Corporate Longevity – How to create companies for the long run
Robert A. Burgelman is Professor of Management at the Stanford University and has dealt with the question on how to build companies for the long run. In this video, he presents central factors to achieve this.
Basis for corporate longevity is the strategic leadership. What he understands is that all managers of an organization are characterized by a strategic mentality and – on this basis – tailor all their decisions in light of the defined strategy and the long term viability of the company.
Burgelman developed a framework of strategic leadership and defined its central factors, which contribute in their totality to the long term stability of the company. These are:
The strategic leadership regime: This describes the relation between top-down and bottom-up leadership. Ideally, both forces are equally strong and go into the same direction.
The interplay between culture and strategy: This is the question inasfar the cultural traits do support the strategy. At the time of the formation of a company, there usually is a strong accord between those two factors. In the course of time, this fit could get looser. The stronger the fit between culture and strategy in the long run however, the higher the likelihood for corporate longevity.
The poles of fit versus evolvability: Fit means that the company has the right capabilities to exploit the current markets and success potentials. Evolvability, however, means being capable to develop adequately in order to be able to exploit new niches and revenue and profit potentials.
The interaction between top management and board of directors: Also in this respect, the art lies in the managing this interaction effectively over the different phases of the dynamic development of a company.
There is a dynamic perspective in this approach. The factors are helpful, but the challenge lies in getting the balance right as the company evolves dynamically further. Herein lies the real added value of this approach in my point-of-view.