Did you know that more than 130 publicly traded companies in the U.S. are over 100 years old? I was shocked at how many there were. What are their secrets for the long term? What can we learn?

Let’s take a concrete example of a company that is celebrating 100 years - IBM. Thomas Watson arrived in 1914 at a company then called The Tabulating Machine Company. Watson focused the company around the biggest opportunity he saw which was the punch card system for data tabulation - eventually named IBM.

What was unique about the strategy and culture Watson and his team created?

He focused the company on the biggest opportunity - punch cards. He sold off other parts of the business and put a stake in the ground. IBM would be the leader in sorting data.
He cultivated a positive, respectful culture and was one of the first to recognize the power of the knowledge worker. In simple words, he cultivated freedom of action inside a framework of innovation and collaboration. He was truly an organizational innovator. As Henry Ford was innovating by creating efficiencies, Watson was innovating by creating effective teams. In 1915 THINK signs started appearing everywhere in the company. Watson knew the engineers and the sales people were critical to his success - and everything revolved around the customer. THINK - what does the customer need and how do we build it?
He knew that innovation and execution were strategic imperatives. It was great to be the leader in an industry, but it required excellence in operations. Innovation without the ability to deliver is not a strategy - it’s a pipe dream. IBM built competencies to do both.
He invested for the long term with his people. In 1916, IBM was one of the first companies to build an education center for employees. Benefits were increased, corporate paid vacations were established for the first time anywhere, and sponsored community events became a normal and expected way of life. And employees embraced this. As one employee told me, when you cut us open, we bleed Blue.
Watson created a famed “open door” policy - anyone, at any time, could approach him or any other executive, with an idea or an objection. We call that creative debate or creative confrontation today. Back then it was called respectful listening despite your seniority. (Some things don’t change - they’re just renamed.)

The culture endured and carried the company through three near death experiences:

The great recession - IBM invested in people when everyone else was laying off people. They built a large backlog of data processing machines to keep people employed and when FDR passed the Social Security Act, IBM was the only company with enough capacity to deliver on the order.
UNIVAC in 1951 introduced a far more advanced computer processing system but was too diversified to deliver on their promises. As Greg Satell points out, UNIVAC was great at inventing but not good at execution nor at focus. The result - IBM passed them up with deeper investments in engineering, sales, and new technology.
The birth of the PC. At this point Lou Gerstner took over as CEO. He refocused the company around solving core customer issues that provided the greatest opportunity - main frames and becoming a custom system integrator. The process took time and relentless focus on what the big, high margin customers were asking for.

One person challenged Gerstner early in his tenure to come up with a vision statement for IBM. He famously replied, “The last thing we need now is a vision statement.” He knew they first needed to understand how the customer base had shifted and how they were going to deliver on what those needs were. Eventually they grew clear on a vision but it was not what led the charge.

What led the charge was a culture of think, focus, invest in talent, and be the best at strategy and execution.

Today IBM is again remaking its way in the world of big data. The company’s market cap after 100 years is $118 billion and it’s paying a 5.2% dividend on a P/E ratio of 9.14. Would I bet on their ability to adjust for the long run? Warren Buffet believes so and owns 81 million shares. It’s well governed, has a powerful female CEO, and has a deep bench.

* Click here to see the list of all 130+ companies in order of market cap that are over 100 years old in the US. Before clicking, take a guess at which one you think is first as far as market cap? Which one do you think is the very oldest?