BUILD TO LAST.

• Author: CASSIDY, SAM
• Position: Business ethics and businesses that last

DID YOU EVER WONDER HOW SOME COMPANIES seem to outperform the competition almost regardless of the business climate? New products come and go, interest rates rise and fall. Politics, wars, pestilence and business cycles present challenge after challenge. Through it all, a handful of companies seem to always land on their feet. Why? How do they do it?

Two Stanford business-school professors decided to answer that question in the book "Built to Last -- Successful Habits of Visionary Companies." First published in 1994, the book, through several new editions, has become a classic exposition of the differences between companies that are merely good and those that have established long-standing reputations for excellence.

Next month, Bill Daniels will be honored posthumously with the second Community Star Award given through the 10-year-old Colorado Ethics in Business Awards. Daniels, who died March 7, 2000, endowed the business school at the University of Denver to incorporate the values demonstrated by "Built to Last" companies in the core of the school's curriculum. The awards, founded by the Daniels College of Business at DU, ColoradoBiz and the Samaritan Institute, offer annual tribute to Colorado models of the kind of leadership Daniels hoped to foster in the business community.

Authors James C. Collins and Jerry I. Porras cast their study of best-performing companies in the language of company values. Their methodology was simple. Using leading CEOs to judge their peers, they established criteria for selection of their "visionary companies," then chose a comparison company in the same industry that was not as admired or as successful as the visionary company. 3M, for example, was chosen one of the 18 visionary companies, then compared with Norton Corp., a major Northeast manufacturer. American Express was compared with Wells Fargo, Boeing with McDonnell Douglas, General Electric with Westinghouse and Hewlett-Packard with Texas Instruments.

The visionary companies exhibited extraordinary long-term performance for their investors. If you had invested $1 in the visionaries in 1926, your $1 would have grown to $6,356 in 1990. The same $1 invested in the comparison companies yielded much less, $955 in the same period. And the visionary companies looked even better compared with the general market. There your $1 investment would have reaped just $415 over the same 64 years.

But visionary companies have done far more than achieve handsome returns for their investors. They have changed the world in which we live.

The comparison companies were hardly dogs, as you can see. They significantly outperformed the market and are well-known. Collins and Porras found, however, that it did not take a great idea to start a successful company, and it did not take a great charismatic leader to sustain one. It may seem odd but the most economically successful companies were less focused on making a profit as their primary objective. Contrary to advice of the Milton Friedmans and Al Dunlaps (and many respected business schools), these companies, instead of focusing on profits and competition, developed core visions that undertook the task of improving their world. Profits were the result of the effort, not the primary objective.

Another striking distinction between the visionary companies and their comparison companies was the development of a "core ideology" and an "envisioned future." According to the authors, this critical "core ideology" expresses both "what we stand for" and "why we exist." It is not composed or wordsmithed, but is discovered by looking inside the company to find what is already there.

Core ideology is composed of two elements: core values and core purpose. Core values are the company's essential and enduring tenets, timeless guiding principles. These are values that the company would not violate even if to follow those...