An insightful article in the New York Times by Tony Schwartz, CEO of The Energy Project, highlights the fact that many of the highly touted business consultants and authors — who describe high performing companies and why they will remain so — are, well…often flat wrong.
Schwartz writes that the most striking example involves Microsoft, which renowned consultant Jim Collins and his co-author of Great by Choice, Morten T. Hansen, cited, Schwartz points out, as “a great performer, and Apple, which they cite as the comparative laggard. Yes, you read that right. Here’s why: the 15-year period the authors happened to examine was 1987 to 2002.”
Schwartz asks, “How could so much research miss the mark by so far?” He explains that “…huge changes in technology in the last decade have redefined what it takes to be successful – elevating factors like the role of disruptive innovation, quickness to market and speed of responsiveness to competitors. What worked for Microsoft in the era that Mr. Collins and Mr. Hansen studied proved to be wholly inadequate to compete with Apple in the era that immediately followed.”
The prime reason Schwartz cites for getting it wrong is “the definition Mr. Collins uses for greatness…Maximizing returns for shareholders over a given period of time is narrow, one-dimensional and woefully insufficient. In an increasingly complex and interdependent world, a truly great company requires a far richer mix of qualities.”
In contrast, Schwartz emphasizes that “A company’s greatness is grounded in doing the greatest good for the greatest number of people, and the least harm. It is neither first nor foremost about maximizing short-term return for shareholders. Rather, it is about investing in and valuing all stakeholders – employees, customers, suppliers, the community and the planet – in order to generate the greatest value over the longest term for all parties, including the shareholders.”
That’s the key.
For Schwartz’s complete article, click here.