In an article published six years ago now, a Fast Company writer asks the question “were built to last companies built to last?”. Built to Last is, of course, a bible to many practicing executives and a fruitful source of inspiration for many managers. In a way, it’s core message of getting your head out of your ‘in’ basket and focused on a big picture goal for your company over the long term is even more relevant today.
But are we looking at causation or correlation when we take our advice from such books? Our good friend the somewhat cynical Phil Rosenzweig argues that much of what we conclude about what drives company performance is heavily influenced by the Halo effect – once you know how a company performed, it’s easy to go back and find “causes” for that performance, without really knowing what’s what.
Intriguing, that of the original 18 “Built to Last” companies, some are definitely struggling: Motorola, Sony, Boeing, Merck, and Citigroup among them. Others have gone through near-death experiences before once more finding their footing: Walt Disney and IBM might fall into that category. And still others are doing really well, even in this tough environment: Nordstrom, American Express, HP, GE, J&J, 3M, P&G and Wal-Mart.
So what do you think? Correlation? Causality? Or are we instead looking at a level of analysis problem – in which you can’t judge the success of a firm as a whole, but have to look at its underlying businesses?
I’m kind of leaning toward the latter. More to come!