The Secret of Enduring Greatness

I thought I would take a break today and let Jim Collins (Good to Great) speak. I recently came across an article he wrote for Fortune magazine in which he talks about the importance of culture in great companies.

In the article, he was responding to the concept that great companies can't endure based on the work of Joseph Schumpeter, the great economist who wrote about the "perennial gale of creative destruction" wherein technological change and visionary entrepreneurs give birth to new things that obliterate old things, only to see those new things become obliterated by the next generation.

You can imagine that Jim took exception to this notion as an all encompassing point of view.

What I found most interesting in his article was that when giving examples of great companies that endured, he repeatedly made references to their cultures. "These companies trained leaders who could evolve and create a portfolio of flywheels - from candles to Pringles, from medical plasters to Tylenol, from light bulbs to jet engines - yet they also held tight to core values that have remained fixed for 100 years or more."

He used the example of Wal-Mart and Ames to illustrate his point. In the early 70”s these 2 companies looked very similar, yet one thrived and the second disappeared. When examining the reasons for their differences, Jim points to internal conditions versus external influences.

He sums it up beautifully, “Companies do not fall primarily because of what the world does to them or because of how the world changes around them; they fall first and foremost because of what they do to themselves.”

When he talks about what they do to themselves, he specifically talks about internal culture as one of the key influencers.

“When you've built an institution with values and a purpose beyond just making money - when you've built a culture that makes a distinctive contribution while delivering exceptional results - why would you surrender to the forces of mediocrity and succumb to irrelevance? And why would you give up on the idea that you can create something that not only lasts but also deserves to last?”

As you can see, he makes the point far better than I, so I encourage you to read the article in its entirety.

Cheers!