THE POWER OF ENDURING COMPANIES
Article | August 2015 | by Amal Masri
In separate commentaries, former Tata Sons chairman Ratan Tata and SEB chairman Marcus Wallenberg both argue that creative destruction can be taken too far.
In the September 2014 issue of the McKinsey Quarterly, Marcus Wallenberg, chairman of SEB, compares the “indirect business generated by a large corporation through small suppliers, service contracts, technology spin-offs, etc” to “rings of water.” For this reason, the importance of large, enduring firms like Ericsson should not be underestimated.
The Wallenberg family indirectly controls almost a third of Sweden’s GDP. In 1856, Jakob Persson Wallberg founded Stockholm’s first private bank. Today, the fifth generation of Wallenbergs run a banking and industrial empire that includes Electrolux, Scandinavian Airlines Systems, and SEB, a financial group for corporate customers. The Wallenberg family believes that the capital markets need investors who recognize that the innovation cycle is often measured in years and that you can’t create successful product portfolios with a short-term view. In Scandinavia, the presence of dominant long-term owners is an advantage.
Ratan Tata, former chairman of the Tata group, Ratan Tata, chairman of the Tata group, believes that it is important to have companies survive over the longer term. He said, “I hate to see major corporations disappearing from the scene because decades of effort and innovation go to waste.”
Read more at The McKinsey Quarterly