Hardcover edition (2004)
|Author||Jim Collins and Jerry I. Porras|
|October 26, 1994|
The text outlines the results of a six-year research project into what makes enduringly great companies. Two primary objectives for the authors' research goes as follows: "to identify underlying characteristics are common to highly visionary companies" and "to effectively communicate findings so they can influence management". The research conducted by Collins and Porras was articulated in Built to Last, presenting valid examples based on stories and research data. The book is said to be "one of the most influential business books of our era".
Collins and Porras listed a total of eighteen companies they identified as 'visionary.' They defined a visionary company as one that is a premier institution in its industry, is widely admired by knowledgeable businesspeople, made an imprint on the world, had multiple generations of Chief executive officers (CEOs), had multiple product/service life cycles, and was founded before 1950. The list of visionary companies was determined based on the results of a survey of 1,000 CEOs. The authors ensured representation across all industries and various sized organizations by sampling from Fortune 500 industrial companies, Fortune 500 service companies, Inc. 500 private companies and Inc. 100 public companies. The survey yielded a 23% response rate with 3.2 companies listed per response. An important caveat the authors express is the fact that through their research, they can claim a correlation, not a causal link between their findings and the success of companies.
The list of eighteen companies identified as visionary:
These companies have taken leadership roles in their industries, offering innovative products and services and consistently outsmarting rivals. What made the research particularly useful and interesting is that Collins and Porras compared and contrasted these visionary companies with a control set of rivals. For instance, Boeing was compared and contrasted with Douglas Aircraft, Marriott was compared and contrasted with Howard Johnson's, and Merck was compared and contrasted with Pfizer. The findings are based on what the visionary companies do that is different than close competitors who have achieved a high level of success, but not to the extent of the visionary companies. From 1926 through 1990 the comparison companies outperformed the general stock market by 2 times whereas the visionary companies outperformed the market by 15 times.
Built to Last has influenced many executives and entrepreneurs since it was originally published, including Red Hat. Co-author Jim Collins became a "superstar" among M.B.A.'s and used his share of the profits to "set up his own research center in Boulder, Colo., staffed with a team of grad students who tackle multiyear research projects aimed at answering big-business questions." This research ultimately led to subsequent books such as Good to Great.
In his book The Halo Effect, Phil Rosenzweig is critical of not only Built to Last but also the entire genre of business books that it belongs to, including In Search of Excellence, Good to Great, and What Really Works. It finds similar faults with a swathe of business journalism. Rosenzweig uses Built to Last as an example of the "Delusion of Rigorous Research". He mentioned that the authors had deliberately implied that their research is backed by a huge quantity of data, but the problem is that most of this data are tainted by the Halo Effect.
Built to Last has also been criticized for the fact that many of the companies it profiled have subsequently faltered. For example:
Meanwhile, Kahneman in Thinking, Fast and Slow criticizes Collins' overstatement of the importance of good practices relative to sheer luck (explaining the low performance of companies as a typical regression to the mean):
Chris Grams, former Senior Director of Red Hat and one of Collins' biggest admirers, admits Kahneman's analysis is technically correct, but he also thinks it is emotionally bankrupt. Although Collins' books may lack academic rigor they make up for in one simple area: they inspire people. They also create the possibility of hope. "Others have done it. I could too!"
Morten Hansen who co-authored Jim Collins on Great by Choice has responded to Kahneman's criticism by referring to Chapter 7 of their book wherein they have analyzed that successful companies are not luckier than the comparisons and therefore luck cannot explain the difference, and that "Regression to the mean is not always happening, and so (it is true) for companies too."