The research that i and my colleagues have carried out over the years has convinced me that internal values are a key part of corporate success. But I can hear some skeptical readers saying “Show me.” To those schooled in hard-nosed quantitative analyses of competitive situations and strategies, explanations such as this will no doubt seem very “soft.” And a handful of examples certainly does not prove that every company with a strong sense of identity and internal values is successful or that every successful company has succeeded because of its values.
However, further evidence to support these conclusions comes from a detailed study of 18 companies with a record of exceptional achievement extending back over many decades (several had also been the subject of the MIT research, including Hewlett-Packard, Boeing, Motorola, and Ford). In this pioneering study, conducted by James Collins and Jerry Porras of Stanford, each of the 18 “visionary” companies was carefully compared with another company of comparable vintage that had started out pursuing similar products and markets. The firms in the comparison group were themselves no slouches, and in many respects had been above-average performers. Yet each had been outdistanced by its more visionary counterpart. Collins and Porras (who published their results in a book called Built to Last: Successful Habits of Visionary Companies) asked what had distinguished the most successful companies from their competitors.
Their answers undermine many of the most pervasive myths about effective corporate management-for example, that business success requires a single-minded focus on maximizing profits and market share; that it requires visionary, charismatic leadership; and that it requires brilliant, sophisticated strategic planning. In general, these characteristics were no more likely to be found in the visionary companies than they were in the others; indeed, they were often entirely absent from the most successful companies, and so could not be implicated in their success at all.
So what does explain the difference? A key finding of the Stanford study reinforces and valuably amplifies our conclusion on the importance of a corporation’s “inner voice.” In each of their 18 visionary firms, Collins and Porras saw a set of core beliefs-an “ideology”-that had remained essentially unchanged over long periods and that had mobilized and inspired people at all levels of the organization. They found that in almost all cases the visionary companies had been motivated more by such beliefs and less purely driven by profit than the comparison firms, even though, paradoxically, they had been more profitable in the long run.
Collins and Porras insist that these core beliefs are unique to each company, that there is no “correct” version. Examples include dedication to serving the customer (Wal-Mart, Nordstrom); respect for individual employees (Hewlett-Packard); and innovation (3M). What matters is not correctness, but authenticity: the strength of the belief that this is what the company stands for and that this is how it should do business.