Business View - November 2015 7
Editor’s
Note
Last month, Business View Magazine ran a profile of The Lindgren Group, a leader in the metal finishing industry and a company whose corporate mission is to make
metal last. The Lindgren Group creates the chemicals and processes whose sole purpose is to fight corrosion – the natural process of oxidation that converts and
degrades refined metals to their more stable, elemental forms. For example, given sufficient time, oxygen, and water, any iron mass will eventually convert entirely to
rust and disintegrate. Thus, corrosion is the gradual destruction of materials by chemical reaction with their environment. Coating, anodizing, or electroplating differ-
ent metals and their alloys gives metals a much longer life span by insulating and protecting them from the corrosive elements in their environment.
Businesses are obviously more resistant than metals to the processes of oxidation, but like metals, they are similarly prone to corrosive dynamics – not of water and
oxygen, but of time and the vicissitudes of fortune. Companies that didn’t last may have been subject to economic turmoil, unforgiving customers, tough rivals, inter-
nal disputes, or any combination of incompetent management, bad luck, and poor timing, and, unfortunately, a business can’t be coated or electroplated to prevent
its potential disintegration or demise. And these days, companies corrode and vanish with increasing frequency. In fact, the average life span of a company listed in
the S&P 500 of leading U.S. companies has decreased markedly over the last century – from 67 years in the late 1920s, to just 15 years today.
But while chemical coatings are hardly the answer for protecting a business against the destructive powers inherent in the prevailing economic environment, many
scholars and experts have attempted to lay down some rules and principles that, they believe, can, at least, help make businesses last longer. One such tome is
actually called Built to Last. It is the result of a six-year research process by two Professors from the prestigious Stanford Graduate School of Business, Jerry Porras
and Jim Collins, who studied the founding, growth, and development of exceptional companies that have stood the test of time.
While composing Built to Last, Porras and Collins discovered that many of their prior beliefs about what makes a business successful were mistaken. Among the
former myths challenged by their research were:
• A great idea is needed to start companies
• Visionary organizations need charismatic leaders
• Maximizing profits is the dominate goal with visionary companies
• Visionary companies focus on beating competitors
• Hiring outsiders as CEO’s is the best way to spark an organization
In contrast, chief among the book’s prescriptions for longevity and success is the concept of “clock building” as opposed to “time telling.” According to the authors,
time telling is “having a great idea or being a charismatic visionary leader” and clock building is “building a company that can prosper far beyond the presence of any
single leader and through multiple product life cycles.” This principle involves making the company, itself, the ultimate product. Those who build visionary companies
tend to be clock builders. Their primary accomplishment is not the implementation of a great idea, the expression of a charismatic personality, or the accumulation
of wealth. It is the company itself and what it stands for.
So, being clear about what a company stands for is another key ingredient that can contribute to its potential longevity. A deeply-held, core ideology gives a company
both a strong sense of identity and a thread of continuity that holds the organization together in the face of change. Moreover, the architects of visionary companies
build cult-like cultures around their core ideologies. Walt Disney created an entire language to reinforce his company’s ideology. Disneyland employees are “cast
members.” Customers are “guests.” Jobs are “parts” in a “performance.” Disney required—as the company does to this day—that all new employees go through a
“Disney Traditions” orientation course, in which they learn the company’s business is “to make people happy.”
Porras and Collins also promulgate the concept of the BHAG – setting Big Hairy Audacious Goals as a hallmark of success. They describe BHAGs as nearly impos-
sible, but possible with confidence and a bit of arrogance on behalf of the company. A BHAG stresses high commitment and working outside of a comfort zone. When
President Kennedy said, early in his term, that America would put a man on the moon and return him safely before the end of the decade, he was stating a BHAG.
Porras and Collins also discovered that hiring outsiders to stimulate change and progress was much less successful than home-growing a company’s own manage-
ment. They learned that insiders are much more likely to preserve core values while simultaneously moving their companies in new directions. A another way to
simulate the drive for progress is to create an environment that encourages people to experiment and learn - to try a lot of stuff and keep what works.
Built to Last also teaches that in order to last long, a company must embrace “the genius of the ‘and.’” A truly visionary company embraces both ends of a continuum:
continuity and change, conservatism and progressiveness, stability and revolution, predictability and chaos, heritage and renewal, fundamentals and craziness.
Finally, according to the Professors, in a visionary company, continuous improvement is a way of life, not a management fad. The critical question is not “How can we
do well?” or “How can we meet the competition?” but “How can we do better tomorrow than we did today?” The challenge is to build for the long term while doing
well today.
As you read through the profiles of companies in this current edition of Business View Magazine, see if you can recognize some of Built to Last’s prescriptions for
long-term success. And then ask yourself if your business is “built to last,” as well.
Al Krulick
Editor-in-Chief
Business View Magazine
