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In New Economy or Old: Defining and Living Excellence is the Key

As the story goes, Horace Greeley said “Go West, young man” while he stayed in the East and made a fortune. Today’s Greeleys seem to say “Go Dot-com,” for a technological frontier entices the young. As with any frontier, fortunes are being made by driving a stake in the techno-firma of the new world.

Frontiers are exciting, romantic, and dangerous – precisely because the old rules cannot be enforced and the new rules haven’t yet hardened. Unusual freedom, with all of its potential and its pain, is available during a window in time. The notion that one must be quick or be dead was coined for other frontiers long past.

As Mr. Greeley knew, more could be made with less risk by promoting and selling the idea of the frontier, than by going there yourself. Thus, much is invested in myth-making, and the media happily headline the hype.

In the March issue of Fast Company magazine, a debate was staged concerning whether companies should be “built to last” or “built to flip.” The discussion is promoted as “The Battle for the Soul of the New Economy.” Jim Collins, of Built to Last fame, weighs in articulately and thoughtfully. He’s answered by a bunch of California entrepreneurs.

As is often the case in staged debates, less is offered than meets the eye. There can be no battle for the soul of the new economy (or the old economy, for that matter), for market economies have no “soul.” That is the virtue and the vice of market economies. Moreover, as Collins states: “Some companies will be built to last; some won’t. Some should be; others shouldn’t. Ultimately, that’s an artificial distinction.” And he could have gone a step further: Some parts and aspects of some companies should be built to last and some shouldn’t.

As we try to make sense of the new economy as it relates to family business, and while internet, e-business, infotelecom fusion, VC, M&A and IPO hype grab the headlines, we keep returning to two fundamental truths:

  • It’s a huge economy out there; and ­
  • There are many ways to skin a cat.

In recent years, venture capital investment has tripled from about $6 billion annually to more than $17 billion in 1998. That’s one day of running the U. S. government. That’s less than 20 percent of Bill Gate’s personal net worth. That’s about 2 ½ weeks of Wal-Mart sales. That’s maybe 5% of what’s invested in starting companies in the U.S. each year. In other words, the venture capital “industry,” for all the attention it gets, is a tiny fraction of our economy.

Our economy is gigantic with plenty of room for differing approaches to building value and success. Indeed, for the economy to be healthy and growing, different organizations must take a variety of approaches. Which begs the second truth.

There are many different goals and for each goal, there are many paths to success. There is no single one right way – new economy or old.

The most successful family businesses recognize that one maximizes one’s self and one’s progeny by responsibly applying one’s resources in constructive ends. Collins points out the late myth-maven Joseph Campbell’s conclusion: “The Holy Grail can be found only by those who lead their own lives,” then adds his own corollary: “Comparison ... is the cardinal sin of modern life.”

The real question, Collins concludes, is not whether or not a company is built to last, but whether it is “built to work.” The answer he says, rests on three criteria: “excellence, contribution and meaning.”

Excellence is usually measured by comparison -- who is fastest, strongest, smartest, luckiest, richest, etc. But, if we accept Collins’ definition of comparison as a cardinal sin (and I do), we can know excellence only by appropriately defining it for ourselves and then living with the standards we’ve developed. The best family businesses we know do exactly that. Rather than following the herd, they work hard to define excellence in their own terms, and develop systems to hold themselves accountable. Experience, maturity, patience, thoughtful collaboration and an accumulated sense of goodness all go into building the confidence required to define excellence and work consistently toward its achievement. Collins’ other criteria follow from uniquely articulated standards of excellence: Work that one can be proud of and that provides a sense of meaning and purpose beyond just making money.

Collins speaks of creating work that one can be passionate about which also makes a contribution and makes money. In the sense that business owning families are often motivated to sustain their businesses to provide special opportunities for their offspring, perhaps we should conceptualize family businesses as organisms which, across generations, can sustain and maximize the opportunity to create such work. Thus, family businesses offer a means to sustain what Collins labels “the rarest of all achievements: A life that works”-- for oneself and one’s family, even those not yet born.

Horace Greeley said “Go West” and some did. The gold they sought is gone – but other avenues of reward were discovered and are still being discovered. We hear their stories told and retold. The vast majority of pioneers, however, found their frontiers and built their lives in already established places with resources at hand. And those frontiers of old were ultimately absorbed and civilized by the lasting institutions established there.

The debate over New vs. Old is an ancient theme, played out today through the symbolism of the so-called “new” economy. The “Built to Last” vs. “Built to Flip” debate is really less about the economy than it is about philosophy. It is about whether old questions need new answers.

Do we live for today (some must, out of necessity) or for tomorrow? Do we exist for our own pleasure or for others’? Is wealth a means or an end? Do we seek businesses that are purely economic or do we wish them to represent other values too? What is excellence and how do we put it to work?

It’s not the businesses that are built to last – it is the values on which the businesses are built. And ultimately, in family businesses, the business and the values are means by which the most difficult task is attempted – building families that last and that continue to offer “lives that work” for generations to come, no matter what labels the spinmasters apply to the economy.

 

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