Stanford Business School Magazine

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What's Your Choice

Our book, Built to Last, identifies 18 visionary companies that have been in existence more than 40 years, traces their historical development, and examines how they differed over time from a set of 18 comparison companies. To identify the visionary companies, we asked 700 CEOs from a broad range of Fortune 500 and Inc. 500 companies to nominate up to five companies they perceived to be "highly visionary." After receiving 165 responses, we pared the list to include the 18 most frequently mentioned companies, shown on page 19.

Before you turn the page, pause for a moment and compose your own mental list of visionary companies. Ask yourself these questions about each one.

  • Is it a premier institution in its industry?
  • Is it widely admired by knowledgeable business people?
  • Has it made an indelible imprint on the world in which we live?
  • Has it had multiple generations of chief executives?
  • Has it been through multiple product (or service) life cycles?
  • Was it founded before 1950?

    Examine your list of companies. Do you notice any common themes? What might explain the companies' enduring quality and prosperity? How might they be different from others? Now turn to the sidebar on page 19 to see the companies we selected as visionary companies and those we decided had the same opportunities in life but didn't attain the same stature.

    - J.C.C. and J.I.P.

    CEOs' choice: The top firms

    We created our list of visionary companies by identifying the 20 organizations most frequently mentioned by the CEOs we surveyed. We then eliminated from the list companies founded after 1950, reasoning that those companies had not proven themselves to be more than beneficiaries of a single leader or a single great idea. The youngest companies in our study were founded in 1945 and the oldest in 1812. At the time of our survey, the companies averaged 93 years of age, with an average founding date of 1897 and a median of 1902.

    As you will see, the "comparison companies" in our study are good companies, having survived as long as the visionary companies and having outperformed the general stock market. But they don't quite match up to the overall stature of the visionary companies. In most cases, you can think of the visionary company as the gold medalist and the comparison company as the silver or bronze medalist.

    - J.C.C. and J.I.P.

    As extraordinary as they are, the visionary companies do not have perfect, unblemished records. All have taken a serious tumble at least once. Yet they display a remarkable resiliency. As a result, visionary companies attain extraordinary long term performance.

    Suppose you made equal $1 investments in a general market stock fund, a comparison companies stock fund, and a visionary companies stock fund on January 1, 1926. If you reinvested all dividends and made appropriate adjustments for when the companies became available on the stock exchange, your $1 in the general market fund would have grown to $415 on December 91, 1990 -not bad. Your $1 invested in the group of comparison companies would have grown to $955 -more than twice the return of the general market. But your $1 in the visionary companies stock fund would have grown to $6,356 -more the six times the comparison companies fund and more than fifteen time the general market.

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