Kongo Gumi
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Corporate Immortality

All businesses, like people, must eventually die and cease to exist. Ten years ago the then world’s old company – Kongo Gumi, aged 1,428 years entered liquidation. Kongo Gumi was a Japanese family run company operating a Buddhist temple construction business.

As corporate immortality is impossible, instead companies need to focus on five things:

  • Maximizing shareholder value while they can.
  • Realize risk cannot be completely controlled and eliminated, and have contingency plans in place for that fact.
  • Long periods of below average shareholder returns will inevitably result in a company being put to sleep by investors.
  • Some companies are worth more dead than alive. That is, liquated and sold off in pieces instead of continuing on as the one company.
  • Investing today to produce the sustainable cash flows for the next 10-20 years. Don’t be sucked into the short-termism of managing a business for the next quarter’s results.

Just as humans go through different phases of life, i.e. born, education, work/business, second career or business, retirement, death, so to do companies. The key is facing the fact of the businesses mortality and making the most of the limited time, resources and opportunities available. That is what life is about too really.