![]() These are fair points, but they don’t discredit the basic findings. Some of it is about the limitations of the sample: The two lists don’t include private and venture-backed firms and professional partnerships and cover only a 25-year time period. I get a lot of pushback when I present this analysis. The bottom line: There has been less creative destruction than prior studies have suggested-indeed, less than most people believe. The big change here was geopolitical: The 2020 Global 500 had 95 fewer companies from Japan than the 1995 list did, and 116 more from China. The 2020 ranking included only 12 entirely new companies 324 firms were new to the list but either had existed or were formed from companies that were already around in 1995. Ten had died, 150 had dropped off the list, and 132 had been sold or merged with other firms. And as we’ve noted, only 17 companies-among them, Facebook (now Meta), Google (now Alphabet), Tesla, Netflix, and Uber-were founded after 1995.Īs for the Global 500, 164 of the firms that were on the list in 1995 still made it in 2020. Another 54 were spin-offs and restructurings of previously existing businesses. The 2020 list also contained 231 firms that were in existence back in 1995 and grew enough to get onto it. Only 35 of the companies in the 1995 ranking went bankrupt. Two hundred and fifty-six firms had dropped off it because they had merged with or been sold to other corporations or to private equity firms or were no longer big enough to qualify. In 2020, 198 of the firms that had made the Fortune 500 in 1995 were still on the list. Let’s go back to the 1995 Fortune 500 and Global 500 and compare them with the 2020 lists. Organizations that approach competitive threats soberly and systematically will make smarter choices about how to not only survive but also thrive. But I’ve found that there are at least three other valid strategies a company might want to adopt, depending on the circumstances. It’s often argued that the only way to fight a tech disrupter is to beat it at its own game-by, say, creating a new business in a separate unit. My second goal is to help executives make better decisions. Knowing why these industries have not been disrupted so far will improve our ability to foresee how things might evolve over the next few years. My research shows that people have been making the same predictions-erroneously-since the 1990s. For example, many observers claim that we are on the cusp of full-scale disruption in industries such as finance, insurance, and education. The first is to help businesspeople understand the reality of the past, which will better prepare them for the future. I have two objectives in writing this article. The facts suggest otherwise.Īdapting to Digital Disruption: Series reprint When you look at the Global 500, the picture is similar.ĭigital disruption is real, of course, but it has been oversold by three myths: Every sector is under threat, disruption happens quickly and is accelerating, and established firms are struggling to adapt. The other 483 have been around, in some shape or form, since that year. So how many of today’s Fortune 500 didn’t exist back in 1995? Seventeen. The internet revolution started in the mid-1990s, a quarter century ago, long enough for the winds of change to work their way through the whole economy. Indeed, most established firms are operating very successfully in today’s digital world.Ĭonsider a couple of data points. However, over the past three decades many large sectors of the economy have not been disrupted-that is, taken over by tech-enabled competitors that serve customers more efficiently and cheaply than incumbents do-to any significant degree. ![]() ![]() Yes, there’s no denying the exponential growth of the large tech companies or the cautionary tales of disruption’s famous victims (think Nokia, Kodak, and Blockbuster). The message to established firms-play catch-up or die-is bleak.īut let’s look at the bigger picture. ![]() The prevailing narrative in business today is one of ever faster change and creative destruction: Big Tech companies are taking over, the number of unicorns (start-ups worth $1 billion) keeps growing, the average tenure of old-economy companies on the S&P 500 is plummeting, and incumbency has never been worth less. Industry transformation happens very slowly, and incumbents can successfully respond to disruptive challenges in one of four ways: retrench, fight back, double down on existing assets, or diversify into new businesses. Only 17 of the companies in the 2020 Fortune 500 didn’t exist in 1995. When you look at how the makeup of the Fortune 500 and the Global 500 has changed since the rise of the internet, that story doesn’t hold. Many people believe that technological disruption will destroy most old-economy companies, with Big Tech and unicorn start-ups ultimately taking over the world. ![]()
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