Built to Last: Successful Habits of Visionary Companies

Collins and Porras initiated their research for Built to Last in 1988 and published it in 1994, marking one of the first attempts to quantify business success scientifically. Even three decades later, many consider the book essential for entrepreneurs and managers. While its content has been scrutinized in the years after publication, it remains both important and relevant to its audience today.

The enduring impact of Built to Last on the business world is undeniable. Concepts like BHAGs (Big Hairy Audacious Goals) and the development of core ideologies introduced in the book have become integral to standard business practices. The work contributed to the establishment of Jim Collins’s management laboratory and laid the foundation for his subsequent research in the Good to Great series.

Historically, 1994 marked the cusp of profound economic and business transformations. The conclusion of the Cold War in 1991 prompted a worldwide shift towards globalization (US Department of State. “U.S. and German Economic Trends and the Transatlantic Trade and Investment Partnership.” U.S. Embassy & Consulates in Germany). The 1990s witnessed a departure from the ethos that defined the “greed decade” of the 1980s, as employees and consumers increasingly prioritized ethical business practices and quality over mere cost-cutting (US State Department). Against this backdrop of change, Collins and Porras undertook their research, culminating in Built to Last, focusing on 18 visionary companies of the time.

The central theme of Built to Last revolves around the mantra of “preserve the core and stimulate progress” (17). This emphasis on establishing a robust core ideology to provide stability while encouraging adaptability became particularly relevant in the turbulent times of the mid-1990s. As the book gained traction, the onset of the tech boom a year later further underscored its timeliness. The widespread adoption of the internet in 1993 ushered in a new era, demanding businesses create an online presence (US State Department). The subsequent rise of start-ups, fueled by investor attention, coincided with Built to Last, which spent six years on the Business Week bestseller list. Coincidentally, the book remained on the bestseller list until the tech bubble burst, which led to a recalibration in the business landscape (US State Department).

While the enduring concepts of Built to Last remain relevant, critiques have emerged over time. Some visionary companies stumbled post-publication, prompting scrutiny (Reingold, Jennifer and Underwood, Ryan. “Was ‘Built to Last’ Built to Last.” Fast Company, Nov. 2004). Practices advocated by Collins and Porras, especially those in the “cultism” chapter, have faced ethical questioning (Reingold and Underwood). “Cultism” is defined in relation to visionary companies in Built to Last, and aspects of company culture that may seem extreme or even harmful are celebrated and encouraged. Specific methods, like isolationist practices and public shaming to foster loyalty, are viewed as unacceptable in modern business environments. Additionally, critics point to a notable misstep where the authors praise Jack Welch while questioning Louis Gerstner (Reingold and Underwood).

Jack Welch, the renowned GE CEO from 1981 to 2001, achieved unprecedented growth but left a legacy of controversy (Gladwell, Malcolm. “Was Jack Welch the Greatest CEO of His Day, or the Worst?” The New Yorker, Nov. 2022). His aggressive practices, including annual employee reductions based on performance and strategic shifts, pushed GE from an engineering to a financial focus (Gladwell). Welch’s championing of sub-prime mortgages and dubious accounting practices came to light during the 2008 financial crisis, severely impacting GE’s standing and nearly bankrupting the company (Gladwell). In contrast, Louis Gerstner, an external CEO with no tech background, is credited with saving IBM (Dweck, Carol. “Lou Gerstner: How He Saved IBM.” Shortform). Shifting IBM from manufacturing to services, Gerstner prioritized long-term growth, resulting in an 800% increase in stock value by 2002 (Dweck). Despite initial criticism in Built to Last, Gerstner’s leadership, explored in-depth in Collins’s later work, Good to Great, showcases the enduring principles of core ideology and adaptability (Dweck).

While some critics highlight this misjudgment as a failing in Built to Last, the reality is quite the opposite. Although Gerstner asserted that IBM did not need a vision, he, in truth, adhered to IBM’s original core ideology of pleasing customers and seeking superiority (Dweck, Collins and Porras 69). Despite job cuts, Gerstner preserved the core value of respecting employees by fostering communication channels and rewarding teamwork (Dweck, Collins and Porras 69). In contrast, Welch blatantly violated GE’s core ideology of “improving life through technology and innovation,” balancing responsibilities to “customers, employees, society, and shareholders, individual responsibility and opportunity, [and] honesty, and integrity” (69). While Collins and Porras could not predict the historical trajectories of IBM and GE, their concepts endure despite their initial misjudgment of these figures. These two CEOs underscore the importance of following a core ideology for long-term success more clearly than the examples used in Built to Last.

As the book aged, criticisms surfaced regarding its data methodologies, such as singular rating scales and potential bias (Reingold and Underwood). Others label the book as more of a philosophy than a business management guide (Collins and Porras, Introduction). Despite these concerns, Built to Last is a product of its time, providing an enduring conceptual map and pioneering a data-driven approach to the analysis of success. The authors acknowledge within the work the adaptability of the methods described with shifting markets and recognize that visionary status does not guarantee its permanence. However, the core concepts of being a “clock builder [...] embracing the ‘Genius of the AND,’ preserving the core while stimulating progress, and seeking consistent alignment” persists as guiding principles in management, reaffirming the book’s relevance over 30 years after its publication (217).