The 3 Common Characteristics of a Good Business

This article is an excerpt from the Shortform book guide to "Built to Last" by Jim Collins and Jerry Porras. Shortform has the world's best summaries and analyses of books you should be reading.

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What qualifies as a visionary company? What are the truths and myths about companies that endure?

In Built to Last, bestselling author Jim Collins and Stanford professor Jerry I. Porras embarked on a six-year research project to 1) identify the characteristics that distinguished the very best companies, and 2) use these insights to create a framework for those who want to build a visionary company of their own. To this end, the authors identified and analyzed 18 visionary companies that performed exceptionally well over a long period of time. 

Read more to learn about the qualities of a visionary company.

What Qualifies as a Visionary Company?

Many enterprises come and go, but a visionary company endures for generations. Visionary companies are the gold standard in their respective industries because they’ve prospered for decades and at the hands of many different leaders. They’ve become household names, ingraining themselves into our collective psyche—it’s hard to imagine a world without their products, from Band-Aids to Post-it Notes to Mickey Mouse.

But what is the key to these companies’ longevity and tremendous success? Bestselling author Jim Collins and Stanford professor Jerry I. Porras embarked on a six-year research project to answer this question and give practical advice for those who want to build a visionary company that lasts.

Narrowing Down the List of Companies

The authors’ primary objectives for the research project were 1) to identify the characteristics that distinguished the very best companies, and 2) to use these insights to create a framework for those who want to build a visionary company of their own. 

The authors came up with their list by surveying CEOs across numerous enterprises of various sizes, industries, and geographic locations, asking them to identify the companies they considered to be visionary. From there, the researchers narrowed the list down to the 20 most-frequently mentioned companies, then eliminated those founded after 1950. (Their reasoning: Companies founded before 1950 have proven that their success wasn’t a fluke due to one leader or one great idea.) 

The researchers then identified a “comparison company” for each visionary company—that is, a company that was founded at around the same time, had the same founding products and markets, and was also highly successful, but not as successful as its comparative visionary company.

The final 18 visionary companies are listed below. Their comparison companies are in parentheses.

  • 3M (Norton) – consumer products
  • American Express (Wells Fargo) – financial and travel services
  • Boeing (McDonnell Douglas) – aviation
  • Citicorp (Chase Manhattan) – banking
  • Ford (GM) – automotive
  • General Electric (Westinghouse) – conglomerate (power, energy, aviation, health care)
  • Hewlett-Packard (Texas Instruments) – technology
  • IBM (Burroughs) – technology
  • Johnson & Johnson (Bristol-Myers Squibb) – pharmaceuticals, medical devices, consumer health care
  • Marriott (Howard Johnson) – hospitality
  • Merck (Pfizer) – chemicals, pharmaceuticals
  • Motorola (Zenith) – telecommunications
  • Nordstrom (Melville) – retail
  • Philip Morris (RJR Nabisco) – tobacco
  • Procter & Gamble (Colgate) – consumer goods
  • Sony (Kenwood) – conglomerate (electronics, gaming consoles, media)
  • Walmart (Ames) – retail and wholesale 
  • Walt Disney (Columbia) – entertainment

They closely examined each company’s history and evolution, conducted a comparative analysis, identified key concepts that led to the visionary companies’ success over their competition, and created a framework for those who want to build visionary companies. They then further refined their framework by asking 30 organizations to test it in real-world situations and give feedback.

Visionary Company Myths We’ll Debunk

Their research findings debunked 12 myths about visionary companies.

  • Myth 1: A great company starts from a great idea. Surprisingly, some visionary companies started without anything specific in mind. Some had a number of misfires in the beginning and took some time to hit their stride.
  • Myth 2: Behind every visionary company is a larger-than-life, visionary leader. The research revealed that leaders come in all shapes and forms—not all of them have the charisma and big personality you might expect from a CEO of a high-flying corporation. What they do have in common is that they’re more invested in building the company than in building their own brand.
  • Myth 3: You can’t have it all. Visionary companies don’t believe that they have to make a choice between two seemingly paradoxical goals. Instead of being ruled by or (for example, stability or progress), they believe in and (stability and progress).
  • Myth 4: Visionary companies are profit-driven. The research revealed that visionary companies aren’t singularly focused on profit. They focus on profit and their values and purpose equally.
  • Myth 5: There is only one way to do things and one set of values to follow. The research found that core values aren’t one-size-fits-all for visionary companies—each had its own priorities and way of doing things.    
  • Myth 6: Change is constant. The research found that while visionary companies do relentlessly pursue progress, they also rigorously adhere to their ideals and values.
  • Myth 7: Visionary companies are ultra-conservative. The research found that, far from playing it safe all the time, visionary companies aren’t afraid to make big moves (what the authors call “Big Hairy Audacious Goals”).
  • Myth 8: Anyone can fit right into a visionary company. While many people dream of working for these companies, not everyone is a good fit. Visionary companies are almost cult-like when it comes to what they stand for, and some people just can’t get on board.
  • Myth 9: Visionary companies carefully plan everything. On the contrary, they leave plenty of room to adapt. They sometimes even rely on opportunism or accidents.
  • Myth 10: Hiring CEOs from outside can revitalize a company. Visionary companies love their own. They rely largely on talent and new ideas from within the organization.
  • Myth 11: Visionary companies are relentless when it comes to competition. Visionary companies see themselves as their biggest competition. They believe that there is always room for improvement. 
  • Myth 12: Vision statements are an integral part of success. A statement doesn’t do the work for a visionary company. It can serve as a useful guide, but it’s just a small part of the process of building something that lasts.

Shortform Note

Built to Last became an instant classic. However, it’s important to note that it was published in 1994. Since then, some of the visionary companies have faltered. 

  • For example, Motorola has seen its market share dwindle with newer or revitalized companies like Samsung and Apple pulling ahead. Ford is once again behind General Motors in terms of market share. Nordstrom has closed many of its stores.

It’s possible that many of the companies were greatly affected by the advent of the internet and other huge shifts in technology over the last 25 years. It’s also possible that the companies have become less successful because they veered away from the concepts presented in this book. We at Shortform won’t discuss whether the changes in the visionary companies’ status undermine the authors’ research findings. We do believe that the authors’ findings are still an insightful look at the keys behind companies’ enduring success, even if it was during a previous era.

A Visionary Company: What It Is and What It Isn’t

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Like what you just read? Read the rest of the world's best book summary and analysis of Jim Collins and Jerry Porras's "Built to Last" at Shortform.

Here's what you'll find in our full Built to Last summary:

  • The key to longevity and success for your company
  • Debunking the twelve myths about what it takes to build a visionary company
  • The four key concepts behind enduring greatness

Elizabeth Whitworth

Elizabeth has a lifelong love of books. She devours nonfiction, especially in the areas of history, theology, science, and philosophy. A switch to audio books has kindled her enjoyment of well-narrated fiction, particularly Victorian and early 20th-century works. She appreciates idea-driven books—and a classic murder mystery now and then. Elizabeth has a blog and is writing a creative nonfiction book about the beginning and the end of suffering.

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