Every small and emerging business dreams of someday entering The Fortune 500. Fortune magazine’s 58th annual ranking of the 500 largest US companies is now on newsstands, and although the top spot is occupied by a familiar name, Wal-Mart, making it to this prestigious list is not a guarantee a business will stay there. Only 57 companies appearing in the inaugural 1955 Fortune 500 have been on it every year. Though there are many factors contributing to the approximately 89% Fortune 500 attrition rate, my applied research and direct experience leads me to conclude the volatility is due to a stale business model.
The prevailing model organizes a business and its critical human capital around functions and industry experience. For instance, a medical devices company looking for a sales VP will look to hire someone who has already sold for a medical device company and previously managed medical device sales people. Though apparently logical, this traditional approach is based on utterly flawed thinking as it assumes a static environment. As evidenced by Fortune 500 churn rates, building and sustaining growth is anything but static as companies that once held dominant positions perished while new entrants disrupted entire industries allowing them to enter the hallowed Fortune 500 halls. My first conclusion, supported by evidence, research and experience is those intimately familiar with an industry are least likely to change an industry as they are most captive to industry convention.
Continuing reading on Huffington Post (article published 5/21/13).