Understanding Corporate Longevity: What Secret Sauce Do Firms Over 100 Years Old Have in Common?

“The longevity practices of Century Club companies described in this book result from 10 years of research. Based on our findings, we built a theoretical longevity model. We tested the validity of the model through extensive corporate surveys. A number of statistically significant practices of long-lasting companies emerged………”

Vicki TenHakenFrom her book “Lessons from Century Club Companies” (2016)

Why Does Understanding Corporate Longevity Matter?

Regular readers of this publication know we have been on a multi-year quest to restate the pension investment paradigm so it becomes more operationally useful. For example, terms like ‘Pension Fund Capitalism’ and ‘Ownership Investing’ have graced a number of Letter titles over the course of the last few years. This quest was originally triggered by Peter Drucker’s 1976 book “The Unseen Revolution”, where he visualized workers eventually becoming owners of the means of production through their pension funds. With the passage of time, our Letters have increasingly focused on the ‘operationally useful’ constraint that has plagued traditional investment theory. How can concepts like pension fund capitalism and ownership investing facilitate making good investment decisions in practice?     

To that end, we have been singing the praises of Bart Madden’s ‘Pragmatic Theory of the Firm’.ⁱ Why?  Because it offers an operationally useful description of the four key drivers firms use to create value for their stakeholders, and hence drive investment returns. This framing naturally leads to another investment attribute we often refer to: long-termism. It is still difficult to improve on John Maynard Keynes’s 1936 distinction between ‘beauty contest’ investors who conduct/participate in short-term stock popularity trading contests, and real investors who live and work in the long-term corporate value-creation world.