If the world's largest corporations don't take action soon, they risk dying out altogether.
It all has to do with one thing: innovation.
The Fortune 500 list was first published in 1955 by Fortune Magazine. Since then, 88% of the list's original companies no longer exist, having merged, gone bankrupt, or fallen from the ranks, according to the American Enterprise Institute.
The list has seen near constant turnover since its founding, with brick-and-mortar companies like Armstrong Rubber, Pacific Vegetable Oil, and Riegel Textile being replaced by tech-focused companies like Facebook, Microsoft, and eBay.
In fact, Forbes Magazine reports that only 50 years ago, the average Fortune 500 life expectancy for a company was 75 years. But today, it's only 15 years... and it's getting shorter.
This tells us a few things:
- The public markets change quickly, and they're insanely competitive. Both of these characteristics contribute to high corporate turnover rates.
- Even if a company is pulling in major revenue today, there's no guarantee that it'll do the same tomorrow as industries keep changing.
- A company's progress and revenue go hand in hand with innovation. If a company isn't willing to develop new, outside-the-box ideas, it won't be able to keep up.