Written to Last? A Review of “Built To Last: Successful Habits of Visionary Companies” by Jim Collins and Jerry Porras
This month the GroupM UK Business Book Club read “Built To Last: Successful Habits of Visionary Companies”. Jim Collins and Jerry Porras wrote the book in 1994, some 21 years ago, so I’ll admit I didn’t have high expectations. Business books often date quickly. Indeed there’s a velocity to the business publishing sector — these books are often written fast, read fast, and discarded fast.
This book is different. Researched over five years, “Built To Last” is the output of a research project by two Stanford academics. The authors’ set out to identify lessons we can learn from “visionary” companies. What have these visionary companies done differently? Visionary companies are defined as leading businesses that haven’t just lasted, but are worthy of lasting. They are social institutions that deliver significant value in a multitude of ways — obviously economic value but also social value and even moral value. While many of them have innovated, producing innovation alone is not a qualifier of a visionary company.
I was immediately struck by the methodology, which is explained in some detail at the outset and defended in the epilogue. Unlike many business books, the recommendations in the book are at least derived from data not just ‘experience’. Through surveying CEOs Collins and Porras compiled a list of visionary companies, then identified those with “genetic twins”. These “twin” companies were competitors, initially at least, though some have taken rather different paths! As both companies are still operating they can be compared to identify what the visionary businesses did differently. This academic rigour sets the book apart from many other business books, though the methodology does have limitations which the authors address in the epilogue. For example, the companies are mostly American (Sony excepted). Moreover all had to be founded before 1950 to provide sufficient data to identify and verify they were truly exceptional. This means a number of newer sectors are omitted, notably Technology and companies such as Apple, Google and Microsoft. A lively topic of debate at the GroupM Business Book Club was: ‘What would a list of visionary companies look like today?’ The list is missing any software companies. While these have grown rapidly in the last 30 years ruling them out of scope according to the methodology for this study, it does feel like a flaw that the book does not include a single one. Reading the book I was struck by how many of the recommendations seem to have been implemented by technology companies like Google — from 3M’s 15% time to the author’s exhortation to create a “cult-like culture” to stimulate employee loyalty and differentiate from competitors.
An obvious criticism of the book is that the visionary companies they identified don’t all look so visionary now! Of the 18 companies selected, several have struggled since, particularly Motorola and Sony. The cause of this is open to debate. Did these ‘visionary’ companies fail to stick to these principles that apparently made them great? Did their competition improve? Or are the principles just incorrect? This is a fundamental challenge with many business books: proving their recommendations work. Do the subsequent struggles of some supposedly visionary companies render the recommendations invalid? While this does undermine confidence, I don’t think it renders them obsolete. A greater concern is the vagueness of some recommendations. Are they too general to be valid? The authors certainly leave themselves plenty of leeway to accommodate most business paradigms. Their central thesis is that businesses should identify core values that they stick to, but continually change everything else. Clearly this is a slippery argument that can apply to most case studies & benefits from hindsight. It is easy to argue that a successful business succeeded by sticking to the right core values and making the right changes, while a less successful business either didn’t stick to their core values, or failed to change enough.
The book does refute two business myths: that successful businesses need a big idea or a charismatic leader. From studying data on the 18 visionary companies and comparing them to their 18 less successful twins, the authors confidently claim this is not the case and provide plenty of evidence. Whether charismatic leaders are necessary was an interesting area of debate for the book club, since there are many successful companies that have had them — Amazon, Apple and Alibaba immediately spring to mind. Having a charismatic leader can make it easier to market the business, both internally and externally. Soundbites can be shared and amplified to differentiate a business from competitors and clarify positioning for the benefit of both customers and employees. Yet while it can be a benefit, I’m inclined to agree with the authors that it’s not a necessity. While a charismatic leader can make it easier to market a business or compensate for weaknesses in other areas of the business, it’s not a necessity. I also think charismatic leaders are raised not born — through high performance and practise they can develop these qualities, if they decide it will benefit the business.
Interestingly, the authors’ argue that visionary companies have goals beyond just profit. Profitability can be a goal, but it is not the only one. Visionary companies such as Johnson & Johnson, IBM, American Express, and 3M set out to generate value for their customers and employees, as well as for their shareholders. I wonder: has the idea of entrepreneurial success has moved on since the book was written and the examined companies were founded? In our 21st century digital economy, when fame and fortune can be achieved in an instant, and the scale of success is many times larger than the pre-digital era. Entrepreneurs look to scale fast, sell equity and exit fast, rather than build lasting and populous social institutions delivering more than just pecuniary value to employees.
Like most business books, “Built To Last” is full of jargon. Terms like “Big Hairy Audacious Goals” did grate on me, however well-meant. Don’t let jargon alone put you off, it is not as prevalent as many business books. While some of the recommendations are broad and there are limitations to the method, the does book provide some valid lessons all businesses can learn from. The necessity of defining core values that you stick to, while also constantly adapting to change is important, if not ground-breaking. The case studies are also useful — particularly all the innovation initiatives at 3M or the guidance on creating cult-like cultures. Business may have moved on since the book was written, but the importance of having and defining core values hasn’t and shouldn’t — whether you’re a business, or an employee.