Scale: The Universal Laws of Growth, Innovation, Sustainability, and the Pace of Life, in Organisms, Cities, Economies, and Companies

by Geoffrey West

Richard Foster, who was for twenty-two years a director and senior partner of the well-known business consultants McKinsey & Company, analyzed the tenure of companies on these lists and discovered that it has been regularly decreasing over the past sixty years. For example, he found that in 1958 a company could expect to stay on the S&P 500 for about sixty-one years, whereas today it’s more like eighteen. Of the Fortune 500 companies in 1955, only sixty-one were still on the list in 2014. That’s only a 12 percent survival rate, the other 88 percent having gone bankrupt, merged, or fallen from the list because of underperformance. More poignant, perhaps, is that most of those on the list in 1955 are unrecognizable and completely forgotten today; how many remember Armstrong Rubber or Pacific Vegetable Oil?

Survival rate for Fortune 500 companies