The data suggests that institutional inertia is endemic, and costly. Consider:

• Only 11 percent of the companies that made up the Fortune 500 in 1955 are on the list today

• The average age of a company on the S&P 500 Index has fallen from sixty years in the 1950s to less than twenty years currently

• Between 2010 and 2019, US public companies reported more than $550 billion in restructuring charges, which are typically the product of belated or inept attempts at strategic renewal

The Corporation in the 21st Century- John Kay

PART 1: The Background

1: Love the Product, Hate the Producer

“Some of these billionaire executives are no superstars: individuals such as Philip Green, who extracted nine-figure sums from retailer BHS before selling the company to multiple bankrupt Dominic Chappell for £1, Mike Ashley, the domineering boss of the retailer Sports Direct, and Eddie Lampert, who inflicted similar destruction on Sears, for a century America’s leading store chain. The lifestyle of these executives contrasts with the fate of their businesses. The 90-metre yachts of Green and Lampert make good newspaper pictures. Green’s is moored in the harbour of the tax haven of Monaco, where he is resident, while Lampert’s is named Fountainhead, after Ayn Rand’s turgid paean to individualism.

The Fortune 500 list did not include retailers. If companies had been ranked by sales, the list would have then been led by America’s three great shopping giants: Sears Roebuck, Montgomery Ward and JCPenney. Their fate was one of steady decline. In 2000, Montgomery Ward filed for bankruptcy. In 2019 Sears did the same and in 2020 JCPenney followed suit. The disappointing fortunes of these businesses are not the result of being in declining industries. Global demand for automobiles, food, oil, steel, chemical products and particularly electrical goods has continued to grow. Consumers still shop. But none of these 1955 companies is today the dominant firm in its industry. Cars are Toyota and Volkswagen; food is Nestlé; steel is ArcelorMittal, which took over much of the excess capacity located in the former Soviet Empire. Germany’s BASF is the world’s leading chemical company. And electricals – well, it depends on what you mean by electricals but, whoever you regard as market leader, it isn’t GE. Within America, cars are still General Motors – unless you look at market capitalisation and hence to Tesla. But food is PepsiCo and Tyson, steel is Nucor and Pfizer leads in chemicals. Retail is Walmart – and Amazon. Only ExxonMobil and some of the DuPont and GE subsidiaries remain among the global leaders in their fields.

In 2020 the Fortune 500 looks very different. Fortune now includes service businesses, so the two top companies by sales are retailers – as would also have been true in 1955. But the current leaders are retailers that did not exist in 1955: Walmart and Amazon. No fewer than four companies are names that probably mean little to non-US readers – they are intermediaries in the fabulously costly US healthcare system. United Health is an insurer, McKesson and Cencora (previously known as AmerisourceBergen) are distributors of pharmaceutical products and CVS Health is both insurer and retailer.

30: Who are the Capitalists Now?

“But while people like Bezos, Gates and Musk top the modern ‘rich list’ and capture the public imagination, most large corporations are controlled by men in suits, if no longer in ties, whose careers have been spent ascending corporate bureaucracies. Of the ten largest companies in the Fortune list discussed in Chapter 7, none was founder-controlled.