The highest market capitalisation companies in 1960 were General Motors, Exxon, Ford, General Electric and U.S. Steel, largely firms in transportation and resources. This had evolved by 1975 to IBM, AT&T, Exxon, Kodak (!) and General Motors, first presence of technology and telecoms with continuation of transport and resources. The list had again changed by 2001 to General Electric, Microsoft, Exxon, Citibank and Walmart; now banking and retailing added to the list.
However, the advent of the 21st century has brought a transformative shift. The highest capitalisation firms last year in 2017 were Apple, Alphabet (Google), Microsoft, Amazon and Facebook. Technology and e-commerce top the list.
This evolution is consistent with Maslow’s hierarchy of needs where more basic needs must be met prior to higher needs, a theory developed in the 1940s. According to Maslow, humans first satisfy their physiological needs, then their safety needs, then their needs for love and belonging, eventually advancing to their self-esteem needs and graduating to self-actualisation.
The firms with the highest capitalisation in the second half of the 20th century in transport, resources, banking and retailing were addressing the bottom two tiers of Maslow’s hierarchy - physiological and safety needs. Society was focussed on satisfying these basic needs.
The emerging technology of the past twenty years has enabled society, admittedly mainly in the developed world, to advance to the third tier of needs for love and belonging. Social media for example aims to advance friendship and acceptance. Technology has played a transformative role in fostering society to progress to a higher need.
Future success will be driven by firms advancing the third and fourth Maslow tiers of “belonging” and “self-esteem”.
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