

• Unwell companies are those suffering from a variety of potentially terminal diseases (poor management, lack of cash flow, high overheads, and so on), which eventually prove fatal.

• Old companies is a terminology we don t hear very often.We hear of ˜established companies and companies with a ˜fine tradition but rarely an ˜old company . Perhaps if we used this term more often we would be more accepting of the notion that just as old animals die, so do old companies. Not all die at the same age, some live longer than others. Even for Fortune 500 companies however, the average life expectancy is only 40 “50 years . In the 1980s the average company had a life span of 20 years. In the 1990s this had reduced to 12 “13 years. ^{[ 1]}

At the start of the twenty-first century, business is becoming more and more competitive. Animals compete to survive but ensure the survival of the species by reproducing. Companies also compete to survive, but most fail to ensure their ongoing existence because management think their company will be the exception and will not die. Unfortunately, statistics prove them wrong.

Progressive enterprises innovate to ensure their survival. Innovation allows them to re-invent themselves and is the equivalent of corporate reproduction. It is also essential to ensure that a company remains relevant. Corporate health (such as good cash flows and strong management) is obviously important, but innovation is the key to long-term survival.

The point to note is this: for corporate survival, innovation is not optional .

^{[ 1]} D Uren, ˜Secrets of Company Longevity , Weekend Australian , 17 “18 October 1998.