In Built to Last, Jim Collins and Jerry Porras describe the results of their 6-year research project to identify and understand a slate of visionary “gold-medal” companies. The criteria were:
- premier institution in its industry
- widely admired by knowledgeable businesspeople
- made an indelible imprint on the world in which we live
- had multiple generations of chief executives
- been through multiple product or service lifecycles
- founded before 1950
Against each visionary company, they compared a silver- or bronze-medal caliber company. Some of the visionary-comparison company pairs were:
visionary company comparison company Ford GM GE Westinghouse Hewlett-Packard Texas Instruments Marriott Howard Johnson
Among other things, they compared the financial performance of the 18 visionary companies with the 18 comparison companies and the general market. For $1 invested 1 Jan 1926, it would have grown to, on 31 Dec 1990, $415 in the general market, $955 in the index of comparison companies, or $6356 in the index of the visionary companies. This financial performance is in addition to the criteria listed above. Clearly, being a visionary company means changing the world while also creating stellar returns. One of the visionary companies profiled, Johnson and Johnson, has never had an unprofitable year!
Collins and Porras and their team of researchers studied the entire history of each visionary and comparison company. Among their findings, they claim this:
Our research showed that a fundamental element in the “ticking clock” of a visionary company is a core ideology core values and sense of purpose beyond just making money that guides and inspires people throughout an organization and remains relatively fixed for long periods of time.
They support this claim with case study after case study of visionary companies operating in accordance with an articulated ideology, sometimes at the expense of short-term profits, as Merck did with Mectizan, or in the absence of solid marketing data to support a product launch, as Sony did again and again, with “the first magnetic tape recorder in Japan (1950), the first all-transistor radio (1955), the first pocket-sized radio (1957), the first home-use videotape recorder (1964), and the Sony Walkman (1979).”
When examining the service-oriented visionary companies, the ideological edge was most prominent. Each company was rated on ideology on a scale running from 4 to 12. Marriott bested Howard Johnson by 6 points, Nordstrom bested Melville by 3 points, Wal-Mart bested Ames by 6 points, and Disney bested Columbia by 7 points.
If we are persuaded by the work of Collins and Porras, then we must conclude that core ideology is an essential part of what it means to be a visionary company. But must this ideology be something in particular? Collins and Porras say no:
In a visionary company, the core values need no rational or external justification. Nor do they sway with the trends and fads of the day. Nor even do they shift in response to changing market conditions.
Further, they caution:
Core ideology does not come from mimicking the values of other companies even highly visionary companies; it does not come from following the dictates of outsiders; it does not come from reading management books; and it does not come from a sterile intellectual exercise of “calculating” what values would be most pragmatic, most popular, or most profitable. When articulating and codifying core ideology, the key step is to capture what is authentically believed, not what other companies set as their values or what the outside world thinks the ideology should be. Let’s apply this now to a libertarian security company.
As I have argued before, trying a security business model as envisioned by libertarians will likely require starting a new company. And so, while Securitas, for example, may well be a visionary company in its own right (I am not persuaded that it is), it likely does not have the entrepreneurial vision to move in the direction of subscription-based patrol and restitution for residences. Their work, and that of most security companies in the US, continues to be focused on business, government, and other large, institutional clients. I claim that a new security company that has such libertarian models within its sights must be independently launched for these security models ever to be tried.
When this new security company is launched, it has the potential to be a visionary security company. One essential element of such a company is that it adopt an ideology. What should be the core ideology of a visionary libertarian security company? Libertarian ideology, of course! But what does that mean?
Nozick (in)famously argued in Anarchy, State, and Utopia that a likely historical consequent of free competition in the provision of security would be the establishment of a geographic monopoly company that forced its “customers” to pay whatever rate it chose. Murray Rothbard rightly ridiculed this in the Journal of Libertarian Studies as the “immaculate conception of the state." I have argued elsewhere that the main flaw in Nozick’s argument is that he presumes that the security and adjudication companies would be one and the same, when it is clearly not in their interest to combine. But, this is a good value to enshrine: we will not be judges in our own cases, or in the cases of our clients.
Further, we might worry that our company might not play well with others. Again, I have argued here that it is in the interest of such a company to cooperate with competitors, including tax-funded patrol, in the capturing of data on crime, patrol services rendered, share data with insurance companies, and even establish a patrol-credit clearinghouse to fairly compete with other companies in the same jurisdiction. So, another value to enshrine: we will cheerfully cooperate with competing patrol and indemnification providers.
One of the dangers of being both a visionary company and a patrol-and-restitution company is that visionary companies are often secretive about their internal operations. However, it is in the best interest of a patrol-and-restitution company to be transparent in its operations, procedures, and cases. There are some areas (employee privacy, pending cases) that must be confidential, but the goodwill and trust that transparency create will be invaluable to the company. I do not mean revealing a little more than other companies I mean completely transparent. As a value: our policies, procedures, operations, and finances will be open to the public.
There are many other values a visionary patrol and restitution company might want to hold. Some of those are typical of a service industry, such as: continuous improvement, excellence in reputation, hard work and productivity, service to the customer, and running lean. These are important considerations, but the most worthwhile value to uphold in the security industry is one that Securitas works on constantly: raising the status of security professionals. I have argued here that the subscription patrol and restitution business model is particularly well-suited to this worthwhile goal, since patrol work under this business model is likely to be more demanding than patrol work by, say, a Sheriff’s Deputy. As a value: our staff will continually learn and improve, and be of the highest caliber in capability, productivity, and integrity.
To recapitulate, the values are:
- Justice. We are not arbiters in our own cases, or in the cases of our clients.
- Cooperation. We cheerfully cooperate with all providers of patrol, insurance, and adjudication.
- Transparency. Our policies, procedures, operations, and finances are open to the public.
- Personal Excellence. Our staff continually learn and improve, and are of the highest caliber in capability, productivity, and integrity.
But an ideology is more than values. To be compelling, there must be a purpose. For Merck, it is victory against disease and help to humankind. For Sony, it is applying advanced technology to the life of the general public, and the elevation of the nation’s culture. Johnson and Johnson has its Credo. It is hard to follow acts such as these, but I offer this:
To improve our community by reducing fear, reducing crime, reducing recidivism, and building meaningful connections between neighbors and community organizations of every type.
Defending this purpose, I point out that patrol is a good itself, regardless of its effects, so that reducing fear is an important goal. Reducing crime is obvious. Reducing recidivism is less obvious. Since our operating procedure will be to attempt to engage offenders in mediation or arbitration, more restitutive justice will take place than in our absence. Some studies show that participation in mediation reduces recidivism, and there are reasons to think that the same reduction would accrue to arbitration. This reduction in recidivism seems to be partly due to the creation of positive social bonds between victim and offender.
But building meaningful connections between people in a community can be accomplished in other ways, and has a multitude of positive effects, among which are the reduction of crime. This is an important element of the purpose of a visionary patrol and restitution company. Just as in the age of kings, outstanding men and families rose to the stature of judge or king in a geographical area; so, the patrol and restitution company must rise to prominence, but in a modern way that respects liberty. A possible strategy for doing just that is to be a Gladwellian connector for the community, bringing together, for instance, the family that has just had a reduction in income with the local Christmas charity. As the eyes and ears of the community, the company would be well-positioned to fill this essential role, which could benefit its customers and the community at large.
January 8, 2007