Thursday, 4 April 2019

The average large company dies at age 30 — Here are 4 strategies Jeff Bezos uses to make sure Amazon isn't one of them

Jeff Bezos on books

Jeff Bezos keeps talking about the fact that Amazon is going to die some day.
That's because the average US public company only lives to be about 30 years old.
But there are some strategies leaders can use to stay innovative and delay a company's death.
Bezos outlined 4 strategies he uses to stay in "Day 1," the growth phase of a company, in his 2017 shareholder letter.
They are: true customer obsession, resisting proxies, embracing external trends, and high-velocity decision making.

"Amazon is not too big to fail. In fact, I predict Amazon will fail."

That's what Jeff Bezos, CEO and founder of Amazon, said to his staff during an all-hands meeting in 2018.

"Amazon will go bankrupt,” he continued. If you look at large companies, their lifespans tend to be 30-plus years, not a hundred-plus years."

Bezos is right. The average US public company is dying younger than ever, around age 30, according to Martin Reeves, a strategist who gave a popular TED talk about how to build a company that lasts for 100 years.

Another startling statistic: Reeves says 32% of companies won't exist 5 years from now, whether they're acquired or they flat-out fail.

How do you keep a company from dying?

Bezos says his goal is not to keep Amazon from dying, it's to keep it from dying during his lifetime. To do this, he uses an innovation philosophy dubbed "Day 1."

I recently gave a talk on Bezos' Day 1 strategies at an Axel Springer Leadership Summit in Germany. Here's the playbook Bezos uses to build a company that lasts.

Imagine if your CEO stood in front of your company and said, "We're going to die." That's what Jeff Bezos has done over and over again.

Bezos has repeatedly said that he expects Amazon will one day go out of business.

That's not because the company isn't doing great right now. It's because if you look at the stats, all companies eventually die and get replaced.

It turns out companies are dying younger than ever. The average US public company only lives to be about 30 years old.

Perhaps more startling: 32% of companies won't exist five years from now, according to strategist Martin Reeves, who gave a TED Talk on how to build a 100-year-old company.