It really bothers us whenever we hear—as we often do—that large, mature businesses are at an inherent disadvantage against newer, digital-native competitors. We know, of course, that many older companies are struggling. But our experience tells us that these businesses aren’t in trouble because they’re old—they’re in trouble because they haven’t turned their age to their advantage.
Simply put, older companies have weathered numerous tumultuous business cycles and other crises, and as a result, they have some inherent smarts. They may not realize it, but success is within their grasp if they identify and apply the lessons of time to the situations at hand. Indeed, plenty of mature companies—even “non-tech” ones—are thriving because they are applying the wisdom that comes with a track record of staying power.
Consider recent Accenture research into the current state of 577 multinational companies from non-tech sectors. In this group of firms, all of which were established before 2000, we found 69 companies that stood out for their strong growth in the digital age. These companies grew their market caps faster than their industry medians in 2012–2017, and they expect to continue that level of performance through at least 2022.
A closer look reveals the reason: over time, each has developed the confidence to look dispassionately at disruption—even digital disruption. As a result, each has also cultivated an immunity to market pressure. These companies invest prudently, in the interest of sustainable performance gains, rather than impulsively following trends in the hopes of putting up good-looking short-term numbers. Older, for these businesses, has meant better.
“Being aware of competition and context is paramount to marketplace success. But trusting your company’s strengths and teasing out the overarching lessons it has learned over the years can make an even bigger difference.”
How can other mature firms turn their age into an advantage? The confidence and prudence displayed by the growing firms in our study stem from two behaviours born of experience.
First, these companies keep investing in their core businesses—even when it would be tempting to let them coast. In fact, they invest enough to make their legacy activities as strong as possible, so that those activities can support other, fledgling ventures until those ventures can stand on their own. In doing so, the companies often find that their old businesses have a lot of life left in them and may even present new avenues to growth.
The 113-year-old Ohio-based American Greetings Corporation (AG) offers an example of just that sort of discovery. The company didn’t cower when digital disruption threatened its core paper greeting card market. Instead, it re-assessed its strengths, pursued intensive customer experience research, and found that with the communications overload that many of us experience today, greeting cards still have power and market potential. Tangible cards can provide a more meaningful form of expression than a snap or a tweet.
On that finding, AG doubled down on efforts to hone its printed card business, even as it moved into the e-card and printable product categories. For example, it invested in new digital production facilities that enable it to reduce time to market and create personalized physical cards, even down to single-card orders. It has also tapped into digital and experiential marketing to demonstrate the ways in which physical greeting cards can complement digital offerings.
In December 2018, AG launched an effort to reposition its products as purveyors of good relationships. The campaign, called Connections Build Us, is underpinned by findings from Harvard’s longitudinal Study of Adult Development. The company has even tapped the 80-year-old study’s current director, Dr. Robert Waldinger, as an advisor. Connections Build Us is also amplifying the association between healthy relationships and healthy living, with AG signing an array of elite American athletes to help disseminate its messages.
Second, older companies know how to pace themselves. If the time isn’t right, they don’t sprint into new business activities, even if their eminent competitors do. Instead, they consider how others’ innovations and tactics will likely play out for their business, and to what extent and in what shape or form (if any) they should pursue them.
The 32-year-old luxury brand conglomerate Moët Hennessy–Louis Vuitton SE (LVMH), for example, waited until 2017 to launch its online store, 24 Sèvres. The site features limited editions of LVMH’s goods and selected other brands, as well as curated work by young, high-potential artisans. This approach adheres to CEO Bernard Arnault’s announcement at an investor presentation that the company planned to continue investing in digital technology, “but we need to be prudent there, so as not to sell at all costs.… We’re very careful about brand deterioration.”
Careful—but not reticent. In 2018, LVMH stepped up its digital efforts significantly, from exploring connected technologies at its TAG Heuer watch brand, to investing in the French start-up scene. The company has recognized the challenge of attracting a new generation of consumers and has signed on celebrities such as Rihanna to co-create new lines of products. And as of January 2019, LVMH’s Instagram followers stood at 365,000 as the company increasingly recognized the growing importance of social media channels. To underscore the point, in March 2018, LVMH hired Kanye West’s creative director, Virgil Abloh, as artistic director of menswear for the Louis Vuitton brand. Abloh has 3.5 million followers and an array of celebrity influencer tie-ups.
As Ian Rogers, LVMH’s chief digital officer and a former Apple executive, noted in a 2018 Forbes article: “We don’t want to be last, but we don’t need to be first.… We don’t need to try every new thing.” So far, it seems, what LVMH has tried has worked. In 2018, the company’s year-on-year revenues grew by 9.8 per cent.
Being aware of competition and context is paramount to marketplace success. But trusting your company’s strengths and teasing out the overarching lessons it has learned over the years can make an even bigger difference. Older businesses are not at an inherent and insurmountable disadvantage. Chances are, what is needed is an objective look in the mirror, the will to allocate innovation investments with a seasoned eye, and the patience to venture into new businesses at your own pace.