Tuesday, May 26, 2009

Built to Last

My first exposure to the business guru Jim Collins came during a conference call in the late 1990s. I was sitting in a conference room in Northern New Jersey with several colleagues while our division head was on the speaker phone from his office in Southern California. The division head had announced two challenging new goals for us and one of my colleagues had apparently asked him which one should demand more of our attention. I wasn't listening too closely at that point. The division head's response caught my attention though, when I thought I heard him extol the "genius of the ant". "The genius of the ant," I thought, "what the hell is he talking about?". After another sentence or two it was clear that he was referring to one of the "myths" Jim Collins (pictured above, rock climbing) debunked on p.10 of his book, Built to Last: Successful Habits of Visionary Companies:

Visionary companies do not brutalize themselves with the "Tyranny of the Or" -- the purely rational view that says you can have either A or B, but not both.


Instead, they embrace the "Genius of the And" -- the paradoxical view that allows them to pursue both A and B at the same time.

At the time, I thought: another management guru serves his purpose, by letting a manager parrot him to rationalize why he set an unrealistic goal. I was scheduled to be interviewed by that division head for a promotion in a couple of weeks, so I decided to read the book before the interview. The book was better and more substantive than I had expected. In it, Collins compared companies he considered great with companies in the same industries he considered also-rans, and tried to explain what made the great ones great. One of the invidious comparisons in the book, Merck (great) v. Pfizer (also-ran) seemed questionable by the late 1990s, when Pfizer was raking in money from Viagra, but I was reminded of it a couple of weeks ago when Pfizer announced that it would start giving away Viagra, Lipitor, and a number of other drugs to current patients who lost their jobs during this recession.

In "Built to Last", Collins had written that one of the things that made Merck great was the company's idealism, and as an example he cited the company's decision to give away Mectizan, the cure it had developed for River Blindness, when it couldn't find a third party to pay for the drug. Collins also quoted then-Merck CEO Roy Vagelos on the decision:

Asked why Merck made the Mectizan decision, Vagelos pointed out that the failure to go forward with the project would have demoralized Merck scientists -- scientists working for a company that viewed itself as "in the business of preserving and improving human life." He also commented:

When I first went to Japan fifteen years ago, I was told by Japanese business people that it was Merck that brought streptomycin to Japan after World War II, to eliminate tuberculosis which was eating up their society. We did that. We didn't make any money. But it's no accident that Merck is the largest American pharmaceutical company in Japan today. The long-term consequences of [such actions] are not always clear, but somehow I think they always pay off.

Perhaps Pfizer CEO Jeffrey Kindler has read "Built to Last"? That thought went through my mind when I heard the Pfizer announcement a couple of weeks ago, but I didn't get around to blogging about it. I was reminded of it by the cover article on Jim Collins in this past Sunday's New York Times business section, "For this Guru, No Question is Too Big". The photo above, by Kevin Moloney, accompanied that article.

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