The Demographics of Change: Enterprise Characteristics and Behaviors that Influence Transformation

Abstract

Tolstoy asserts that happy families are all alike, but that every unhappy family is unhappy in its own way. Successful companies achieve strong performance based on many attributes–total revenue, current profitability, stock market valuation, and future potential profitability. Unsuccessful companies that experience decreases in these metrics may fail along any dimension, or combination of dimensions, for a wide range of reasons. We characterize the various combinations of changes, including explanations for how they arise, as the “demographics of change.” In this article, we elaborate the demographics of change by exploring companies’ changes in ranks and financial performance within two industry sectors: information technology and healthcare. We then pursue explanations of these changes using text mining of press releases, business news reports, and related materials to identify enterprise behaviors associated with changes in ranks and financial performance. The contribution of the article is in applying advanced yet easy-to-use techniques to study the demographics of change, understand the dynamics of industries as they change, explore reasons for enterprise changes, and provide potential insights into investment opportunities.

Keywords:

• company ranking
• enterprise transformation
• financial performance
• industry trends
• ranking methodologies
• text mining

ACKNOWLEDGMENTS

The authors are pleased to acknowledge the help of David Seuss and his Northern Light team in structuring their Single Point platform to support this research.