5 Qualities That Help Companies Thrive for Decades—Even Centuries

How do companies survive not just for years, but for decades? For centuries even?

During a global pandemic, researchers are studying anew what makes companies resilient, agile, and enduring. After all, Japanese construction firm Kongō Gumi, which builds temples, has been in business for 1,444 years. That’s a lot of war, natural disaster, and political turmoil to survive.

The new book Leadership to Last: How Great Leaders Leave Legacies Behind looks at the ingredients of long-lasting businesses in South Asia, focusing specifically on companies in India. Written by Harvard Business School Professors Geoffrey Jones and Tarun Khanna, the book, which is available in India, includes interviews with dozens of business and social leaders culled around the topic of lasting leadership principles. The interviews were conducted by Harvard faculty as part of the Creating Emerging Markets project, and transcripts of interviews and video clips are available on the site.

“All these stalwarts have built, to general acclaim and acknowledgement, organizations that are seen as forward-looking and innovative, subscribing to a code of ethics, and generally contributing to the betterment of societies,” write the authors.

The book explores tactics used by several long-time entrepreneurs: Ratan Tata, former chairperson of Tata Group; Anu Aga, former head of Thermax; Adi Godrej, chairperson of the Godrej Group; Kiran Mazumdar-Shaw, chairperson and founder of Biocon Limited; Devi Shetty, founder and chairperson of Narayana Health; and Rahul Bajaj, the late chairperson of the Bajaj Group.

Leadership to Last finds five common characteristics among Indian and other South Asian companies that built lasting enterprises and a legacy of leadership.

1. The businesses are often run by families

Families can be rich in resources, providing both financial backing and mentoring, the authors say.

“If you are in a society that has relatively few safety nets, both financial and other types of safety nets, then doing it within the construct of a family support system seems like a really important thing,” says Khanna, the Jorge Paulo Lemann Professor at HBS. “And even in the US, when you look at sources of early-stage capital for new entrepreneurs, it tends to be friends and family.”

But making sure families will work well together can be a daunting task. Bajaj notes the difficulty in the book: “Problems happen in family management when there are three or four brothers. All brothers may not be of equal capability and commitment.”

Successful family-owned enterprises build mechanisms that over time recognize the value that each family member brings to the table, but also each person’s weaknesses.

This function of keeping and nurturing values can be more difficult in public companies, where turnover of top leaders is relatively frequent. “Philosophically-wise, families are … the key agent for passing on these value sets from one generation to another generation,” says Jones, the Isidor Straus Professor of Business History, and Faculty Chair of the Business History Initiative at HBS.

2. Values guide decisions

Jones believes that successful firms in India have a commitment to social values above that found in many other geographies. Certainly, religious traditions played a significant role in influencing younger generations of leaders. In numerous instances, so did the continuing influence of the ideas of Mahatma Gandhi.

“[In India], our protagonists talked, unprompted actually, about a sense of mission for society, the need for ethical behavior, the benefits for those,” Jones says. “In India, you often encounter a really strong set of value-driven businesses. And it’s an interesting question why.”

Reputation is an especially strong attribute of long-haul companies, adds Khanna. “I really think of it as an asset that is invested in year after year, action by action, minute by minute, and then builds up … creating an asset on the balance sheet,” he says.

3. Companies innovate to have a positive impact on society

Leaders who leave legacies head enterprises that make creating public good a priority. They innovate to make money, yes, but in ways that directly benefit society.

Shetty, a cardiac surgeon and founder of Narayana Health, built a financially viable enterprise at scale by pioneering low-cost heart surgery for tens of thousands of low-income patients. Shetty was motivated by the widespread unavailability of routine cardiac care for the poor, and highlighted the societal bias favoring boys over girls. (Parents will find resources to cover surgeries for boys but not girls.) Shetty’s innovation is not just technical, but entrepreneurial—developing a network of investors and business partners to compensate for infrastructural inadequacies in India.

The drive to use business to improve society comes from “some moral compass and a calling of, ‘I really have to do this,’” says Khanna. “This translates into leaving money on the table in the short term. But that money on the table turns out to buy an unbelievable asset that literally no amount of money could buy.”

4. Business leaders strive for inclusivity and gender equality

Some of the business leaders featured in the book were among the first generation of women to break through considerable barriers in their professions. One method used to overcome gender bias has been through strong mentoring by successful women.

Zia Mody, a founding and senior partner of law firm AZB & Partners, suggests it’s not enough to just bring women into the organization; mentors must actively guide their growth. For example, her firm has a structured program in place to provide proactive mentorship and advice during the “two crisis points” of marriage and motherhood, life events when a woman might consider giving up her profession. The advice even includes how the bride-to-be should think about her relationship with her mother-in-law.

Businesses must also support women’s education, the authors say. Mahindra Group, formed in 1945 as a builder of utility vehicles and now a conglomerate spanning a number of industries, helps educate 90,000 girls in schools each year.

“That's a very important thing,” says Jones, “that a company can … allocate resources to try and shift … at that early stage, discrimination, and try and sell a new culture. A bunch of [Indian businesses leaders] recognize the problem and are trying to do that.”

5. They fight corruption, even if they aren’t always successful

India routinely shows up near the top of global corruption studies.

The interviews reveal different approaches to combatting corruption, ranging from flatly refusing to pay bribes to looking for other ways to challenge the practice. Some companies decide to do less business inside India—or they conduct business in India only in sectors known to have less corruption. Some entrepreneurs relocate to other countries.

Developing a reputation for playing it straight sends a signal that can dissuade corrupt officials from knocking on a company’s door. It is also a beacon to other businesses that want to do the right thing.

“I think there are enough examples around … where investing in reputation, along with a quality product or a service, pays off handsomely,” says Khanna. “You’re a role model for others who would rather live in that way.”

When Aga, former head of equipment manufacturer Thermax, went to the board to propose a zero-corruption policy, “they felt I was being an idealist and a stupid woman,” she says. Aga persisted, eventually winning approval after a government raid of the company over business issues. “Buy-in by the senior people, and meticulously following what you have said, these are the two ways senior management can help ensure there is no corruption within the company,” she says.

Lessons for business leaders everywhere

How do leaders around the world build legacies that last?

“My answer would be that just like you think of investing in a physical facility, in new product development, think of longevity as an asset class,” says Khanna. “And what it takes is the drip, drip, drip of steady investment that pays off in gargantuan terms down the road.”

The leader needs to develop the right mindset, the willingness to forego short-term profit to build a long-term business that pays back to society. “I’d be the first to concede that there may be quicker ways to make an immediate buck, but that's not what these people are doing,” Khanna says. “They're building societies, a different agenda. My admonition would be, think about whether that's something that's important to you.” Jones believes business leaders may reconsider what is possible by learning from these entrepreneurs, who have accomplished everything from developing generic life-saving medications to educating thousands of people. “I hope practitioners would be inspired by these stories about what they can do,” Jones says. “Not what they should do, but simply what they can do.”

[iStockphoto/cookelma]

Related reading from the Working Knowledge Archives

Building Histories of Emerging Economies One Interview at a Time

Any curious reader sees that there are tomes written on leadership daily. As academics teaching in a management school, we are of course aware of, and informed by, much of this incredible work. For example, the work that distinguishes personalist from situationist perspectives reminds us to pay attention to both the attributes of the individual leader and the circumstances within which he or she works. The work on leadership being both embodied in a person and being the cultivated result of a process is similarly informative.

What do we take away from these hundreds of hours of fascinating narrations in [Creating Emerging Markets], only a few highlights of which can be shown here?

The first is that the featured entrepreneurs lead with ideas and actions. Some organizations started with a clear long-run vision that has been actualized, others had an emergent animating idea. In all cases, the leaders nurtured a coalescing of organizational energies on an idea, a theme, that drove things forward, that acted as the entity’s economic and moral compass. Significantly, this nurturing always entailed action, not just thought. We see throughout that actions speak louder than words.

Second, they lead from within the organization, of course, but equally also lead in shaping the context. In a country—India—and other environs—South Asia and other emerging markets—where investment in public goods is sorely lacking, it is insufficient to focus on the ensemble of individuals who comprise the organization in question. The ecosystem must be catalyzed to compensate for institutional inadequacies as well. We see the leaders recognizing the intertwined nature of economic and social problems in these settings. It’s hard to address one problem without being bedeviled by another, and it’s hard to rely on the absent institutional foundations that normally propel creativity when societies have under-invested in them for a long time.

The diversity of settings is an exciting feature of the book—we have companies that some would consider too traditional—but it’s their very stability that provides a base for the innovation and creativity on which we want to shine a light. In any event, almost axiomatically, if one wants to examine leadership that “lasts,” you’re inevitably going to look at entities that have been around a while. As you’ll see, their existence is anything but inimical to the even flashier forms of entrepreneurship.

Equally, we have newfangled “tech” industries represented here. Kiran Mazumdar-Shaw’s Biocon brought the life sciences movement to India; several software entrepreneurs put India on the world software map some decades ago, and their skill sets have in turn over subsequent decades permeated many of the interstices of society. The mobile revolution in Africa was unleashed by Mo Ibrahim’s Celtel (the descendants of that entity are now part of Bharti Airtel in Africa).

Truth be told, we find as much to learn from incumbent enterprises, if you will, and newer ventures, as also from social entrepreneurs. Gujarat’s Self-Employed Women’s Association (SEWA) and Dhaka’s BRAC are emblematic of some of the best examples of social entrepreneurship anywhere in the world.

Our overall takeaway is simple. We are just humbled by the combination of audacity (of intent), humility (of demeanor) and steadfastness (of purpose) displayed by the giants whose life lessons are narrated here.

Adapted from  LEADERSHIP TO LAST: How Great Leaders Leave Legacies Behind by Geoffrey Jones and Tarun Khanna. Published February 2022 by Penguin Random House India, 2022, Gurgaon, India.