3 Qualities That Are Essential In Sustaining a Billion-Dollar Company
There are many companies with multi-billion dollar valuations, including Google, Microsoft, Amazon, Tesla, and Goldman Sachs. But how do these companies achieve such valuations and grow their firms over many years? Companies must have many qualities to achieve and sustain such growth in very competitive environments. Arguably some of the most essential qualities include strong leadership, adaptability, and a growth-orientation. With strong leadership comes a more focused and well-directed company; with adaptation comes continued success even when markets change; with a growth-orientation comes a focus on constantly meeting (and exceeding) market needs. Some of the top examples of these qualities include Microsoft’s transformative leader, Satya Nadella, Nokia’s long history recreating itself (and then stumbling), and Salesforce.com’s rapid growth that has supported expansion into new markets.
1. Strong Leadership
Microsoft’s CEO, Satya Nadella, is a prime example of strong leadership that transformed a stumbling company into one with over a trillion-dollar valuation.
“Microsoft’s market capitalization under Nadella has increased to more than $1.2 trillion at the time of this writing from $315.9 billion in January 2014, the month before he took over” (Stewart).
This is a tremendous jump and a clear example of how the work of a strong leader can dramatically alter the trajectory of a company. Nadella is even “credited with leading a grand reinvention of Microsoft” (Stewart). Microsoft addressed the current and projected market’s needs, developed the right strategy, and executed it correctly. One example is how Nadella invested heavily in cloud-computing in its early stages. Just this past year, Microsoft’s commercial cloud revenue reached $38.1 billion (Stewart). Undoubtedly, strong leadership is vital in the creation and sustainability of a successful company.
The second crucial quality of a successful business is continuous adaptability. Keeping up with the changes in the market is challenging but absolutely vital to success. Nokia, once known as one of the world’s largest telecom equipment providers, was once a role model of adaptability. It was originally a paper company during the mid-1800s (Simpson). Then, with the introduction of electricity into society, they expanded to power generation around 1900. The next transformations were from being a rubber company, followed by a mobile phone provider, and a telecom equipment company. Through a history of diversification and adaptability, Nokia was able to grow tremendously and meet the market needs of each era. However, in 2007, the company passed on launching an innovative touch screen mobile phone which would have beaten Apple to market its iPhone — and the rest is history. They faltered at a crucial moment and haven’t recovered since, dropping from 48% market share to 2% in 2019. They were not able to see and then adapt to the changing mobile phone market, and their growth has since slowed down significantly. Nokia is a perfect example of how maintaining the ability to adapt is essential but not easy.
3. A Growth-orientation
Salesforce, a customer relationship management platform, exemplifies what a growth-oriented company can become. Founded in 1999, the company’s revenue rose 33% to $4.51 billion in 2019 (Reuters). Their focus on growth through aggressively selling to new customers, expanding their products, and acquiring companies have helped them consistently beat expectations. Just this past year, the company has accomplished some tremendous goals and has set some very ambitious targets for 2020. “It completed its biggest acquisition ever in June, when it bought the data-analytics company Tableau for $15.7 billion. It signed a cloud deal with its sometimes rival Microsoft. It marked the first full year of Marc Benioff and Keith Block serving as co-CEOs of the company. It also set an ambitious goal of doubling the company’s revenue within the next five years” (Zaveri). Focusing on growth is what allows companies to meet market needs, generate investor interest, and use capital to reinvest or buy companies.
These three qualities are essential to build and sustain a successful business. As seen through Microsoft’s CEO, strong leadership can transform even a very large company. As Nokia illustrates, it is possible to survive for over 150 years through adaptation but must be done continuously. Finally, as demonstrated by Salesforce.com, having a growth-orientation can lead to success. By having these qualities, companies can grow into billion-dollar businesses that impact the world.
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Reuters. “Salesforce Earnings Beat on Strong Subscription Growth.” Business Insider, Business Insider, 3 Dec. 2019, www.businessinsider.com/salesforce-earnings-beat-on-strong-subscription-growth-2019-12
Simpson, Stephen D. “5 Of The Most Adaptive Companies.” Investopedia, Investopedia, 29 Jan. 2020, www.investopedia.com/financial-edge/0311/5-of-the-most-adaptive-companies.aspx
Stewart, Ashley. “7 Charts Show the Most Important Ways Satya Nadella Transformed Microsoft from a Tech Has-Been to a Trillion-Dollar Giant in 6 Years.” Business Insider, Business Insider, 5 Jan. 2020, www.businessinsider.com/microsoft-ceo-satya-nadella-charts-figures-2020-1
Zaveri, Paayal. “What Experts Think Is Ahead for Salesforce in 2020: More Acquisitions and the Possibility of a Massive Leadership Upheaval.” Business Insider, Business Insider, 6 Jan. 2020, www.businessinsider.com/salesforce-year-ahead-2020-tableau-acquisitions-benioff-2020-1