Technology as killers Firm

The life of large companies was shortened dramatically in recent decades, as a recent study in the U.S. shows.

In mid-September had the largest PC manufacturer in America, Hewlett-Packard, expunged from the Dow Jones Industrial Average (DJI), that list of 30 blue chip stocks that are intended to reflect the basic composition of the U.S. economy.

The HP removal from the Dow Jones is a sign of how rapidly transforming the IT industry. But technological innovations also seem to lead to that large companies overall have a lower life expectancy – at least in its original form. HP, however, is not the only company that had to leave the DJI – including Bank of America and Alcoa said “bye-bye”. Instead, Nike, Visa and Goldman Sachs were taken.

Richard N. Foster, a well-known consultant and economist who has helped shape the concept of “creative destruction” in recent decades, has long been concerned with the question whether innovation will shorten the life of corporations. With creative destruction is not that exactly meant: New technologies and the overall progress lead to fresh, younger entrants to take the helm

HP is this actually a good example.. The company still sells mainly PCs, laptops and printers. And the customers buy less and less of these devices in recent years. Instead, they go to the fastest growing consumer technology ever – smartphones and tablets. Although HP’s business is still huge, but it shrinks.

In order to test whether accelerated rise and fall of major corporations, Foster has a broader stock index considered the DJI, the Standard & Poor’s 500 Index (S & P 500), of the 500 most valuable traded on the U.S. stock market comprises companies.

Here, the researchers came to the conclusion that the rate will be pushed to the companies in the S & P 500 actually increases. In 1958, a company that has been freshly added to the S & P remain in the index with a statement about it or expect 61 years. Currently, the average stands at only 18 years

The company fall in the S & P 500, if they have become too small -., Or they will be taken over by another company. Often that plays a role in what we like to call in professional circles “disruption” – technological changes that can revolutionize the market. Since 2002, Google, Amazon and Netflix have been included in the S & P 500, while Kodak, the “New York Times”, Palm and Compaq had to leave the index – and especially due to a changing technology landscape

Today’s S & P 500 includes many well-known companies such as Apple, AT & T, Corning, Ford, Intel and Yahoo – and even Hewlett-Packard. In the current high level of change could create three of four of these companies disappear over the next 15 years from the public eye, at least according to Foster’s long-term statistics.

And that should not change. According to the “Creative Destruction” Pope corporations can overtake the market in terms of innovation almost never. Instead, they need to remain large, leave old into new business segments and for themselves – and, if possible, without compromise. (For example, HP may not decide to exit the PC business.)

Foster’s data also show which company is the major long-term survivors in the American Economy: General Electric (GE). It is the only company that is still in the index since the beginning of the S & P 500 in 1926. <- AUTHOR MARKER DATA BEGIN -> ( Antonio Regalado ) / <- RSPEAK_STOP -> (bsc)
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