Transformation Of Apple
Building Organizational
Fitness in the 21st C
Building Organizational Fitness in the 21st Century
Michael Beer
The 21st century promises to be characterized by rapid change in technology and
relentless competition spurred by globalization. It is hardly news that in this environment
firms will have to possess the capacity to adapt or suffer the consequences – low
performance and ultimately death and destruction.
Unfortunately, firms do not seem to be adaptive. Consider these startling findings by
Foster and Kaplan regarding the survival rate and performance of U.S. firms.1 Of those
firms in the original “Forbes 100” list published in 1917, 61 ceased to exist by 1987. Of
the remaining 39 only 18 stayed in the top 100. These firms (which included Kodak,
DuPont, General Electric, Ford, General Motors, Proctor and Gamble) survived
momentous events such as the Great Depression and World War II, but, with the
exception of General Electric and Kodak, under performed the overall market by 20%.
Recently, Kodak’s performance has suffered as it struggles to respond to challenges by
foreign competitors. Similarly, of 500 companies in the original S&P 500 list in 1957,
only 74 remained on the list in 1997 and of these only 12 outperformed the S&P 500. In a
Darwinian economic environment, unfit organizations – those that do not adapt to fit new
circumstances - do not survive.
Failure to perform not only hurts investors. There are human costs involved in all these
corporate failures. Employees of Polaroid Corporation, a firm that has been failing for
years and declared bankruptcy in 2001, found that out recently.2 Not only did they lose
their jobs and attachment to an organization about which they cared deeply, promised and
critical healthcare and retirement benefits have disappeared. Leaders themselves are hurt
by their inability to change their organizations and their leadership behavior. CEO tenure
has decline from 10.5 years in 1990 to 4.2 years in...
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