Many entrepreneurs and business owners mistakenly believe that their organization’s long-term success is a byproduct of successful selling. Essentially, if the product or service their organization sells is successful, their business will be rewarded too. Although an innovative customer-centric product or service is an important success factor, it is only a ticket to the business game. It is not unusual for companies with good products and services to fail. In fact nationally, 80% of all new companies will fail in the first five years. And unfortunately, 80% of the remaining 20% will be gone by year ten. This leaves just 4% of new companies obtaining long-term success.
Only 4% of new companies obtain long-term success.
The last three companies I started were in three different industries (financial services, aquatics and software), and used three different organizational structures (C-Corporation, Nonprofit and a Limited Liability Company, respectively). The first company was sold in year nine, and remains a successful division of a fortune 500 company 23 years later. The second organization is the largest nonprofit public aquatic facility ever built in the U.S. – without a single dollar of tax funding or subsidies. The aquatic facility is highly profitable, reinvesting in its growth and programming for the community. It currently employs 90 people and just turned 8. The third company develops software. At just three years old, the company had a successful annual growth trajectory of over 200%.
So what is the common denominator of successful organizations?
How does that 4% successfully make it through the treacherous ten-year journey? I believe the common denominator is creating a consistent culture of successful behavior from employees. The most important component of long-term success is management’s ability to create, instill and nurture this culture within the organization.
The company’s culture – beliefs, ethical standards, and attitudes towards work, peers, and customers – must be instilled by top leadership. This culture is held accountable by management and peers throughout the company.
A culture of success creates alignment and a positive environment.
In this environment trust is high, character is strong, and belief in the mission of the organization is energizing. [bctt tweet=”A culture of success creates a challenging environment where curiosity and learning are rewarded.”] Failure is an acceptable stepping stone to success, and leadership is expected from every single person at every single level of the company.
Success has little to do with the type of industry, the organizational structure, or the products and services being sold. I once heard a CEO of a $2 billion privately held company say, “90% of my assets drive out of the parking lot every day and I want to make sure they are excited about coming back.” I allocate substantial time, energy, and resources in an attempt to hire the right people to build and maintain a culture of success.
In your experience, do you think my time is well spent? Let me know in the comments below.
Read Michael Currans bio here.