WITH the currency crisis throwing a cloak of uncertainty on business, the question that’s top most on the minds of most businessmen today is “Can my business survive?” Aware that some companies are floundering in the quick sand of escalating costs, most businessmen worry that their businesses may just fold up, if they are not careful.
Some businesses that are deep in trouble just hope to keep their heads afloat. Others, in better positions, strive to get out of the mire. Escaping from a real quicksand requires and alert mind and a sound body. Similarly, companies with a strong foundation and a flexible organization have better chances of surviving the present economic difficulties.
Thus, the answer to the question posed earlier lies in whether or not companies have, as we often hear nowadays, “a strong set of fundamentals.” In other words, Is your company built to last?
For companies that are not built to last, assessing their capabilities may be a bit too late in the day to do them any good. For companies who still have time, it is worth looking at how to ensure that their companies will survive this and any future crisis and do something about it.
James C. Collins and Jerry I. Porras, authors of the book “Built to Last,” show how companies can be strengthened. By analyzing eighteen (118) excellent and enduring companies, they unlock the code of success in these organizations. From the voluminous data gathered in their research, they discover the fountain of youth for organizations who wish to flourish in the coming millennium.
Collins and Porras identify companies that are built to last, which they call visionary companies, by using the following criteria: the company is considered a premier institution in its industry, it is widely admired by knowledgeable business people, it has made an indelible imprint on the world, it had multiple generations of chief executives, it has been around for some time (for the purpose of the book, the authors established a 1950 cutoff).
The authors’ select list of visionary companies include: 3M, American Express, Boeing, Citicorp, Ford, General Electric, Hewlett-Packard, IBM, Johnson & Johnson, Marriot, Merck, Motorola, Nordstrom, Philip Morris, Proctor & Gamble, Sony, Wal-Mart and Walt Disney.
Based on a six-year research project at the Stanford University Graduate School of Business, the authors examine the histories of these companies and compare them with other successful companies in their respective industries (called comparison companies in the book) and extract the factors or “habits” that account for their long-term success.
The author observe that visionary companies’ performance are way ahead of other successful companies in their industries. In the graph of the cumulative stock returns on the investments between January 1, 1926 to December 31, 1990, the authors show that a one-dollar investment in the general market stock fund in 1926 would have grown to $415 by 1990, an equal investment in the comparison companies would have grown to $955, while the same investment in visionary companies would have grown to $6,356 a 563 percent increase as compared with the other companies and a whooping 1, 431 percent increase as compared with the general market.
Given the data, it is no wonder that many would want to find out the secrets of these visionary companies. What were their beginning? How did they become to be what they are now? What characteristics do they have in common that set them apart from the other companies? How can one use their experiences to create, build and maintain a visionary company? All the answers to these intriguing questions are found in the book. Their findings shatter many myths on corporate success.
Myth on Leaders
One of the myths shattered ion this book is that visionary companies require great and charismatic visionary leaders (it is interesting to note that a seminar widely held belief is that a great nation requires a great leader). Collins and Porras present evidence that is contrary to this belief. They write: “In one of the most fascinating important conclusions from our research, we found that creating and building a visionary company absolutely does not require… a great and charismatic leader. In fact, we found evidence that great ideas brought forth by charismatic leaders might be negatively correlated with building a visionary company.”
To explain this finding, the authors use an interesting metaphor. They write that visionary companies concentrate on “clock building” rather than “time telling.” They write: “Imagine you meet a remarkable person who could look at the sun or starts at any time of day or night and state the exact time and date… This person would be an amazing time teller, and we’d probably revere that person for the ability to tell time but wouldn’t that person be even more amazing if, instead of telling the time, he or she built a clock that could tell tome forever. Even after he or she was dead and gone?”
The authors then go on to state that their findings indicate that builders of visionary companies are clock builders rather than time tellers. They write: “They concentrate primarily on building an organization a ticking clock rather than hitting a market just right with a visionary product idea and riding the growth curve of an attractive product cycle… the primary output of their efforts is not the tangible implementation of a great idea, the expression of a charismatic personality, the gratification of their ego, or the accumulation of personal wealth. Their greatest creations is the company itself and what it stands for.”
Another widely held belief that’s shaken by the authors is that “the most successful companies focus primarily on beating the competition.” The authors note that “visionary companies focus primarily on beating themselves.” Rather than the competition. They point out that “success and beating competitors comes to the visionary companies not so much as an end goal, but as a residual result of relentlessly asking the question.”
How can we do better tomorrow than we did today? For a visionary company, there is no sense of “having made it.” For these companies, they cannot coast the rest of the way, living off the fruits of their labor.
All in all, there are twelve myths that Collins and Porras try to blast with their research findings. In the process, they expose the secrets of visionary companies. A thorough reading if the book will have a powerful impact of the perspectives of the people in business and other organizations. It will change the way businessmen think and act; it will change the way businesses conduct their business; it will change leaders and their ways of leading.
More than these, the book “Built to Last,” appeals to the longing of mortal human beings to leave a legacy in this world. It impels us to ask ourselves: would we like to leave memories of fame that will soon fade as generations pass through this earth? Or would we rather leave a living monument a visionary organization that will continue to make and indelible imprint on the development of mankind long after we’re gone. The choice is easy but the task is hard. Shall we choose to respond in accordance with our essence?
Built to Last: Successful Habits of Visionary Companies
By James C. Collins & Jerry I. Porras
Century Ltd., Random House 1996, 322 pages
Author: Regina Galang Reyes. First published in the Philippine Daily Inquirer January 19, 1998.
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