English | EN Bitcoin 2.0 Shortens the Life Span of Companies
Mar 9, 2015
In their book “Built to Change” the authors Edward Lawler and Chris Worley analyzed the Fortune 1000 list. This list contains the thousand largest U.S. companies ranked on the basis of generated income. The study shows that a total of 35 percent of the companies in the top 20 are new in the period from 1973 to 1983. In the subsequent period of ten years, again this percentage increases to 45 percent. From 1993 to 2003 this figure amounts to 60 percent. Over the years, the percentage of new companies that enter the top 20 increases. In the book, the authors propose an important question: “Any bets as to where it will be between 2003 and 2013?”
In the article “Big Business … The End is Near” an answer to this question is given. If the above trend continues, more than 70 percent from the list of the Fortune 1000 companies will be replaced.
Gabriel Weinberg , the founder of the DuckDuckGo search engine, states in his blog post “Software is eating the Fortune 500”: “We should eventually be seeing bigger companies form and rise faster and faster over time. Not only should they pick off huge incumbents, but they should also pick off each other in faster waves.” In the near future, new companies will emerge that will achieve tremendous growth within no time and thereby undermine the position of established organizations. To prove his theorem Weinberg has looked at the Fortune 500 list since 1955. His research shows that an accelerated change is noticeable. Companies stay less and less years on the list. After a few years, most companies disappear from it and their place is taken over by another one.
The same trend can be seen in the S&P 500. Research by Richard Foster, a consultant with the company Innosight, shows that the average life span of a company listed on the index has declined tremendously. In 1958, the average life span of a company was 61 years, in 1980 this has fallen down to 25 years and now it ́s only 18 years long. His prediction is that it will decrease even more in the coming years and the life span will eventually approach 10 year. In less than a hundred years, the life span of companies has decreased by 83 percent.
According to Scott Brinkler technology advances exponentially, while organizations absorb changes logarithmically. Brinkler states that “the great management dilemma of the 21st century is the relationship between these two curves: technology is changing faster than organizations can absorb change. […] To succeed, technology management must explicitly address how those technologies will be absorbed into the operations and the culture of the organization.”
Bitcoin will have an effect on the lifetime of existing companies. Possibly it will accelerate the trend of decreasing life spans even more.
About the author
