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Growing Pains, 5th Edition by Yvonne Randle, Eric G. Flamholtz

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Chapter 1Transitions Required to Build Sustainably Successful Organizations®

It is well established that approximately 50% of all new ventures will fail within five years. For every Southwest Airlines that succeeds, there is a People Express that goes bankrupt. For every Facebook, there is a Myspace that was once popular, but that is now an afterthought. For every Starbucks, there is a Diedrich Coffee that failed. For every Dell, there is an Osborne Computer (who very few people even remember—even though it reached $100 million in sales revenue in three years before going bankrupt, and was a leader in personal computers prior to the founding of Dell).

It is a great achievement to create a successful start-up, given their 50% failure rate. It is an even greater challenge to create a company that is sustainably successful over “the long run.” As we view it, the long run relates to sustainable success over several decades. At a minimum, it involves success over at least two generations of company leaders. In sports such as baseball, basketball, or football, it is possible to have sustained success with a specific group of players and a single coach; but true “sustainable success over the long run” exists only when leadership has passed from generation to generation with sustained success. One company that has achieved this is General Electric (GE). Founded in 1878, GE continues to be a global leader. Another is Heineken, the Netherlands-based beer company. Heineken was founded ...

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