The UK’s oldest continuous index is the FT30. It was created back in 1935 and is now rarely used since being superseded by the FTSE 100, introduced in 1984.
Of the original members of the FT30, just four are currently in the FTSE 100: Guest Keen & Nettlefolds (GKN), Tate & Lyle, Imperial Tobacco and Rolls-Royce, and even these stalwarts have dipped in and out over the years.
Why does this matter? Well, mainly because it shows what a transient world big business is.
I’ve recently been reading The Start Up of You, a joint effort from Reid Hoffman, the co-founder of LinkedIn and Ben Casnocha, a San Francisco based entrepreneur, author, blogger and self-confessed ‘learner’.
That’s an apt label for the co-author of a book who’s main idea is that each one of us as individuals should think of ourselves as ‘businesses-of-one’. I’ve only just begun to delve into the parallels that Hoffman and Casnocha draw between life in Silicon Valley and an individual’s career, but I’m struck by the book’s opening which explains why Intel co-founder Andy Grove was so right when he once said “Only the paranoid survive.”
Success, according to The Start Up of You, is “fragile – and perfection, fleeting. The moment you begin to take success for granted is the moment a competitor lunges for your jugular.”
Reid Hoffman uses the example of Detroit and America’s car industry to show why standing still and failing to innovate is a recipe for failure:
“Easy success had transformed the American auto companies into risk-averse, nonmeritocratic, bloated bureaucracies. When the competition heated up and customer needs changed, the company executives and the autoworker employee unions did not adapt. Instead, they did more of the same.”
He also makes the point that whilst during the 1920’s and ‘30’s firms stayed in the S&P 500 for an average of sixty five years, by the late 1990s the average tenure had fallen to just ten.
Of course, it’s not just car manufacturers that can get caught out. It can happen to any sector and, right now, you’d have to think that financial institutions are more vulnerable than most.
Hoffman believes the underlying causes of disaster include “the hubris that comes from success, the failure to recognise and match competition, an unwillingness to exploit opportunities that contain risk and an inability to adapt to relentless change.” Does that remind you of any banks and their approach to social media or digital banking or the way that consumers appetite for information and engagement has changed?
The principles of Silicon Valley on which The Start Up of You is based are as follows:
- Take intelligent and bold risks to accomplish something great
- Build a network of alliances to help you with intelligence, resources, and collective action
- Pivot to a breakout opportunity.
There’s a fair few financial players who could benefit from taking these to heart, and remember, look over your shoulder. The only way to beat who’s coming up behind is to be honest about who and what they are. Only the paranoid survive!
Latest posts by Hazel McHugh (see all)
- Women on Top of the Financial Ladder – February 13, 2014
- FinTech Investment: Cerulli Say Asset Managers Must Spend to Save – February 7, 2014
- Wealth Management in Year 2043 – February 5, 2014