Built to Last: Visionary Exam

Porras: I think the virtue of the long-term is to have a set of missions and a set of contributions that shape and influence a society you're in. And if you think about how our great companies have helped to shape our society -- and I think in very positive ways -- you can't get that sort of influence from short-term thinking. Yes, we do have to have innovation and we do have to have change. But I'm not convinced that all the innovation and all the change is just coming from the brand new companies. I think that most of it does. But I think a lot of the change -- and I'm talking very subjectively because I haven't done any analysis of this -- much of what we consider to be the useful change that has come from the small or brand new companies is change that doesn't endure. Whereas I think that the sorts of changes that come from BTL-types of companies are changes that tend to endure over longer periods of time. As a result those changes really influence and affect a society over a longer term. I don't believe that we should have one or the other. I think anyone who says these old companies, these big companies that have been around, like 3M and Merck and all that, are dinosaurs and done away with, I think that's really shallow thinking.

FC: What lessons do you take from the visionary companies that have stumbled since Built to Last came out a decade ago?

Porras: I think the stumbling can be divided into two camps. One is a stumbling that I think is driven by the organization drifting away from some of the core perspectives that have made it great. And I think the second is the stumbling that happens to companies because they are run by human beings, who make errors and they're existing in environments that are changing on them and sometimes their decisions don't match what the environments need so they stumble. But that's a temporary thing. They're still doing things right. But you go out and run the race and your toe catches a little indentation in the track and you lose your stride and you don't win the race.

What happened at Disney, for example, turned out, I believe, to be a sort of evolution in Michael Eisner in which he really failed to understand that he was building a great organization. That's why Disney had been great up to that point. It was because Walt had built an organization. And, yeah, Walt was the center of it. He was a very charismatic guy. But he was spending a lot of his energies and efforts in building the organization. Eisner didn't do that on his own. You go back and look at Frank Wells, who was number two to Eisner, who died in a helicopter crash. I think Wells was really running Disney and Eisner was more of the outside guy, the charismatic guy who would make the deals and all that. But the building of the organization and all that was Wells. Wells was really the builder of the organization. He was the one who was really making the right decisions and creating the strength in the organization to do all the things necessary to be great. He died, and Disney carried forward on the momentum of his work for a while, but then I think the momentum just kept getting slower and slower and then just finally kind of stopped and started reversing. Eisner has not been able to find it within himself to appoint someone to that second position. And I think as a result, a lot of the ways Disney has operated have been predicated on his making the decisions. And that slowed a lot of things down and a lot of poor decisions have been made. I think the latest rift with Pixar is as much as anything an example of Eisner's ego getting in the way of a good business deal. So here we have a leader who really was strong on the values that Disney needed to get back on track, but who was weaker on the building side.

FC: How do you think the list of visionary companies would look different today?

Porras: If we put no constraints on the survey in terms of age of the company, I think some that would come on it would be Microsoft. I think Intel would probably come on it. We made the decision to drop Apple and Compaq because at the time we did the survey, Apple was 13 years old and Compaq was 8 years old. Apple to me is the perfect example of the charismatic visionary leader being the driving force. In fact, when we did the survey, Apple was one of the most frequently mentioned, if not the most frequently nominated company. So what happened a year or two later? Steve Jobs leaves Apple. Apple sort of goes in the tank. A few years later, Jobs comes back to Apple. Apple starts to become a prime company again. That's a natural experiment almost. You withdraw one force and the thing changes, then you put it back in and it goes back to what it was. That's a pretty strong demonstration of the power of that leader and the fact that he has not built a great organization. I would think if we were doing the survey now, in terms of dropping off, I think probably people would drop Motorola off. I think there would be some question about Nordstrom. I think people might well drop Ford off it. But I'll betcha Toyota would be on it. Boeing would go off.