What About Companies that Stumble?

Audio Transcript

What about companies in our research that might have stumbled? The signature of any truly great entity is not the absence of difficulty but the ability to come back from difficult times even stronger than before. When we published Built to Last in 1994, IBM found itself in the middle of a desperate turnaround, and we endured derision for including IBM in the book. I remember being at a seminar where somebody challenged us, “How can you have IBM in the book? They’re stumbling; they’re struggling.” But ten years later, IBM had returned as one of the most significant companies in the world. Resiliency—not perfection, resiliency—that is the signature of greatness, be it in a person, an organization, or a nation.

Furthermore, even if a few of our struggling companies fail to regain their prior greatness—and, of course, that’s always possible—that fact alone would not undermine the fundamental ideas we derived in our research. Think about it this way. Suppose we studied the great UCLA basketball dynasty of the 1960s and ’70s, which won ten NCAA championships in twelve years under the legendary coach John Wooden.

Suppose also that we compared the UCLA Bruins under Wooden to a matched pair that failed to become a great dynasty. Let’s say the UC-Berkeley Golden Bears basketball team of that era. Further, suppose that we repeat this analysis across a range of sports dynasties: Green Bay Packers in the ’60s in contrast to the San Francisco 49ers, the New York Yankees to the Boston Red Sox, and so forth. And we develop a framework of principles about building a great dynasty.

Now, consider the following question: is the UCLA basketball team a great dynasty today? Certainly not at the same level as the Wooden era. Now consider this question: would this fact negate the principles we learned by studying the Bruins at their best in contrast to the Golden Bears? Sure, the practices may have changed, but the principles of great sports dynasties would still stand even if the UCLA Bruins had ceased to live the principles that made them truly great under John Wooden.

Or think about it this way. If we studied healthy people in contrast to unhealthy people and derived principles of health such as sound sleep, balanced diet, and moderate exercise, would it undermine these health principles if later, sometime down the road, some of our previously healthy subjects started sleeping badly, eating poorly, and not exercising? The answer is no. All that would say is that some members of the original study set had ceased to live the principles that had made them healthy in the first place. Sleep, diet, and exercise—they would still hold as principles of health.

That’s how we should think of the Good to Great and the Built to Last principles—principles derived by studying those that became great in particular eras in contrast to those that did not. Even if some companies stumble—even if they stop sleeping well, they stop exercising, they stop eating well—the principles of sleep, diet, and exercise; the principles of First Who, Level 5, and the Hedgehog Concept still apply.