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How Businesses Have Shifted to Persevere in the Current Times of Crisis

As we can see, most shifts provide short-term sustainability and may be discontinued after the pandemic crisis is resolved into a new normal. However, some of the shifts made will likely endure into the future, providing long-term profits and even transformation. Time will tell.

How agile has your organization proved to be? What shifts has your company made during the pandemic crisis? Which shifts, if any, do you anticipate will far outlast the period of crisis? What actions can leaders take to better ensure the company can survive or even thrive through the next crisis we may face?

  1. Disruptions, Booms, and Busts in our Past: A Driving Force of OrganizationalTransformation 

Companies currently remain in the Fortune 500 for under 15 years.  Fifty years ago, the average life expectancy on this elite list was about 75 years.

The Fortune 500 are recognized as the biggest and the best, and it makes sense that they are our models of success. We have looked to the List for lessons and wisdom through the years.  For example, they have provided visibility and insight about progressive new business practices that’ve proven effective. We have scrabbled to find meaning by analyzing those who joined or changed places on the List as well as from the many whose names fell from the List.

Turnover on the List began to escalate in the late ’50s, just a few years from its beginnings.  Over 1,800 companies have made the list since its inception.  All of us have observed that there are many causes of turnover among the Fortune 500.  Following are examples:

  • Greater efficiencies and value creation among individual companies
  • Changes made in the methodology used in compiling the Fortune 500 List itself
  • M&A activity, in its booms and busts.  For instance, M&A boomed in the 1990s; subsequently, we saw an unfolding of the largest number of the worst deals of the past 30 years.  More recently we’ve witnessed the consolidation of Fortune companies themselves; for instance, consider the potential acquisitions proposed between Aetna and Humana as well as Anthem and Cigna.
  • Globalization, with heightened competition, emerging markets and off-shoring.
  • Ups and downs in the world economy
  • Technology changes that have disrupted customer demand for products and services, making some obsolete and leading to the creation of new ones
  • Start-ups who are becoming equally or more highly valued than many companies on the Fortune 500.  They are still private, not on the stock market.  Note:  These are the focus of Fortune’s recently launched Unicorn List.

What has endured in the face of all of the turbulence the Fortune 500 List has experienced since coming to life in 1955?  

The answer:  Fifty-seven companies have endured, maintaining places on the list every single year.  Just think about the significance of this achievement:  These companies have adapted to changing times, innovated, adopted new technologies, diversified and reinvented themselves, remaining vibrant today.  They are referred to, by Fortune Magazine, as the Honorable 57.  Motorola, Pepsi, Exxon, GE, and Dow Chemical — are some of these special giants, who together help drive the US economy.  “These businesses have weathered economic turmoil and rapid innovation in their industries. They’ve survived boardroom battles and bankruptcies. All the while, they’ve maintained a spot among the cream of the corporate crop…” said Tom Huddleston, Jr. in his Fortune article dated June 9, 2015, “These companies have made every Fortune 500 list for 61 years”.

As we considered the volatile performance of the Fortune 500 companies and the List’s high turnover rate, we became more scrutinizing in selecting success models and more skeptical about treating the Fortune 500’s turnover as an economic indicator or trend.  We are now shifting our focus to the 57 companies who have remained part of the Fortune 500 all these years The Honorable 57.

What have they been doing that has enabled them to not just survive but to prosper in these decades of change, adversity, and turbulence?

We explored their annual reports and letters to shareholders for answers to this question.

Following are common themes we observed:

  1. The business strategy has been actively used, organization-wide, to guide day-to-day decisions and actions as well as the establishment of both short and long-term goals.
  2. Six similar strategic areas of focus are visible threads within the fabric of their plans, actions, and/or results:
  • Reinvention, Transformation, Differentiation, and Growth
  • Sustainability – From the Community to the Planet
  • Agility and Resilience – Core Strengths
  • Emphasis on Developing and Aligning Their People and the Company Culture
  • Innovation – Products, Services, and Technologies
  • Execution – Strategically Oriented with a Focus on Operational Excellence and Efficiency

We became more and more excited as we reviewed the Honorable 57’s annual reports and letters to shareholders, with their powerful stories of great leadership, challenges faced and impact achieved.  Following are highlights of the achievements of the Honorable 57 in 2015, including a few examples for today’s leaders as we navigate in an ongoing global tsunami of change and challenges.

Reinvention, Transformation, Differentiation and Growth

PepsiCo Story

  • PepsiCo has not only held a place on the List but has moved up over 320 slots on the List since 1955.  The company’s transformation is reflected in the impact of its strategy, which has its roots in both shareholder return and the company philosophy of Performance With Purpose.  Performance With Purpose is embedded throughout the organization, driving a focus on integrating the following three priorities into business activities:  Human Sustainability, Environmental Sustainability, and Talent Sustainability.
  • Alcoa completed the transformation of its product offerings in 2015, in preparation for a planned split into two public companies in 2016, the Upstream Company and the Value-Add Company, each with unique value propositions and goals. The company completed the integration of three multi-material acquisitions, expanding penetration of the most advanced aircraft engine and airframe market segments where the company’s innovation strength has established a powerful competitive edge. The 2015 restructuring positions the company for profitability in peaks as well as down cycles.  The exit from high-cost commodities assets and strategic investments strengthen the company to grow as a leader in its key markets — exemplifying both strategic diversification and market discipline.
  • US Steel:  The 2015 Chairman’s Letter to shareholders stated “Across our company, our employees drove our success. They transformed how we do business…”  This transformation was enabled by the company’s adoption of The Carnegie Way to guide the company strategy, energizing and leveraging employee-driven change.
  • GE:  2015 marked the strategic re-focus of GE as a high-tech leader.  The company completed the transformation of its portfolio by exiting most of its financial services while completing the purchase of Alstom. To accomplish this transformation, GE sold more than half the Company where they lacked competitive advantage and rebuilt their core. As stated in the annual report, every GE business today rests solidly on a bedrock of deep domain competency.
  • Abbott Laboratories acquired Tendyne Holdings, Inc. thereby expanding their treatments for mitral-valve disease; acquired Omni lab to broaden lab informatics capabilities; announced a collaboration with Sekisui to offer coagulation testing solutions; and sold their Developed Markets pharmaceuticals to tighten the company’s strategic alignment.
  • IBM is the only computer industry company that has reinvented itself through multiple technology eras and economic cycles. The purpose of their reinvention is to create differentiating value.  In 2015 a new reinvention took root, moving the company beyond traditional hardware and software services to become a cognitive solutions and cloud platform company.

Sustainability – From the Community to the Planet

  • Alcoa reduced absolute greenhouse gas (GHG) emissions by 5.5 million metric tons since 2014, was among the first to sign the White House’s American Business Act on Climate Pledge, pledging significant, specific reductions in absolute and net GHG emissions, and joined the Aluminum Stewardship Initiative to define the first global sustainable aluminum standard. In their communities, the Alcoa Foundation contributed more than $22 million for programs in education and environmental sustainability. Employees contributed over 80,000 hours to local organizations during the company’s annual Month of Service.
  • Eli Lilly and Company initiated and continued their ongoing leadership and support of initiatives in communities worldwide with a number of programs focused on health care, serious illnesses, patient programs, STEM and other education initiatives, poverty relief, product donations, disaster relief, and more.  In 2015, Eli Lilly donated over $560 million in products and cash, while employees contributed time and skills to their communities.
  • John Deere and Company:  Employee hours volunteered to their communities grew 20% in 2015, exceeding 100,000 hours for the first time.  The company and the Deere Foundation contributed almost $30 million to support world hunger, education, and economic development in the US and internationally.  In addition, Deere achieved an environmental initiative, exceeding their goal of recycling
  • Boeing:  In 2015, the company completed the largest single restoration project on the Duwamish River in Washington state; the 757 eco Demonstrator tested more than 15 technologies aimed at improved environmental performance, including the first flight with U.S.-made “green diesel” fuel; and they announced several collaborations with universities and other organizations to advance research of sustainable aviation products and practices. Boing continues to target zero growth by 2017 in greenhouse gas emissions, water intake, hazardous waste, and solid waste sent to landfills.  Boeing, with its employees and retirees, invested $190 million in 2015 to help improve lives and build better communities worldwide. During the company’s global month of service employees and their family members and friends participated in more than 200 projects benefiting community partners in 14 countries.
Sandy Chernoff
Sandy Chernoffhttp://softskillsforsuccess.com/
SANDY'S 30 years of didactic and clinical teaching in study clubs and continuing dental education, coupled with her almost 40 years of Dental Hygiene practice bring a wealth of experience to her interactive soft skills workshops. With her education background she easily customizes interactive sessions to suit the specific needs of her clients. Her energetic and humorous presentation style has entertained and informed audiences from Victoria to New York City. Sandy’s client list includes law firms, teaching institutions, volunteer and professional organizations and conferences, businesses, and individuals. Her newest project is turning her live workshops into e-learning programs using an LMS platform. Her teaching and education background have helped her to produce meaningful and somewhat interactive courses for the learners wanting the convenience of e-learning options. As the author of 5 Secrets to Effective Communication, Sandy has demonstrated her ability to demystify the complexities of communication so that the reader can learn better strategies and approaches which will greatly improve their communication skills and ultimately reduce conflict, resentment, disappointment, complaining, and confusion. As a result, the reader will be able to increase productivity, efficiency and creativity, improve all the relationships in their lives and ultimately enjoy a happier, healthier existence! Sandy blogs regularly on her two websites on the various soft skills topics that are featured in her workshops and e-learning programs.

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2 CONVERSATIONS

  1. Magnificent lesson!
    Winston Churchill once said, “Never let a good crisis go to waste.” He was right.
    Business crises and problems are the best opportunity to amplify and improve your skills, find new solutions and move forward successfully.
    You can cope with problems, but, first of all, you have to learn how to get out of your comfort zone. First, by learning to control yourself. A boss who yells at his team when everything falls apart is not a pleasant sight and cannot even motivate his company “travel companions” properly. Becoming a bigger and wiser person is the right key, there is no other way. By pacifying anger and directing emotions into problem solving, not destruction.
    Second, one must learn to think strategically and proactively. This will not only help pay attention to what really matters, but it will also transform us into leaders who control circumstances and don’t give in under pressure.
    Third, one need to be prepared to be flexible and adaptable. When unexpected things happen, one can’t stick to strategies that no longer work.
    Crisis management means learning new things. And so a leader has to try to use these new skills to make a difference.

    • hi Aldo, I do agree with you and as I remember, you and I often agree on things. I hope you are doing well and staying safe and healthy. Thanks for your comments, they are always appreciated.

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