One of the most popular books about organizations in the past decade was Built to Last published by Jim Collins and Jerry Porras in 2004. The subtitle of the book for the few of you who have not read it is "Successful Habits of Visionary Companies" and it's a great read with many insights. However, I think the principles of this book are being seriously put to test today by the new reality being driven by the rapid acceleration of technology. I submit to you today, that companies, especially those in the tech sector, are not building to last but instead are building to win NOW. Let me explain.
Years ago, I was with Reid Hoffman, Chairman and Founder of LinkedIn, when he was asked by a reporter what company or competitor did he worry about the most. It was early 2010, and, at the time LinkedIn was growing fast but was still far from the powerhouse it is today. Reid's answer to this question struck me and said so much about the challenge of growing a company today. Reid replied, "I worry more about the company that has yet to be founded than I worry about an existing company or competitor." Think about that comment for a second. Reid was saying that he worried more about how an upstart company could come and possibly undermine the paradigm of his business and change the model such that it would hurt him more than a Facebook or Google might. This was a powerful statement.
Reid's words have stuck with me so much since hearing them, because he was also speaking about the increasing pressure companies face today to build fast and have their business thrive quickly. It used to be that when you built a business you had a good sense of the competitive landscape and you knew for a good period of time, several years, at least, that your idea and model would probably not be challenged. But today, you almost have to expect that your idea will be challenged and somebody will probably build something competitive especially if your model looks to be successful. Why? Because they can and because its easier to do today than ever before. Look how fast Uber, Square and Airbnb came on to the scene or how fast SnapChat and WhatsApp earned billion dollar valuations. It feels like this happened overnight when seen through the lense of traditional business trajectories.
Information is shared so fast today and companies require far less capital than ever before to reach a viable status. Competition is intense and what makes it all the more challenging is that long-term planning beyond one or two years seems silly. How can one even predict what is happening in the competitive landscape five years out when so much is changing in the present? And if you cannot plan your business out very far, how can you start thinking about organization decisions with a 100 year mindset?
Companies today have to focus on the now--they have no choice. If they go too slow, they risk opening a window for a competitor to build something better or create a model that will disrupt their offerings. This is why I believe that a new model is emerging whereby companies must focus on the now, on getting viable fast and the effort it takes to do that is so consuming that the concept of building a 100 year company, or said another way, the Collins' and Porras' "Built to Last" idea does not seem relevant especially in the early years of a company. And, while the speed it takes for a company to become viable is an entrepreneur's dream, it creates a great deal of pressure for organizations to succeed quickly and build a moat to protect their business because competition can come quickly and from anywhere.
While at LinkedIn, we did try to do some long-range scenario planning, but over time we found it really difficult and rarely did even an annual plan not get adjusted mid-year. Virtually every year I was at LinkedIn, either an acquisition took place (Rypple) or a new product was introduced by a competitor (Google Circles), or, a new competitor (Branch Out) came onto the scene, forcing our leadership team to the table to do some immediate threat assessments and to reconsider our plans.
This emerging pressure has many organizational implications. Since you need to win quickly and win now, companies must put big resources behind recruiting and getting the right talent in ASAP. In the early years, longer range organization topics like succession planning, performance management, organizational design or learning and development roadmaps almost have to take a back seat to the massively critical immediate needs of building a team so the company can get on its feet quickly before a competitor or a new player enters with something better.
I am not saying this approach is right and I am not saying you should not think about your decisions within a context of building a 100 year company. I am simply pointing out a reality which is that in the early stages of starting your company, even in the first few years, immediacy is the priority; finding ways to win now, hiring fast and building your mote is the priority. If you do it right and you see some solid success, then you can begin to ease into thinking more long term about how you will design and run your organization. In many ways, it's like starting a marathon at a sprint pace, whereby you must focus on critical needs to win as fast as possible and establish yourself before somebody else does.