I enjoy sushi. Part of the experience is the dip into soy sauce. Recently I read an article about Kikkoman Soy Sauce that fused that flavoring with my interest in generational family businesses. Kikkoman’s origins trace back to the 17th century. The product moved from a local brand to a national brand (in Japan) in 1917 and to overseas production in 1973.

In the modern business world, longevity is increasingly rare. Companies are dying younger, but are also more prone to collapse at any given time. According to a Boston Consulting Group report, “one-tenth of all public companies fail each year, a fourfold increase since 1965.”

There are, however, exceptions to these statistics: world-wide, there are 967 businesses founded prior to the year 1700 (and dating as far back as 578) that are still in operation today.

Incredibly 517 of them, or 53%, are located in one country: Japan.

In his book, The Living Company, Dutch business theorist Arie De Geus analyzed 30 centuries-old businesses for common traits (including several in Japan), and deduced their success to four commonalities:

  1. Long-lived companies were sensitive to their environment and remained in harmony with the world around them.
  2. Long-lived companies were cohesive, with a strong sense of identity. No matter how widely diversified they were, their employees (and even their suppliers, at times) felt they were all part of one entity.
  3. Long-lived companies were tolerant and generally avoided exercising any centralized control over attempts to diversify the company.
  4. Long-lived companies were conservative in financing. They were frugal and did not risk their capital gratuitously.

Ultimately, he whittled down his theory to one sentence: “Companies die because their managers focus on the economic activity of producing goods and services, and they forget that their organization’s true nature is that of a community of humans.”

Thank you to Zachary Crockett at Priceonomics for the research.

Jamie Michelson, President/CEO