In 1994, Jerry Porras and Jim Collins wrote “Built to Last--” which it certainly has, ranking #935 on Amazon, lo these thirteen years later. (Collins’ later “Good to Great” ranks even higher). The aim was to diagnose “landmark,” “outstanding,” and “exceptional” companies (adjectives from the bookflaps).
Almost all great books get something very right. In this case, it was the characteristic of “visionary” that they identified. The “vision thing” is as important as ever.
But often, even great books don’t age well. Time reveals a flaw in the foundation, maybe not critical, but a source of confusion—something just not quite right, something that begins over time to annoy.
In this case—it’s the title itself.
The book picks twelve matching pairs of companies—e.g. Westinghouse vs GE, Merck vs. Pfizer, Ford vs. GM—and explores why we think one is better than another. “Better” is also defined in stock market performance terms, so we’ve got long-term value creation as a criterion, along with brand power, and a few others.
Some have critiqued the choices—ditto for "In Search of Excellence"—-for not being valid over time (both Ford and GM today are candidates for the dustbin of history, for example). But the choices stand up pretty well—if your game is to be lasting.
But—what precisely makes “lasting” the criterion for describing a company as landmark, outstanding, or exceptional?
What used to be valuable about continuity over time was:
- stock market performance for investors
- employment and economic stability for workers
- community involvement for host governmental units
- a dependable brand for consumers.
Let’s see how well these criteria have stood the test of thirteen years.
• The vast majority of owners these days are not shareholders looking to hitch their wagon long term to a particular organization. They are pension and other funds looking for performance, managed by hired guns ready to swap equities at the drop of a quarterly hat, or leave them entirely for the latest hot category, e.g. private equities—hardly bastions of vision.
More importantly—financial instruments have evolved enough that shareholders don’t need to buy a corporate package—they can create the virtually the same performance through a blended mix of instruments reflecting currency, geography, industry and risk profiles. This is not at all a bad thing: it greatly enhances the ability of investors to pick precisely what they want. Which is not, frankly, a lasting organization.
• Employees of a lasting organization are not likely to be well-served unless that organization is participating in most of the global trends affecting its business. Those include outsourcing, globalization and technological investments. Job security at the cost of growing irrelevance is the short-term opiate of the unions.
• Community involvement doesn’t necessarily require a sustained physical presence—the core values an organization carries with it ought to be recognizable quickly with a given locality or other community.
• Branding is a funny thing—it is usually the word we use to describe the retail B-to-C feeling we get when we know what a name stands for. But test yourself: who owns Jif Peanut Butter? Skippy? If a brand clearly conveys something over time, we don’t much care about the visionary nature of the company producing it. The consumers of YouTube don’t seem to be terribly concerned about whether it will last into next month—but it was visionary, and it did what consumers wanted, at least yesterday.
The truth is: focusing on “lasting” as an attribute of a company these days is likely to confuse rather than enlighten. The continued existence of a particular corporate organization is a pretty un-inspiring goal, when you think of it.
Ironically, the continued existence of a particularly corporate instantiation probably requires high turnover in shareholders, employees, geographies and even consumers. So who exactly cares if it’s lasting?
The point is not to last. The point is to do great things for all your constituents. Where continued existence helps, great. Otherwise, standing water stagnates. The visionary thing works; but these days, the vision had better be to change, morph, grow, evolve, turnover, shift.
Built to last is not a desirable adjective anymore, it’s likely a critique.