A new book by Vicki TenHaken of the Hope College management faculty examines five traits shared by U.S. companies in the “century club”—firms that have lasted at least 100 years.
“Lessons from Century Club Companies: Managing for Long-Term Success” was published earlier this year by Spinner Press of Ann Arbor. It suggests five characteristics that help companies become centenarians: strong corporate mission and culture; unique core strengths and change management; long-term relationships with business partners; being active members of the local community; and long-term employee relationships.
Although “making money” isn’t on the list, that’s not to say that profits don’t matter. Instead, TenHaken’s results echo influential business thinker Peter Drucker, who noted that while profits are necessary to a company’s survival, the purpose of business should be to create and keep a customer.
“Leaders of the Century Club companies say these practices build loyalty to their firms, in particular with customers and employees,” said TenHaken, who is a professor of management and the Ruch Director of the college’s Baker Scholars Program. “They also believe their approach to doing business is difficult for competitors to imitate and helps their firms to thrive.”
TenHaken’s conclusions are based on surveys of more than 7,000 companies in the U.S. and Japan as well as follow-up interviews and case studies. She has conducted research on the project for more than 10 years, working with economics professor Makoto Kanda of Meiji Gakuin University in Japan, who was already studying “shinise”—ancient and honored Japanese companies—when they met while she was leading Hope’s Japan May Term in 2004.
TenHaken notes that there are more than 600 companies in the U.S. that are more than 100 years old. The book lists many (TenHaken will welcome learning of more), from Zildjian of Norwell, Massachusetts, established in 1623, through Western Construction Group of St. Louis, Missouri, established in 1915.
While the cohort includes firms like the Ford Motor Company, established in 1903, she and Kanda focused on small- and medium-sized, privately owned firms, which in the U.S. represent more than 95 percent of all businesses.
“We wanted our research to be useful to a majority of companies today desiring to thrive for the long-run,” she writes. “We wanted the practices we revealed to be relevant.”
Some of TenHaken’s findings regarding each of the five qualities:
Factor 1: Strong corporate mission and culture.
“The existence and deliberative preservation of certain values and beliefs that form a strong corporate culture are a key survival factor among Century Club companies. Most have values developed by a founder and passed on through the generations…
“Present leaders of Century Club companies see themselves as stewards or custodians of the business and feel an obligation to manage the firm in a way that both honors the past and ensures its survival into the future.”
Factor 2: Unique core strengths and change management.
“These company ‘secrets’ or special methodologies make the organization and what it offers unique. Further, the enduring enterprises say the ongoing development of their special capability is also necessary. The image of old companies is often that they stick to tradition and resist change. Nothing could be further from the truth.”
Factor 3: Long-term relationships with business partners.
“These firms regard the maintenance of long-term relationships with customers and the development of their suppliers from generation to generation as crucial to their own success… The emphasis on relationships with business partners goes beyond mere economic transactions or the exchange of goods or services for financial gain.”
Factor 4: Long-term employee relationships.
“Many employees become lifelong, loyal members of the organization and often describe their relationship with the company as being part of a family. One of the important employee practices used by the old companies is the development of leaders from within, using a deliberate process for leadership succession.”
Factor 5: Active members of the local community.
“Century Club companies participate actively in their local communities, promoting them and developing local networks for mutual learning and benefit. Century Club companies believe their businesses greatly benefit from having a good standing in the community. They also say that a community’s good reputation helps their business, so enduring enterprises invest time and resources in projects that develop and sustain their communities.”
As important as the research found the five qualities to be in ensuring the longevity of the companies studied, TenHaken noted that they are not a blueprint, nor do they guarantee success.
“Though the practices Mako and I identified exist in companies in business for over a century and many are not practiced by younger companies, implementing these practices alone cannot guarantee a company’s survival for the long run,” TenHaken writes. “Too many economic and social factors, not to mention the results of poor leadership, affect the life spans of businesses. Also, the statistical significance of these practices does not mean that all Century Club companies employ all the practices we uncovered.”
TenHaken worked in corporate settings for more than 25 years before joining the Hope faculty in 2000. She previously worked at General Electric and Herman Miller Inc., in roles including executive vice president of strategy, general manager of a new business venture, vice president of marketing, director of corporate planning and human resources management. She has published several papers on topics of leadership and corporate longevity as well as a handbook for new managers. In 2007, she received an award through the Fulbright U.S. Scholar Program to teach and conduct research in Krakow, Poland.
“Lessons from Century Club Companies: Managing for Long-Term Success” costs $14.99 and is available at the college’s Hope-Geneva Bookstore. The bookstore is located on the ground level of the DeWitt Center, 141 E. 12th St., and can be called at 800-946-4673 or (616) 395-7833 or emailed at firstname.lastname@example.org.