Built to Last: Visionary Exam

Fast Company: In an author's note in the paperback edition, you write that you and Jim Collins didn't pick the title of Built to Last. Is it the right title?

Jerry Porras: I think that that title is really the right title. When organizations last, it doesn't mean that 100 years later they look exactly the way they look now. But it does mean that there are some fundamental roots, some fundamental characteristics that don't change. If we think of the evolution of human beings and we look at them across thousands of years, there are some fundamental things that don't change. They have two legs, two arms, two eyes; those are fundamental principles of what it takes for us to survive and be effective. And I think organizations have the same sort of characteristics. That's what we were trying to identify. As a result, the title continues to capture the essence of the work that we did.

FC: On pages five and six you have two big charts showing the stock returns of the visionary companies. In light of what we've been through with investor scandals, as well as increasing quarter-by-quarter pressure on stock prices, do you still think this is a good measure?

Porras: Let me be clear. The visionary companies were not selected based on the stock return measure. That measure was something we took after the companies were selected by the CEO survey. When you're looking at over 100 years' worth of history it's really difficult to find one single measure that's quantifiable, that's relatively reliable, and that people have some confidence in. So that's really how we landed on saying let's look at the stock performance of these companies. Clearly, we've had all these outrageous things happening in the last five or six or seven years that have affected what we consider an appropriate measure of performance. And we've got these very inflated price earnings ratios and so on.

But still, even given that, when we're looking at long periods of history, there isn't anything in my mind that's more reliable than that.

FC: Why did you pick the word "visionary" in the first place?

Porras: That goes back to the roots of how the research actually evolved. These are not clean processes. Very early on, Jim and I were talking about what guides a company. Is it purpose or is it mission? And where does that come from? We sort of evolved and said it comes from great leaders. Well, what are great leaders? You've got to remember that this is back in the late 1980s. People were writing books about great leaders and they were calling them visionary leaders. So we were laboring under the very simple model that it takes a great leader to create and lead a great company.

We were talking about this particular issue and then said if you need to have a really great leader to lead a great company, who's the charismatic visionary leader of 3M? Then we said, God, we don't know. We started looking at 3M and found that they had had a heck of a lot of leaders since their founding in the early 1900s. But none of them could be classified as a charismatic visionary leader, any larger-than-life, walk-on-water types. When we saw that, we said something's going on here, not in the leader, because you had all of these different leaders and none of them seemed to fit the bill of what a great leader's all about. It's got to be someplace else, where could it be? We think it's in the company.

When you look at the data, the vast majority of the visionary companies didn't start out with a great product. If you call a product a visionary product, if you will, they didn't start out with that. They started out with more of, we want to get in business, we want to make some contributions. It wasn't until some leader early in the history of the company transformed it, like William McKnight at 3M. The founders at 3M didn't have the sort of perspective that McKnight had.

I would say what's more important in these companies is that they want to live their values, they want to serve their purpose. And if we do that really well, the money comes. It's a different paradigm for the leadership of these companies. In a traditional company, the perspective is that we will shoot for the target of maximizing profits. If we do that it will allow us to make more money than if we did not shoot for that target. The visionary companies, they say we will shoot for the target of living our core values and pursuing our purpose. And if we do that, the money comes. And the data show that more money comes to them than to the people who shoot for maximizing profit or shareholder wealth.

FC: What's the great virtue of building for the long-term?