The lifespan of large, successful companies has never been shorter.

That's according to a new study of turnover in the S&P 500, conducted by the growth strategy consulting firm Innosight.

Here are two of the report's most significant insights: 

  • In 1965, the average tenure of companies on the S&P 500 was 33 years. By 1990, it was 20 years. It's forecast to shrink to 14 years by 2026.
  • About 50 percent of the S&P 500 will be replaced over the next 10 years, if Innosight's forecasted churn rate holds. 

In the past seven years alone, many renowned companies have been jettisoned from the S&P list: Eastman Kodak, National Semiconductor, Sprint, US Steel, Dell, and the New York Times. New companies to the list include Facebook, PayPal, Level 3 Communications, Under Armour, Seagate Technology, and Netflix. 

In tracking all the comings and goings to the S&P 500 for the last 50 years, the study shows that the duration companies spend on the list fluctuates in cycles mirroring the overall state of the economy and disruption from new technologies, including biotech breakthroughs, social media, and cloud computing.

But the overall trend is that average tenure on the list is sloping downward.

Of course, there are several reasons companies drop off the list. Some file for bankruptcy or lose market share to competition. Others are acquired. That latter reason has been especially significant of late, with 2015 setting records for dealmaking, with more than $5 trillion in mergers and acquisitions taking place. 

The world of entrepreneurship is also a factor in the S&P 500 turbulence. The Innosight report notes that startups with multibillion-dollar valuations are likely candidates for forthcoming IPOs and, therefore, S&P 500 eligibility. The report specifically cites unicorns such as Uber, Airbnb, Dropbox, Spotify, and Snapchat. Once public, they could become the next wave of companies to sweep out the old guard of the S&P 500. Then there are newer public companies like Tesla Motors. The report says that companies like Tesla "easily meet the valuation threshold for inclusion and will be added to the S&P 500 once they meet certain liquidity benchmarks."

What does all of this mean for leaders and organizational decision makers? First, it's a reminder of a general principle: A company cannot endure in the long term without reinventing itself. Which means leaders have to be vigilant for what the report calls "fault lines"--the weakening foundations in your business model, or the shifting needs of your customer base.

How can you learn more about your fault lines? The report recommends reading a Harvard Business Review article from December, 2015, called "Knowing When to Reinvent." Co-authored by two Innosight senior partners and Aetna CEO Mark Bertolini, the article provides a framework for detecting five potential fault lines: Your business model, customer needs, performance metrics, industry position, and internal talent/capabilities. It includes real-world examples from Aetna, Nestle, Adobe, Xerox, and Netflix. 

Another important step is to conscientiously avoid getting caught up in present-day obligations. In a survey of executives from 91 companies with revenue greater than $1 billion across more than 20 industries, Innosight asked: "What is your organization's biggest obstacle to transform in response to market change and disruption?" Forty percent of survey respondents blamed "day-to-day decisions" that essentially pay the bill, but  undermine our stated strategy to change." It was by far the most prevalent response. The next most popular answer, at 24 percent, was "lack of a coherent vision for the future." 

In other words, the survey results highlight how hard it is for leaders to break free of organizational inertia--the existing mindsets and processes in large organizations. Yet that's what has to be done, if you want to build an enduring company.