As companies die younger, people are living longer.
By all accounts, the chaotic “new normal” in business is real and corporations are navigating rough waters these days. According to an Innosight study in 2012, companies in the S&P 500 in 1958 lasted in the index for 61 years, on average. By 1980, the average tenure had shrunk to about 25 years, and it is expected to drop to 15 years by 2020. Richard N. Foster, who led the study, issued a clear warning: “At current churn rate, 75% of the S&P 500 will be replaced by 2027”. A more recent study from the John M. Olin School of Business at Washington University goes as far as estimating that 40% of the S&P 500 companies will no longer exist by 2025.
Kodak has actually become a verb, as in “being Kodaked”, a creative reference to the expected mass extinction of companies and even entire industries in years to come.
Peter Diamandis put it bluntly: “I don’t think investors and money managers are aware of the rate of change coming down the pike. It is too hard to fathom.”
In this kind of environment, SeaWorld (NYSE: SEAS) is an interesting case to highlight. Its parks have seen severe declines in attendance following the 2013 release of the CNN documentary, “Blackfish”. The company has fought back with a prolonged media campaign defending what it says are the parks’ humane practices. In November of last year, it announced that 2016 will be the last for the famous Shamu show in San Diego and coming in 2017 will be “an entirely new orca experience, designed to take place in a more natural setting”. The move was announced amid efforts at both the state and federal level to introduce legislation that would prohibit the breeding of captive orcas, end the capture of wild orcas and stop the import and export of killer whales. Not surprisingly, this has forced SeaWorld to shelve a $100 million plan to nearly double the killer whale tanks at the San Diego park. And now the company is pulling the plug on its signature theatrical performance altogether. Just this month, after announcing a shakeup in its executive team, CEO Joel Manby also had to admit that some employees had been instructed to go undercover as animal rights activists to spy on critics.
Marking the 20th anniversary of Free Willy, “Blackfish” managed to have a blasting impact that the creators of the family drama could have only dreamed of. But SeaWorld has an even bigger challenge, which may prove elusive even to the most astute public relations specialist. The under-18 population in the United States is shrinking in relation to the total. In other words, children, who represent the main potential source of business growth for a brand like SeaWorld, are growing up and out of the category, while being backfilled at a much slower rate than before.
In the past, when short life expectancy and high fertility rates were the norm, the pyramid used to be a common way of visualizing the age structure of our society. Children formed the largest group at the bottom of the pyramid, while the elderly accounted for the smallest group at the top. Today the global population is undergoing a transformation unlike anything before, and its age structure is increasingly shaped like a dome. Over the last 50 years the average number of children born to a woman over her lifetime has halved, and life expectancy increased by 15 years to almost 71 years.
We face an extraordinary paradox today: companies die younger while people are living longer.
And an aging population doesn’t only have implications for the marketing strategy of companies; it also forces them to re-think their approach to recruiting and developing talent. More importantly, an aging global workforce combined with the inability of their employers to adapt to changing market dynamics opens the door for individuals to start re-thinking their own career paths.
The prevailing modus operandi in organizations is still highly influenced by a model in which career paths are locked based on a set of abstract qualifications that job applicants may have had at a very early stage of their careers. While this approach may have been effective in the past, it is excessively rigid in times of socioeconomic turbulence, cultural transformation and technological advancement.
Here’s Diana O’Brien, CMO of Deloitte University: “It’s important for people to think of themselves as constant learners, capable of growth and improvement every day. We can’t afford to have people thinking, ‘Well, I studied tax in college, so I can’t learn technology.’ Of course you can. Don’t confine yourself to your undergraduate major, or set of experiences.”
Cultivating the ability to pivot one’s career as needed and learn new concepts throughout one’s life might seem like a complicated and unappealing idea to many people, perhaps even unnecessary. But the further developments in technology we achieve, the bigger the need for this — across blue-collar and white-collar job categories. While computerization has been historically limited to routine tasks involving explicit rule-based activities, algorithms for big data are now rapidly entering a wide range of domains, including healthcare, legal and financial services. In the seminal paper The Future Of Employment: How Susceptible Are Jobs To Computerization?, which studied over 700 occupations, Dr. Carl Benedikt Frey and Dr. Michael A. Osborne estimate that 47% of total U.S. employment could be at risk in the next several years.
As a general rule, corporate leaders are not really thinking about these issues, which could probably explain the alarming S&P 500 predictions stated earlier.
As Klaus Schwab has noted, “There has never been a time of greater promise, or one of greater potential peril. Today’s decision-makers, however, are too often trapped in traditional linear thinking, or too absorbed by multiple crises demanding their attention, to think strategically about the forces of disruption and innovation shaping our future.”
There are exceptions, of course. One notable example is Starbucks and its College Achievement Plan, in partnership with Arizona State University. The Seattle-based company offers employees who work 20 hours per week or more (which account for roughly 80% of its U.S. workforce) full tuition reimbursement for an online undergraduate college degree. Emphasizing the importance of people expanding their education, Starbucks openly encourages its “partners” to seek employment opportunities elsewhere after graduation, if they choose to do so. To further dramatize this point: Starbucks believes that people departing the company for a better opportunity, even after it has paid for their college degree, is a positive outcome overall.
But let’s return to the subject of killer whales for a moment. The future of SeaWorld is anyone’s guess at this point, and they might have a chance if they at least fully recognize the problem. The truly interesting thing about this case, though, is that building a bigger water tank can be thought of as a metaphor for what many companies tend to do. The default approach, especially when facing decline, seems to be “go bigger, harder and faster”. Just think about it. Is your company building a bigger tank? Will it be sustainable? How about yourself? Are you building a bigger tank? Will it fulfill you? Perhaps the answer is yes, only you can decide.
Just like SeaWorld is having a hard time creating a new path for its brand by dispensing with the need to confine 6-ton animals to a life in prison, people struggle to imagine creating new stories and new paths for themselves. Questioning our own default mental models is a difficult thing to do. While we all have the capacity to keep learning throughout our adult life, the structures in which we usually have to function — e.g. family, school, church, corporation, etc. — are often not conducive to new thinking nor engagement in activities that help us broaden our horizons.
Granted, some of the market dynamics discussed here may not necessarily be in plain sight depending on where you live or where you work, or you may not be as susceptible to the changes coming our way in the near future. But if we are indeed going to live longer, in an environment that will re-shape itself beyond recognition, it behooves us to consider that we might have to course-correct our own trajectory just slightly.
In the process, we may even find the enthusiasm to explore what else we have stored inside, and rejoice in Master Shifu’s words of wisdom:
“If you only do what you can do, you will never be more than you are now.”