Built To Last: Successful Habits of Visionary Companies - Criticism

Criticism

In his book The Halo Effect Phil Rosenzweig is critical of not only Built to Last but also the entire genre of business books that it belongs to, including In Search of Excellence, Good to Great and What Really Works. It finds similar faults with a swathe of business journalism.

"It's so slippery, it's like grabbing a frog," says Richard D'Aveni, professor of strategic management at Dartmouth's Tuck School of Business, of the book, and goes on to further comment "To take this book -- or any business book -- as gospel is to set yourself up for a fall."

Built to Last has also been criticized for the fact that many of the companies it profiled have subsequently faltered. For example:

"Ten years on, almost half of the visionary companies on the list have slipped dramatically in performance and reputation, and their vision currently seems more blurred than clairvoyant. Consider the fates of Motorola, Ford, Sony, Walt Disney, Boeing, Nordstrom, and Merck. Each has struggled in recent years, and all have faced serious questions about their leadership and strategy. Odds are, none of them today would meet BTL's criteria for visionary companies, which required that they be the premier player in their industry and be widely admired by people in the know."

However, author Jim Collins has subsequently argued that "The books never promised that these companies would always be great, just that they were once great."

Meanwhile, Kahneman in Thinking, Fast and Slow criticizes Collins' overstatement of the importance of good practices relative to sheer luck (explaining the low performance of companies as a typical regression to the mean):

"The basic message of Built to Last and other similar books is that good managerial practices can be identified and that good practices will be rewarded by good results. Both messages are overstated. The comparison of firms that have been more or less successful is to a significant extent a comparison between firms that have been more or less lucky. Knowing the importance of luck, you should be particularly suspicious when highly consistent patterns emerge from the comparison of successful and less successful firms. In the presence of randomness, regular patterns can only be mirages."

Chris Grams, former Senior Director of Red Hat and one of Collins' biggest admirers, admits Kahneman's analysis is technically correct, but he also thinks it is emotionally bankrupt. Although Collins' books may lack academic rigor they make up for in one simple area: they inspire people. They also create the possibility of hope. "Others have done it. I could too!"

Morten Hansen who co-authored Jim Collins on Great by Choice has responded to Kahneman's criticism by referring to Chapter 7 of their book wherein they have analyzed that successful companies are not more luckier than the comparisons and therefore luck cannot explain the difference, and that "Regression to the mean is not always happening, and so (it is true) for companies too."