In their book, Built to Last: Successful Habits of Visionary Companies, management consultants Jim Collins and Jerry I. Porras closely examined several successful business ventures to determine why they had become such long-lasting companies that thrived in their respective industries.

The pair carefully studied these organizations’ growth — from startup, to enterprise, to Fortune 500 — and noted what qualities they saw in the leaders of those highly successful businesses.

The harsh truth regarding these renowned companies featured in the book — Walmart, 3M, Merck, and the like — is that they are increasingly anomalies with each passing year.

Innosight’s latest Corporate Longevity Forecast shows the average lifespan of S&P 500 organizations is slowly but surely decreasing over time:

From an average “tenure” of nearly 40 years to roughly half that as of 2024

The report continued that, while some of this decline can be attributed to the recent global pandemic and subsequent economic downturn, there are other factors at play.

“Although it’s easier than ever to launch new startups, fewer are being launched than we should expect, and those that do aren’t surviving as long as they should,” High Alpha Innovation CEO Elliott Parker explained during his keynote at Alloy 2023, our annual event that features sessions with venture builders, startup founders, investors, and operators.

“Shorter company lifespans translate, in most cases, to fewer problems being solved, less impact, and less advancement because those companies, once they scale, have less time to get things done,” Elliott added.

So, this begs the question: How can business ventures endure and build a lasting legacy?

Why we need more business ventures to thrive long term as a society

Poor business planning. Offering a redundant product or service that fails to stand out. Insufficient financing to support growth plans. The list of potential reasons new business ventures — and even those that have sustained for several years — can falter is a fairly long one.

As Elliott indicated in his Alloy keynote, though, the common thread among poor-performing (and eventually shuttered) businesses is simply a lack of money.

“The world’s most enduring institutions are hyper-conservative about fiscal matters,” said Elliott. “They take very little risk. They can afford to be safe because they’re typically very tightly held and not worried about short-term growth.”

In the case of companies at least 100 years old, Elliott added they tend to have at least a couple years’ worth of cash on hand to survive economic headwinds and other external factors.

Of course, it’s not just about being mission-driven and sticking to financial principles.

With a concerted innovation strategy that entails constant analysis of existing operations and market opportunities and collaboration with the right partners, corporate leaders greatly enhance their organizations’ odds of not just surviving near term, but also thriving long term.

“I believe that, for most companies, endurance is a better goal than short-term profit maximization,” said Elliott. “Even if cash flow is the most important measure of a company’s success, sustained cash flow generation over centuries, even if at a meager rate annually, is likely more desirable than a short-term spike and crash.”

And the way to realize that endurance is by testing new ideas and concepts that can augment existing offerings for the core business and/or help companies initiate new business ventures.

What lessons can be learned from long-lasting business ventures

According to Elliott, the modern approach to build a business venture that outlasts the competition and continues to innovate to address market demands and opportunities is to:

• Test, test, and test some more. “And every time you discover an anomaly, something unexpected, you’ve possibly learned something before the rest of the world. Enduring companies are like living organisms that must learn, that must expand their knowledge base to survive.”

• Create a firm succession plan. “Institutions are more likely to endure when their founding requires the efforts of multiple generations. … A small group of people can start construction of a cathedral, but it requires a large group of people, sometimes over hundreds of years, to finish the job.”

• Set lofty but reasonable goals. “I’m not suggesting you should be modest in your objectives. … I’m suggesting that you should be audacious in your objectives but conservative in your timelines.”

Regarding this latter point, Elliott spotlighted Birkenstock. He noted how the company’s roots go all the way back to 18th-century Germany. That longevity may seem unachievable to many entrepreneurs. But the shoe producer even states the formula for its success is simple:

“Since 1774, Birkenstock has passed this commitment down from one generation to the next. The result is the absolute best in quality, comfort and support.”

That 250-year-old business venture pales in comparison to another organization Elliott highlighted: Kongō Gumi, a Japanese construction company that was founded in 578 A.D. and lasted 1,400 years.

“The company exhibited tremendous flexibility in how it chose its leaders, selecting the son who showed the most potential to succeed in the job, or son-in-law if there was no son,” said Elliott. “Eventually daughters were allowed to run the business too, fortunately.”

Succession was a careful choice for Kongō Gumi, not just a default to the right of primogeniture, Elliott added. Family members over generations were trained and empowered as needed.

Though the business eventually was acquired in 2006 due to debt burdens, its story is a powerful one for current and aspiring founders looking to play the long game.

“Game theory teaches us that when we play finite games, we optimize for our own outcome because there is no threat of repercussions,” said Elliott. “When we play infinite games, we must optimize for all stakeholders to keep playing the game. Too many forget that business should be an infinite game.”

How the right business venture builder can help your company endure

Whether you’re an enterprise executive looking to create an innovation lab at to validate proofs of concept for spinoff business ventures, a university leader with funds to support innovation hub-led initiatives, or a budding entrepreneur eager to join an early-stage organization that aligns with your career ambitions, the optimal avenue to realize your goals is to partner with a venture builder that does exactly what Elliott discussed in his Alloy talk:

Create or join a startup co-created by a venture builder that takes the long view.

Consider High Alpha Innovation. Our team of venture-building experts collaborates with corporations, universities, governments, non-profits, and entrepreneurs to:

• Align on short- and long-term innovation investment opportunities

• Define the problems facing audiences they want to potentially serve

• Speak with consumers and customers to secure qualitative feedback

• Move quickly on agreed-upon concepts to test and validate their potential

• Establish delivery and economic models upon business venture selection

• Launch ventures that have the opportunity to excel “today” and “tomorrow”

“Building companies with enduring impact is really, really hard,” said Elliott. “It’s a big reason why High Alpha Innovation exists. We believe there should be more entrepreneurs in the world, and that more of them should succeed. We believe that, when startups and large institutions collaborate effectively, the world is better off.”