A Long-Term Game

Gary Neat, National President of the Australian Institute of Management, cautions against forgetting the future for short-term gains.

Is organisational longevity really crucial? For any business, non-governmental organisation (NGO), or manager, the clock is ticking; so does it really matter if your organisation is five or 50 years old?

Osaka-based construction company Kongo Gumi is claimed to be the oldest company in the world. It can trace its origins back to AD 578 when Japan 's Royal Court commissioned Kongo Gumi to construct the Buddhist Shitennoji Temple . Despite fires, wars and typhoons, the temple still exists, 1400 years after the first Kongo Gumi construction team cleared the site. Forty generations of company presidents have presided over this incredible corporate icon, each averaging 35 years at the helm.

Clearly, it's a feel-good corporate story. But, with its niche market of temple building/repair is Kongo Gumi's longevity to be envied, and even copied, by contemporary corporate leaders in Australia ?

Consider the US , where more than 60 per cent of companies fail to operate longer than five years. The figure escalates to 90 per cent for high-tech firms in the same five-year timeframe.

In booming China , the figures are even more sobering. Each year, more than 150,000 enterprises are established, yet more than 60 per cent fail to make it to their first birthday.

Here in Australia , it's no secret that short-term performance and success is often traded at the cost of long-term corporate health.

So significant have the changes been in Australian society over the past 20 years that business longevity has been thoroughly tested. As a medium-sized economy with a major reliance on trade, Australia has had to be proactive with its policy on globalisation. The alternative is to stagnate economically and socially. Successive Australian governments have implemented economic policies designed to ensure we can take advantage of more open international markets.

Australian individuals are making their presence felt on the world business stage, largely through a better understanding of niche markets, innovative processes and, most importantly, management skills. Yes, despite what the pessimists say, our robust education and training system is producing quality outcomes, which, when combined with innovative and proactive workplaces, have ensured we've become a happy hunting ground for international recruiters. One million Australians living overseas confirms that we punch above our weight.

Still, within Australia itself the effects of globalisation are profound. We're undoubtedly wealthier, poverty overall has declined, yet the major structural changes in our economy have contributed to large-scale social dislocation. We'll eventually pay an emotional price.

Witness already the decline of small rural communities and the pervading sense of unease and insecurity in the community.

Ponder the fact that while absolute levels of poverty are declining, new forms of poverty related to exclusion, geography and education are emerging. Greater rewards await the highly skilled, yet the relative penalties for low levels of education and a lack of ability to adapt to a more knowledge-based and innovation-driven economy are exacerbated.

Underlying all of this is one simple truth. To survive, to prosper, to enhance society – whether as a government, an individual or as a company – requires the courage to embrace reform.

AIM – now celebrating its 65th year – has in the past 12 months embraced the greatest raft of reforms in its history. With more people passing through our programs than ever before, it's clear we're playing a major role in optimising the nation's management skills.

Finally, do we want to emulate Kongo Gumi? Certainly not on my watch. For a start, anyone contemplating 35 years as President of AIM should be subjected to compulsory shock therapy!

[Article first published in Management Today, April 2006.]