“One general law, leading to the advancement of all organic beings, namely, multiply, vary, let the strongest live and the weakest die.” –Charles Darwin
As you can see from the quote above, I was recently perusing the works of my favorite business advisor, Charles Darwin, after I saw this statistic on Twitter:
429 of the original Fortune 500 companies  are no longer in business today. Adapt or die.
That is some serious survival of the fittest, or a whole lotta’ death of the inflexible.
And it is probably a scary thought, or should be, for those who sit at the top of the healthcare mountain right now. Today’s king of the castle can be tomorrow’s court jester. Look no further than the words of Charles Darwin, who really should have been a management consultant:
“It is not the strongest or the most intelligent who will survive but those who can best manage change.” –Charles Darwin
Half a century ago, life expectancy of a firm in the Fortune 500 was around 75 years. Now it’s less than 15 years and declining even further, according to Steve Demming in an article called “Why Big Companies Die.”
I looked up the original Fortune top 10 and found they were General Motors, Exxon, US Steel, General Electric, Esmark, Chrysler, Armour, Gulf Oil, Mobil, DuPont.
Even though those 10 companies were the giants of their time, there has been pretty significant turnover at the top. The current top 10 are: WalMart, Exxon, Chevron, Berkshire Hathaway, Apple, Philips 66, General Motors, Ford, General Electric and Valero Energy.
As you can see, only three of 10 have maintained their place at the top. Of the seven no longer in the top, their fate was as follows:
• US Steel exists, but no longer in Fortune 500
• Esmark is a mid size company with $400 mm in revenue and no longer qualifies for the list
• Chrysler went bankrupt and its assets were acquired by Fiat
• Armour and Company was sold and broken into parts
• Gulf Oil was merged into Standard Oil, which later became Chevron
• Mobil Oil was merged into Exxon
• DuPont has moved from #10 to #86 on the list
“I think it inevitably follows, that as new species in the course of time are formed through natural selection, others will become rarer and rarer, and finally extinct.”
Here are the healthcare companies that are included in the 2014 Fortune 500:
• Insurance: United, WellPoint (Anthem), Aetna, Humana, Cigna, Centene, HealthNet, WellCare, Molina Healthcare
• Services: HCA, Community Health Systems, Tenet, DaVita Healthcare Partners, Universal Health Services, Vanguard Health, Kindred Healthcare, Express Scripts, Quest Diagnostics, Omnicare, LabCorp of America, Quintiles
• Medical Products: Abbott, Medtronic, Baxter, Stryker, Becton Dickinson, Boston Scientific, St. Jude
• Pharmaceutical: J&J, Pfizer, Merck, Eli Lilly, Abbvie, Amgen, Bristol Myers Squibb, Gilead, Biogen Mylan, Celgene, Allergan
• Wholesalers: McKesson, Cardinal, AmeriSource Bergen, Henry Schein, Owens & Minor
That’s 45 companies, almost 10 percent of the current Fortune 500. And if you go by history, some 86 percent of them are doomed to obscurity or worse if they don’t learn how to adjust to life after the giant asteroid hits earth, also known as the full implementation of the Affordable Care Act.
“It is always advisable to perceive clearly our ignorance.”—Charles Darwin
Many of these companies are making sincere attempts to modernize and modify their businesses to change with the times.
Insurance companies are trying to become technology and outsource service companies selling to providers. The provider companies are trying to become insurance companies or something akin to them. The medtech and pharma companies are trying to adopt technology and services models to augment relationships with consumers or otherwise turn themselves into consumer products companies. The wholesalers are trying to become big data businesses.
Everyone in healthcare is betting on technology as the answer while, ironically, the technology companies like Apple, Google and Oracle and Intuit are betting on healthcare. Whether this results in the tech companies becoming the new healthcare names on the list or, a giant cataclysmic self-cancelling exercise as healthcare and technology giants pass each other in the hallway, remains to be seen. In some cases these former strangers—healthcare and technology companies—are collaborating to find their way onto the road to the future, wherever that leads.
I was recently told by one of the very large entities on the healthcare Fortune 500 list that they were undertaking certain activities (challenges, accelerator sponsorship, etc.) to “check the innovation box,” thus completely minimizing the import of the undertakings.
That company best be looking over its shoulder for a guy with a black hood and a scythe. Actually, if it’s a startup that’s coming to eat his lunch it will probably be a guy with a black hoodie, but you get my point.
“We are always slow in admitting any great change of which we do not see the intermediate steps”—Charles Darwin