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Monday, November 08, 2004

Built to Last: The True Test of Timeless Companies -Part 1

Jim Collins is a student of enduring great companies—how they grow, how they attain superior performance, and how good companies can become great companies. Having invested more than a decade of research into the topic, Jim has authored or co-authored four books—including the classic Built to Last, a fixture on the Business Week bestseller list for more than six years, and the New York Times bestseller, GOOD TO GREAT: Why Some Companies Make the Leap…And Others Don’t. In this interview with Fastcompany, Jim talks about why Built to Last is not about business performance, why the list doesn't matter, and why the laws of physics will never change . Key Themes :
On why Built to Last is not about business performance, why the list doesn't matter, and why the laws of physics will never change : We did an interesting analysis in the book, where we analyzed, just picking who would have been the best performing companies over say certain period. And it wasn't the same list. In fact if we were just selecting on performance we would have picked a different list. And we put that list in the appendix. Not only did we say the book wasn't about performance, we went so far as to say, not only that, if you would have picked on performance, you would have picked a different list. Only one of those top 18 performers actually made it in to our study. And most of the companies there, you wouldn't look at today as really meet the BTL test. That is, how many of them meet that test of having an impact on society, that truly visionary standard of the companies? How many of them brought the 747 to the world? How many of them invented Disneyland? How many of them brought the IBM 360? How many of them changed the entire retailing landscape by redefining service? Or invented product management? The companies that are on this list, the best-performers over 10 years, they didn't have that stature.
What companies would be on the BTL list today and which ones would be off? Good to Great is not about the GTG companies. The current research is focussing on - How do you endure brutally turbulent events and still become great? Now let me ask you a question: Do you need to know who my companies are to be interested in that question? How to endure brutally turbulent events, big bad scary things out of your control, inherently unpredictable that can rip away control of your own destiny. And yet how can you survive those things and still end up being a great company or building something great or having a great life? What is BTL about? It's about discovering the timeless principles that make iconic companies that weave themselves into the fabric of the world. How did we discover those timeless principles? By discovering a set of companies that met that test at some point in their history and comparing them to what? To others that did not. So it doesn't matter if you picked a different list today so long as the companies met that test and you did rigorous paired comparisons. You would get the same timeless principles. The companies would be different. Do the laws of physics change? Does f=ma change if you derive it by looking at billiard balls or whether you derive it by dropping pens from the leaning tower of Pisa? You don't go back and say f=ma no longer applies.Jim Collins says, The one thing I have been incredibly frustrated with, though. Probably the thing that is most -- what I've had to most hammer into people, what people don't get as easily -- is that the BTL ideas are very much about the "And." One of the things that really has frustrated me has been peoples' perception that BTL is about preservation, conservation, stasis, stability. To be built to last, you have to be built to change. And we always said that. If you read chapter four, where we introduce the most important law of physics to come from this book, the most important chapter of this book. Preserve the core and stimulate progress. You can have the most deeply cherished and meaningful core ideology, but if it just sits still or refuses to change, the world will pass it by.
(Part II Shall be published shortly.)

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