Strategy Conversations: The Biology of Corporate Survival
Strategic Conversations, brought to you by the BCG Henderson Institute: Leading thinkers, practitioners and experts discuss the ideas that drive global business strategy.
You know the line from the old Sam Cooke song: “Don’t know much biology.” Well, if you’re looking for strategy to survive in business today, you might want to learn about it. Quickly.
A recent Harvard Business Review piece laid out the case. It’s titled “The Biology of Corporate Survival.” Numbers explain why it matters:
After reviewing the histories of more than 30,000 U.S. public firms over 50 years, the authors found that “Businesses are disappearing faster than ever before.”
• Corporations have a one in three chance of being delisted in the next five years, because of bankruptcy, liquidation, M&A, and more — six times the rate from 40 years ago.
• In fact, corporations die, on average, at a younger age than their employees.
So what’s a corporation to do to survive? And what’s biology got to do with it?
Martin Reeves is a Boston Consulting Group Senior Partner and Managing Director, and Global Head of the BCG Henderson Institute. He is also co-author of the award winning management book Your Strategy Needs a Strategy. Dr. Simon Levin is the George M. Moffett Professor of Biology at Princeton University. He is also a 2016 winner of the National Medal of Science, our nation’s highest scientific honor.
Reeves and Levin researched “the intersection of business strategy, biology, and complex systems focusing on what makes such systems — from tropical forests to stock markets to companies themselves — robust.”
Their conclusion: “Companies are identical to biological species in an important respect… and the principles that confer robustness in these systems, whether natural or man-made, are directly applicable to business.”