Collins’ Classics

As a business owner and management consultant, I struggle to identify quality business books.  However, I believe I am in good company when I say that Jim Collins’ books “Built to Last”, “Good to Great”, “Great by Choice”, and “How the Mighty Fall” are enduring business classics.  They fall into a narrow group of writings in which the conclusions are built on scads of financial data and historical research and are not simply a collection of generalized statements supported by a few anecdotes like most business books.  The works are practical because they identify the unique characteristics that differentiate good companies from great companies. The books are intellectually appealing because they propose correlations, not causes of success and failure and don’t claim to be the over-hyped cure to every existing business problem.

“Built to Last”

The principles of academic rigor and business applicability are evident in “Built to Last” one of Collins’ inaugural works written with  Jerry Porras a professor of Organizational Behavior and Change at Stanford University.  Relying heavily on a CEO survey and the establishment of concrete statistical parameters, the team painstakingly analyzed public and private company data and identified companies that were clear leaders in their industry and in the business world as a whole. Eighteen firms with an average corporate lifespan of ninety-two years were identified and then eighteen very strong, but not elite companies were selected as a comparison group.

Dispelling Business Myths

The authors use their research findings to debunk a number of commonly held business myths.  Of the twelve identified myths, several are striking in their contrast to popular belief and common logic.  One is the idea that starting a great company requires a breakthrough concept or product.  It was discovered that many of the visionary companies did not begin with a powerful idea, but rather were started by people whose foremost desire was to build a strong company and then seek opportunities for products and services in their areas of expertise.  Another myth is that excellent companies require charismatic founders and leaders.  The research in fact showed that many of the initial leaders were not focused on their personal gain and that building a quality company did not, and does not depend on the CEO’s force of personality.  This leads to the assertion that almost anyone can learn the skills and apply the lessons necessary to build a great company.  A final myth worth noting is that the predominant objective of successful companies is to maximize profits.  The findings of this study revealed that in contrast to this belief, the visionary companies simultaneously pursued multiple goals.  While profit was among them, equal, if not more important, is the focus on core values and the underlying purpose of the business.  In the long run, it was discovered that a broad set of objectives led to more sustainable strategy than did targeting profits alone.

Elements of Greatness

After exposing these myths, Collins and Poras reveal the critical differentiating factors between the visionary companies and comparison organizations.  An early chapter applies the analogy of clock building compared to time telling to describe the visionary leaders’ initial focus on structuring a company for long term performance versus centering the company solely on a compelling product or service.  In fact, they researchers discovered that the founders of visionary companies spent a significant amount of time thinking about and articulating what was important to them in terms of organizational purpose and values.  This formulation of organizational principles occurred early in the development of the company, before there was a glimmer of later success and was reviewed and updated at crucial points in the company’s history.  The comparative firms either never established a strong core ideology or relied primarily on a charismatic leader or powerful product.  The distinguishing feature of the elite firms is that after crafting the core ideology, the concepts are embedded into each aspect of the company from finance to employment policies to product design and new market expansion.  This alignment is subsequently used as a touchstone for decision-making at every level.  In fact, it creates a cult-like environment in which people are attracted to and retained (or decide to remain with the company) based on an enthusiastic embrace of its values and practices.

If you as a business owner or executive are becoming frustrated with sorting through the latest business trends focused on technology or big data or team-building and need to refocus on fundamental principles, “Built to Last” is an excellent place to begin.

Built to Last: Successful Habits of Visionary Companies.  James C. Collins and Jerry I. Porras. Harper Collins: New York, New York, 1994 – 2002.  342 pages.

What do you think?

If the business myths cited are in fact not true and counterproductive, why were they so prevalent before the book’s publication and have persisted for years afterward?