April 30, 2008

News & Opinion: Is it still possible to build a company that lasts?

By: 800-CEO-READ @ 8:13 PM – Filed under: Management & Workplace Culture

In 1994, Jim Collins co-authored the landmark title Built to Last followed by Good to Great in 2001. This month's special edition of Fortune magazine features a piece by Collins.
A technology pundit told Collins that, "'We live in an era when nothing can be built to last. Everything is in flux; nothing can sustain.'"
When looking at the Fortune 500 facts presented in the piece, that seems to be true:
* Of the 500 companies that appeared on the first list, in 1955, only 71 have a place on the list today. (The 1955 list included industrial companies only, whereas today's list also includes service companies.)
* Some of the most powerful companies on today's list--businesses like Intel, Microsoft, Apple, Dell, and Google--grew from zero to great upon entirely new technologies, bumping venerable old companies off the list. Robert Noyce invented the integrated circuit in 1958, three years after the first Fortune 500. Dozens of companies on this year's list did not even exist in 1955.
* Some of the most celebrated companies in history no longer even appear on the 500, having fallen from great to good to gone from the list--companies like Scott Paper, Zenith, Rubbermaid, Chrysler, Teledyne, Warner Lambert, and Bethlehem Steel--most often because they gave up their independence, and sometimes because they outright died.

Jim counters those points with proof of endurance: P&G, started before the American Civil War, continues to succeed; as does Johnson & Johnson whose roots were planted back in 1886 and GE which has been around for over 100 years. Then there's Nucor Steel who rose from near bankruptcy to the 151 spot on the Fortune 500 list (its story can be found in the out-of-print book, American Steel). Or Xerox which turned over profits of over $1 billion in 2007, a mere seven years after suffering losses of over $300 million.
Jim's underlying message is that the environment is not responsible for a company's success or failure. He points out that success or failure "depends more on what you do to yourself than on what the world does to you."
The full article is available here.