These are our new ideas on how companies have tried to last longer in this changing scenario that is the 21st century.

1. Built to Last – Does it still hold water now?
From:
Udit Sharma(9004205234),
Vishal Varadharajan
Roshan PR
MBA(CORE).
Narsee Monjee Institute
of Management Studies

2. Built to Last – Does it still hold water now?
The theory of Built to Last entails a few paradigms which a certain number of companies have been able
to follow in order to ensure they stand the tests of time. Over the course of the years these theories and
paradigms have been put to question, mostly since a few companies have faltered in their paths. In this
article we discuss what steps should companies (visionary or otherwise) have taken, or should take in
order to get back on top.
Built to Last. The question whether this theory(the theory that companies can be run as if they will
remain through generations and last centuries) still holds water is primarily raised due to two reasons.
Firstly there has been about 15 years since the idea was first brought out in the form of a book by Jim
Collins and Jerry Porras and due to massive changes in technology and economic environment there
have been questions whether companies could still refer to the theories given in this epic.
Secondly, not all of the companies mentioned as Visionary in the book have had good times. Motorola,
for instance has faltered and failed miserably to deal with the revolution in Mobile world technology.
Merck, once envisioned as the shining beacon of the pharmacy world is languishing as the 9th
largest
pharmacy company, no longer its leader. Such instances bring to doubt the theories prophesized by
Messrs. Collins and Porras.
The book has taken severe criticism from a lot of economic and management theorists. Daniel
Kahneman, Nobel Prize winning economist in his book Thinking Fast and Slow said:
"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."
Through this article we plan to emphasize the steps that the companies both visionary and otherwise
have taken in order to sustain business and maintain longevity and market shares. These efforts are a
form of an addendum to the theories found in Built to Last.
In this article we are going to discuss the steps taken by the visionary companies to remain the leaders
in their respective fields over the years. We shall also discuss why a few visionary companies failed to
hang on to their pedestals. A few steps taken by companies in a bid to remain on top are:
1. Investing in Rapidly-growing Emerging Economies.

3. 2. Reacting proactively to changes in Technology.
3. Participation in Corporate Social Responsibility (CSR).
Looking South
In management circles, the most powerful management idea of the past two decades is touted as:
Expansion into rapidly growing emerging economies.
A lot of things have happened since the publishing of the book that has shaken the economies in which
these Visionary companies reside. There was the 9/11 attacks which shook the stock market, the
hurricane Katrina which put excessive load on the insurance industry, the financial crisis of 2008 which
brought both The US and the European countries to their knees, the Fukushima Daiichi disaster etc.
These incidents have forced companies to reassess their strategies. The American and European
markets, once thought of as self-sustaining behemoths, have faltered in giving companies their desired
growth. The companies who recognized the potential of the emerging economies like India, Indonesia,
Brazil, Mexico and some African countries have been able to maintain a steady inflow of revenues even
if their home markets have failed to give them expected returns.
About the time the Berlin Wall fell, India opened up its markets for foreign firms and China began to
prosper. Initially, firms came to these countries in order to manufacture goods for rich countries;
eventually they stayed in order to satiate the desire of the suddenly affluent new middle-class. The
financial crash of 2008 only emboldened foreign firms to invest more resources and capital in emerging
markets.
Takeovers by rich world companies quadrupled between 2003 to 2010, to 180 billion dollars. Rich world
firms had invested around $3 trillion in the emerging markets. Canadian rail makers, German carmakers,
American apparel makers all had jumped in. Firms which considered western markets as their
“backbone” now sell most of their products in emerging markets.
Some firms have had an unexpected change of fortunes in emerging economies. Boeing, an American
aircraft, maker sells more planes in China and Latin America than in the whole of Europe. Suzuki, a
Japanese carmaker, reported that its sales from India provide for more than half their revenue.
Adapting to technological Changes
“If you bring change you’ll lead, if you adapt to change you’ll survive, but if you resist change, you’ll
perish.”
With technology changing so rapidly, the biggest question in the minds of business leaders is how to
drive growth in this rapidly changing landscape.
Every industry has faced massive changes in the last few years and technology has been at the core of
those changes. Take for example the digital camera market. It has enabled people to take high quality

4. images at cheaper prices. From at one point being only able to take pictures from digital cameras,
people are now able to take pictures from their cell phones. This change in technology has put a huge
corporation like Kodak in jeopardy. Similarly, technological changes like the entry of Android technology
in mobile phones, has made companies like Motorola obsolete, just because the mobile making
company hesitated in joining the Android revolution. Sticking to digital photography, since people are
able to take and share photographs through social media sites like Facebook and Orkut, the demand for
print copies has fallen down. The advent of online shopping firms has reduced the reliance of people on
bricks and mortar stores. The rapid growth of sites like Amazon and Alibaba has put a massive threat to
stores that have a reputation of charging higher prices.
Some of the major technological changes are in the area of Personal Monitoring and medical
consultation in the privacy of their own homes. Some of the current practices are the mobile health
industry. This is freeing up doctors and technology provides the necessary check-ups on the go. The m-
Health industry is projected to report revenues of $20.9 Billion by 2019. This is increasingly creating an
environment the need to personally connect with a physician is becoming obsolete.
In 2009, only 16 percent of U.S. hospitals were using an EHR. By 2013, about 80 percent of hospitals
eligible for CMS' meaningful use incentives program had incorporated an EHR into their organizations. In
Merck Canada-supported MIHealth’s Mobile Patient Health Record System, patients are charged an
annual fee of $59 per year, per person, or $224 for a family of four, for access to their mobile PHR. The
doctor, on the other hand, is paid a small fee for annually validating the patient’s medical information.
The fee is paid, presumably, by MiHealth Global.
PayPal and Bitcoins are changing the way people pay for the goods they purchase. NetFlix has changed
the way people watch television. Vapor cigarettes or E-cigarettes are changing the way health conscious
people smoke these days. Online grocery stores are changing the way people buy groceries these days.
There are lots of new and advanced substitutes to how people have been purchasing the commodities
they need. The big companies need to sense the opportunity and make sure they do not miss the next
big thing.
“Being good, Is good business”
The idea that corporations bear a responsibility that stretches beyond their shareholders is not new. The
scope though of responsibility shouldered by corporations towards their environment, their community
and their stakeholders has expanded in recent years. Many companies during the past years have
integrated social responsibility into their organizations core business strategies. From earlier on writing
checks to a charitable organization of about 2% of a company’s profit, organizations have moved
towards investing millions in order to reduce their carbon print or using other CSR initiatives to establish
themselves as good corporate citizens.

5. There have been few important reasons why companies have reached out to the society. Scandals at
Enron, Deepwater horizon and elsewhere have brought infamy to big businesses everywhere. Many
ratings agencies and other ranking institutes put pressures on companies by assessing not only their
financial, but also their non-financial results. Companies are being watched more than ever. Any news of
the damage to the environment of exploitation of people in the production of a company’s products can
be put on the internet instantly. But the most important driver towards the CSR cause is the aspect of
climate change.
The way in which the visionary companies like to see CSR is by viewing it as an opportunity to create
value. Once perceived as a burden on the bottom line of a company CSR is now viewed as an
opportunity to gain competitive edge.
Proctor & Gamble’s CSR initiative, Skiksha has till date helped 280,000 underprivileged children access
their right to education. Parivartan another P&G initiative has been protecting millions of adolescent
girls from getting trapped in traditional practices of unhygienic cloth for sanitary protection, by
providing timely menstrual education.
Ford Motor’s Skills for Life strategy aims to develop a skilled workforce committed to improving the
business whilst maintaining employment opportunities now and for the future.
Johnson and Johnson’s Earthwards goals to make their materials, packaging, water usage, energy usage
etc. greener by 10% by 2015 is also a great example how companies gain social impact.
Hewlett Packard’s The Joko Project in Senegal was an attempt to provide affordable Internet access
across the country. It’s collaboration with Busyinternet, a corporation in Ghana has aimed to create
Africa’s largest Internet Development Centre in Ghana.
Companies have gained competitive edge by taking initiatives to make the life of their host communities
better.
Looking Ahead

6. Through his epic, Jim Collins had laid out a foundation, trying to collate factors that differentiate
Visionary companies from other companies (called the Comparison companies). 15 years down the line,
majority of the factors do stand still, but the framework required to last in the current scenario would, in
our opinion, include the above highlighted factors.
SOURCES
1. http://www.ford.co.uk/experience-ford/AboutFord/CorporateSocialResponsibility
2. http://www.hp.com/hpinfo/globalcitizenship/08gcreport/pdf/hp_csr_full_hi.pdf
3. https://www.google.co.in/search?q=built+to+last+wikipedia&oq=built+to+last&aqs=chrome.0.6
9i59l2j69i57j69i60l3.2548j0j4&sourceid=chrome&es_sm=93&ie=UTF-8
4. The Economist Intelligence Unit.