Friday, July 25, 2008

ദ്ര. മന്‍മോഹന്‍ സിംഗ് Speech

The following is the full text of Prime Minister Manmohan Singh's reply to the debate on the motion of confidence in the Lok Sabha:

The Leader of Opposition, Shri L.K. Advani has chosen to use all manner of abusive objectives to describe my performance. He has described me as the weakest Prime Minister, a nikamma PM, and of having devalued the office of PM. To fulfill his ambitions, he has made at least three attempts to topple our government. But on each occasion his astrologers have misled him. This pattern, I am sure, will be repeated today. At his ripe old age, I do not expect Shri Advani to change his thinking. But for his sake and India's sake, I urge him at least to change his astrologers so that he gets more accurate predictions of things to come.

As for Shri Advani's various charges, I do not wish to waste the time of the House in rebutting them. All I can say is that before leveling charges of incompetence on others, Shri Advani should do some introspection. Can our nation forgive a Home Minister who slept when the terrorists were knocking at the doors of our Parliament? Can our nation forgive a person who single handedly provided the inspiration for the destruction of the Babri Masjid with all the terrible consequences that followed? To atone for his sins, he suddenly decided to visit Pakistan and there he discovered new virtues in Mr. Jinnah. Alas, his own party and his mentors in the RSS disowned him on this issue. Can our nation approve the conduct of a Home Minister who was sleeping while Gujarat was burning leading to the loss of thousands of innocent lives? Our friends in the Left Front should ponder over the company they are forced to keep because of miscalculations by their General Secretary.

As for my conduct, it is for this august House and the people of India to judge. All I can say is that in all these years that I have been in office, whether as Finance Minister or Prime Minister, I have felt it as a sacred obligation to use the levers of power as a societal trust to be used for transforming our economy and polity, so that we can get rid of poverty, ignorance and disease which still afflict millions of our people. This is a long and arduous journey. But every step taken in this direction can make a difference. And that is what we have sought to do in the last four years. How far we have succeeded is something I leave to the judgement of the people of India.

When I look at the composition of the opportunistic group opposed to us, it is clear to me that the clash today is between two alternative visions of India's future. The one vision represented by the UPA and our allies seeks to project India as a self confident and united nation moving forward to gain its rightful place in the comity of nations, making full use of the opportunities offered by a globalised world, operating on the frontiers of modern science and technology and using modern science and technology as important instruments of national economic and social development. The opposite vision is of a motley crowd opposed to us who have come together to share the spoils of office to promote their sectional, sectarian and parochial interests. Our Left colleagues should tell us whether Shri L.K. Advani is acceptable to them as a Prime Ministerial candidate. Shri L.K. Advani should enlighten us if he will step aside as Prime Ministerial candidate of the opposition in favour of the choice of UNPA. They should take the country into confidence on this important issue.

I have already stated in my opening remarks that the House has been dragged into this debate unnecessarily. I wish our attention had not been diverted from some priority areas of national concern. These priorities are:

(i) Tackling the imported inflation caused by steep increase in oil prices. Our effort is to control inflation without hurting the rate of growth and employment.
(ii) To revitalize agriculture. We have decisively reversed the declining trend of investment and resource flow in agriculture. The Finance Minister has dealt with the measures we have taken in this regard. We have achieved a record foodgrain production of 231 million tones. But we need to redouble our efforts to improve agricultural productivity.


(iii) To improve the effectiveness of our flagship pro poor programmes such as National Rural Employment Programme, Sarva Shiksha Abhiyan, Nation-wide Mid day meal programme, Bharat Nirman to improve the quality of rural infrastructure of roads, electricity, safe drinking water, sanitation, irrigation, National Rural Health Mission and the Jawaharlal Nehru National Urban Renewal Mission. These programmes are yielding solid results. But a great deal more needs to be done to improve the quality of implementation.


(iv) We have initiated a major thrust in expanding higher education. The objective is to expand the gross enrolment ratio in higher education from 11.6 per cent to 15 per cent by the end of the 11th Plan and to 21% by the end of 12th Plan. To meet these goals, we have an ambitious programme which seeks to create 30 new universities, of which 14 will be world class, 8 new IITs, 7 new IIMs, 20 new IIITs, 5 new IISERs, 2 Schools of planning and Architecture, 10 NITs, 373 new degree colleges and 1000 new polytechnics. And these are not just plans. Three new IISERs are already operational and the remaining two will become operational from the 2008-09 academic session. Two SPAs will be starting this year. Six of the new IITs start their classes this year. The establishment of the new universities is at an advanced stage of planning.


(v) A nation wide Skill Development Programme and the enactment of the Right to Education Act,


(vi) Approval by Parliament of the new Rehabilitation and Resettlement policy and enactment of legislation to provide social security benefits to workers in the unorganized sector.


(vii) The new 15 Point Programme for Minorities, the effective implementation of empowerment programmes for the scheduled castes, scheduled tribes, paying particular emphasis on implementation of Land Rights for the tribals.


(viii) Equally important is the effective implementation of the Right to Information Act to impart utmost transparency to processes of governance. The Administrative Reforms Commission has made valuable suggestions to streamline the functioning of our public administration.

(ix) To deal firmly with terrorist elements, left wing extremism and communal elements that are attempting to undermine the security and stability of the country. We have been and will continue to vigorously pursue investigations in the major terrorist incidents that have taken place. Charge-sheets have been filed in almost all the cases. Our intelligence agencies and security forces are doing an excellent job in very difficult circumstances. They need our full support. We will take all possible steps to streamline their functioning and strengthen their effectiveness.


Considerable work has been done in all these areas but debates like the one we are having detract our attention from attending to these essential programmes and remaining items on our agenda. All the same, we will redouble our efforts to attend to these areas of priority concerns.


I say in all sincerity that this session and debate was unnecessary because I have said on several occasions that our nuclear agreement after being endorsed by the IAEA and the Nuclear Suppliers Group would be submitted to this august House for expressing its view. All I had asked our Left colleagues was : please allow us to go through the negotiating process and I will come to Parliament before operationalising the nuclear agreement. This simple courtesy which is essential for orderly functioning of any Government worth the name, particularly with regard to the conduct of foreign policy, they were not willing to grant me. They wanted a veto over every single step of negotiations which is not acceptable. They wanted me to behave as their bonded slave. The nuclear agreement may not have been mentioned in the Common Minimum Programme. However, there was an explicit mention of the need to develop closer relations with the USA but without sacrificing our independent foreign policy. The Congress Election Manifesto had explicitly referred to the need for strategic engagement with the USA and other great powers such as Russia.


In 1991, while presenting the Budget for 1991-92, as Finance Minister, I had stated : No power on earth can stop an idea whose time has come. I had then suggested to this august House that the emergence of India as a major global power was an idea whose time had come.


Carrying forward the process started by Shri Rajiv Gandhi of preparing India for the 21st century, I outlined a far reaching programme of economic reform whose fruits are now visible to every objective person. Both the Left and the BJP had then opposed the reform. Both had said we had mortgaged the economy to America and that we would bring back the East India Company. Subsequently both these parties have had a hand at running the Government. None of these parties have reversed the direction of economic policy laid down by the Congress Party in 1991. The moral of the story is that political parties should be judged not by what they say while in opposition but by what they do when entrusted with the responsibilities of power.


I am convinced that despite their opportunistic opposition to the nuclear agreement, history will compliment the UPA Government for having taken another giant step forward to lead India to become a major power centre of the evolving global economy. Jawaharlal Nehru's vision of using atomic energy as a major instrument of development will become a living reality.


What is the nuclear agreement about? It is all about widening our development options, promoting energy security in a manner which will not hurt our precious environment and which will not contribute to pollution and global warming.


India needs to grow at the rate of at least ten per cent per annum to get rid of chronic poverty, ignorance and disease which still afflict millions of our people. A basic requirement for achieving this order of growth is the availability of energy, particularly electricity. We need increasing quantities of electricity to support our agriculture, industry and to give comfort to our householders. The generation of electricity has to grow at an annual rate of 8 to 10 per cent.


Now, hydro-carbons are one source of generating power and for meeting our energy requirements. But our production of hydro-carbons both of oil and gas is far short of our growing requirements. We are heavily dependent on imports. We all know the uncertainty of supplies and of prices of imported hydro-carbons.


We have to diversify our sources of energy supply.



We have large reserves of coal but even these are inadequate to meet all our needs by 2050. But more use of coal will have an adverse impact on pollution and climate. We can develop hydro-power and we must. But many of these projects hurt the environment and displace large number of people. We must develop renewable sources of energy particularly solar energy. But we must also make full use of atomic energy which is a clean environment friendly source of energy. All over the world, there is growing realization of the importance of atomic energy to meet the challenge of energy security and climate change.


India's atomic scientists and technologists are world class. They have developed nuclear energy capacities despite heavy odds. But there are handicaps which have adversely affected our atomic energy programme. First of all, we have inadequate production of uranium. Second, the quality of our uranium resources is not comparable to those of other producers.Third, after the Pokharan nuclear test of 1974 and 1998 the outside world has imposed embargo on trade with India in nuclear materials, nuclear equipment and nuclear technology. As a result, our nuclear energy programme has suffered. Some twenty years ago, the Atomic Energy Commission had laid down a target of 10000 MW of electricity generation by the end of the twentieth century. Today, in 2008 our capacity is about 4000 MW and due to shortage of uranium many of these plants are operating at much below their capacity.


The nuclear agreement that we wish to negotiate will end India's nuclear isolation, nuclear apartheid and enable us to take advantage of international trade in nuclear materials, technologies and equipment. It will open up new opportunities for trade in dual use high technologies opening up new pathways to accelerate industrialization of our country. Given the excellent quality of our nuclear scientists and technologists, I have reasons to believe that in a reasonably short period of time, India would emerge as an important exporter of nuclear technologies, and equipment for civilian purposes.


When I say this I am reminded of the visionary leadership of Shri Rajiv Gandhi who was a strong champion of computerization and use of information technologies for nation building. At that time, many people laughed at this idea. Today, information technology and software is a sun-rise industry with an annual turnover soon approaching 50 billion US dollars. I venture to think that our atomic energy industry will play a similar role in the transformation of India's economy.


The essence of the matter is that the agreements that we negotiate with USA, Russia, France and other nuclear countries will enable us to enter into international trade for civilian use without any interference with our strategic nuclear programme. The strategic programme will continue to be developed at an autonomous pace determined solely by our own security perceptions. We have not and we will not accept any outside interference or monitoring or supervision of our strategic programme. Our strategic autonomy will never be compromised. We are willing to look at possible amendments to our Atomic Energy Act to reinforce our solemn commitment that our strategic autonomy will never be compromised.


I confirm that there is nothing in these agreements which prevents us from further nuclear tests if warranted by our national security concerns. All that we are committed to is a voluntary moratorium on further testing. Thus the nuclear agreements will not in any way affect our strategic autonomy. The cooperation that the international community is now willing to extend to us for trade in nuclear materials, technologies and equipment for civilian use will be available to us without signing the NPT or the CTBT.


This I believe is a measure of the respect that the world at large has for India, its people and their capabilities and our prospects to emerge as a major engine of growth for the world economy. I have often said that today there are no international constraints on India's development. The world marvels at our ability to seek our social and economic salvation in the framework of a functioning democracy committed to the rule of law and respect for fundamental human freedoms. The world wants India to succeed. The obstacles we face are at home, particularly in our processes of domestic governance.


I wish to remind the House that in 1998 when the Pokharan II tests were undertaken, the Group of Eight leading developed countries had passed a harsh resolution condemning India and called upon India to sign the NPT and CTBT. Today, at the Hokkaido meeting of the G-8 held recently in Japan, the Chairman's summary has welcomed cooperation in civilian nuclear energy between India and the international community. This is a measure of the sea change in the perceptions of the international community our trading with India for civilian nuclear energy purposes that has come about in less than ten years.


Our critics falsely accuse us, that in signing these agreements, we have surrendered the independence of foreign policy and made it subservient to US interests. In this context, I wish to point out that the cooperation in civil nuclear matters that we seek is not confined to the USA. Change in the NSG guidelines would be a passport to trade with 45 members of the Nuclear Supplier Group which includes Russia, France, and many other countries.


We appreciate the fact that the US has taken the lead in promoting cooperation with India for nuclear energy for civilian use. Without US initiative, India's case for approval by the IAEA or the Nuclear Suppliers Group would not have moved forward.


But this does not mean that there is any explicit or implicit constraint on India to pursue an independent foreign policy determined by our own perceptions of our enlightened national interest. Some people are spreading the rumours that there are some secret or hidden agreements over and above the documents made public. I wish to state categorically that there are no secret or hidden documents other than the 123 agreement, the Separation Plan and the draft of the safeguard agreement with the IAEA. It has also been alleged that the Hyde Act will affect India's ability to pursue an independent foreign policy. The Hyde Act does exist and it provides the US administration the authorization to enter into civil nuclear cooperation with India without insistence on full scope safeguards and without signing of the NPT. There are some prescriptive clauses but they cannot and they will not be allowed to affect in any way the conduct of our foreign policy. Our commitment is to what has been agreed in the 123 Agreement. There is nothing in this Agreement which will affect our strategic autonomy or our ability to pursue an independent foreign policy. I state categorically that our foreign policy, will at all times be determined by our own assessment of our national interest. This has been true in the past and will be true in future regarding our relations with big powers as well as with our neighbours in West Asia, notably Iran, Iraq, Palestine and the Gulf countries.


We have differed with the USA on their intervention in Iraq. I had explicitly stated at a press conference at the National Press Club in Washington DC in July 2005 that intervention in Iraq was a big mistake. With regard to Iran, our advice has been in favour of moderation and we would like that the issues relating to Iran's nuclear programme which have emerged should be resolved through dialogue and discussions in the framework of the International Atomic Energy Agency.


I should also inform the House that our relations with the Arab world are very good. Two years ago, His Majesty, King Abdullah of Saudi Arabia was the Chief Guest at our Republic Day. More recently, we have played host to the President of Iran, President of Syria, the King of Jordan, the Emir of Qatar and the Emir of Kuwait. With all these countries we have historic civilisational and cultural links which we are keen to further develop to our mutual benefit. Today, we have strategic relationship with all major powers including USA, Russia, France, UK, Germany, Japan, China, Brazil, Nigeria and South Africa. We are Forging new partnerships with countries of East Asia, South East Asia and Africa.


Conclusion


The Management and governance of the world's largest, most diverse and most vibrant democracy is the greatest challenge any person can be entrusted with, in this world. It has been my good fortune that I was entrusted with this challenge over four years ago. I thank with all sincerity the Chairperson of the UPA, the leaders of the Constituent Parties of the UPA and every member of my Party for the faith and trust they reposed in me. I once again recall with gratitude the guidance and support I have received from Shri Jyoti Basu and Sardar Harkishen Singh Surjeet.


I have often said that I am a politician by accident. I have held many diverse responsibilities. I have been a teacher, I have been an official of the Government of India, I have been a member of this greatest of Parliaments, but I have never forgotten my life as a young boy in a distant village.


Every day that I have been Prime Minister of India I have tried to remember that the first ten years of my life were spent in a village with no drinking water supply, no electricity, no hospital, no roads and nothing that we today associate with modern living. I had to walk miles to school, I had to study in the dim light of a kerosene oil lamp. This nation gave me the opportunity to ensure that such would not be the life of our children in the foreseeable future.


Sir, my conscience is clear that on every day that I have occupied this high office, I have tried to fulfill the dream of that young boy from that distant village.


The greatness of democracy is that we are all birds of passage! We are here today, gone tomorrow! But in the brief time that the people of India entrust us with this responsibility, it is our duty to be honest and sincere in the discharge of these responsibilities. As it is said in our sacred texts, we are responsible for our actions and we must act without coveting the rewards of such action. Whatever I have done in this high office I have done so with a clear conscience and the best interests of my country and our people at heart. I have no other claims to make.

(Thanks to Prof. Sunny Mathews for sending this)

Wednesday, July 23, 2008

infosys

The secret of enduring greatness Jim Colins

The secret of enduring greatness

In an age of turmoil, corporate stars rise and fall. How many will survive? A bestselling management expert makes the case for well-founded hope.

(Fortune Magazine) -- I don't know how many times I've had the Fortune 500 presented to me as Exhibit A by those who argue that it's time to give up on a 20th-century American idea. Forget about building great companies that endure, they tell me.

One technology pundit cornered me at a conference and deemed the whole premise absurd in today's world: "We live in an era when nothing can be built to last. Everything is in flux; nothing can sustain." He invoked Joseph Schumpeter, the great economist who wrote about the "perennial gale of creative destruction" wherein technological change and visionary entrepreneurs give birth to new things that obliterate old things, only to see those new things become obliterated by the next generation.

His argument feels particularly sharp today. Bear Stearns disappeared over a weekend, after more than eight decades of growth to No. 156 on the Fortune 500. Citigroup (C, Fortune 500) traces its roots to City Bank of New York which was founded in the same year Napoleon marched to Moscow and grew into a visionary global bank under mavericks like Walter Wriston and John Reed. Today Citigroup's CEO reports "unprecedented losses resulting from the sudden and severe deterioration in the U.S. subprime market" - a shock so severe that it overshadowed all the company's other accomplishments.

In 1907 Henry Ford proclaimed, "I will democratize the automobile," and then made good on his promise. Today Ford Motor (F, Fortune 500) fights to create a future for itself in the face of brutal global competition and the green revolution. Fifty-four of the Fortune 500 posted losses totaling $115 billion in 2007, an amount equal to the entire revenue base of more than 20 Fortune 500 companies.

I've been through versions of the creative-destruction argument dozens of times, with smart, well-informed people. And one of their favorite arguments invokes the Fortune 500: If you examine the list over time, you find tremendous churn - the vast majority of those on the list 50 years ago are nowhere to be found on the current list. And, yes, the data do lend credence to the argument:

Of the 500 companies that appeared on the first list, in 1955, only 71 have a place on the list today. (The 1955 list included industrial companies only, whereas today's list also includes service companies.)

  • Nearly 2,000 companies have appeared on the list since its inception, and most are long gone from it. Just because you make the list once guarantees nothing about your ability to endure.
  • Some of the most powerful companies on today's list - businesses like Intel (INTC, Fortune 500), Microsoft (MSFT, Fortune 500), Apple (AAPL, Fortune 500), Dell (DELL, Fortune 500), and Google (GOOG, Fortune 500) - grew from zero to great upon entirely new technologies, bumping venerable old companies off the list. Robert Noyce invented the integrated circuit in 1958, three years after the first Fortune 500. Dozens of companies on this year's list did not even exist in 1955.
  • Some of the most celebrated companies in history no longer even appear on the 500, having fallen from great to good to gone from the list - companies like Scott Paper, Zenith, Rubbermaid, Chrysler, Teledyne, Warner Lambert, and Bethlehem Steel - most often because they gave up their independence, and sometimes because they outright died.

But if we look through another lens, we can see a different story, a story of well-founded hope. For one thing, we find clear examples of enduring greatness.

In 1837, more than two decades before the American Civil War, William Procter and James Gamble formed a partnership to make soap and candles. In 1955, P&G stood at No. 27 on the Fortune 500; today it is No. 23. In 1886, Robert Wood Johnson, operating from the fourth floor of an abandoned wallpaper factory, issued a small catalog jam-packed with antiseptic surgical dressings and medical plasters. By 1955 his son had built Johnson & Johnson into No. 159 on the Fortune 500; today it stands at No. 35, with 45 consecutive years of increasing its dividend.

Systematic management development

In the early 20th century General Electric's Charles Coffin brought forth perhaps the most significant business innovation of the past 200 years: systematic management development. GE created generations of leaders and thereby produced more than a century of sustained success so reliable that a hiccup in quarterly profits can drive down the entire stock market. In 1955, GE was No. 4 on the Fortune 500; today it is No. 6. These companies trained leaders who could evolve and create a portfolio of flywheels - from candles to Pringles, from medical plasters to Tylenol, from light bulbs to jet engines - yet they also held tight to core values that have remained fixed for 100 years or more.

We also find companies that overcame oppressive mediocrity or worse to achieve sustained success.

In 1965, Nucor Corp., then less than one-hundredth the size of Bethlehem Steel, was on the verge of bankruptcy. With a hodgepodge of unrelated businesses and deteriorating debt ratios, the board made a move of desperation. It turned the company over to a division manager named Ken Iverson, then just 39. "Here," the board seemed to say, "you're too young to know any better. You take it!" Iverson had run Nucor's only successful division, where he'd built a weird culture of crazed productivity making steel joists. After jettisoning the worst divisions, he began to build ... and build ... and build. He and his team backward-integrated into making raw steel, creating a mini-mill, and discovered that Iverson's culture could be harnessed to produce the lowest-cost steel in America. Step by step, year by year, Iverson and his team added capacity, eventually breaking onto the Fortune 500 at No. 481 in 1980. Today, in the brutally competitive steel industry, Nucor retains a solid No. 151 on the Fortune 500, with 41 years of consecutive profitability. As a testament to the durability of Nucor's culture, the annual report continues a long-held tradition of naming every Nucor employee, more than 18,000 individuals.

We also find companies that fell from greatness but then regained their footing, standing defiant against the forces of creative destruction.

Xerox, one of the great success stories in American corporate history, entered the Fortune 500 at No. 423 in 1963 and rose to No. 21 by 1990. But then the company began to falter as high costs translated into uncompetitive prices, and by 2001, Xerox had encountered a stock price that plummeted 92% in less than two years, decreasing cash, a falling market position, and an SEC investigation. Some questioned whether Xerox could survive as an independent company. Anne Mulcahy, who did not even make the initial list of CEO candidates, caught the attention of the board with her passion and dedication for the company and its culture. When Mulcahy became Xerox CEO in 2001, after working her entire career deep inside the corporation, she refused to destroy the company in order to save it. ("I am the culture," she said. "If I can't figure out how to bring the culture with me, I'm the wrong person for the job.") Churchillian in her belief that Xerox people could prevail against all odds, she refused to capitulate, refused to sell out, refused to acknowledge the inevitability of defeat. From losses of more than $300 million in 2000 - 01, she righted the company to more than $1 billion in profits in 2007.

Just because a company stumbles - or gets smacked upside the head by an unexpected event or new challenge - does not mean that it must continue to decline. Companies do not fall primarily because of what the world does to them or because of how the world changes around them; they fall first and foremost because of what they do to themselves.

In the early 1970s, Ames Department Stores and Wal-Mart looked like identical twins. They had the exact same business model of rural discount retailing. In fact, Sam Walton copied much of his original model from Ames, and Ames later copied operating ideas from Sam. The only significant difference was that Ames operated in the Northeast, while Wal-Mart moved in concentric circles from Arkansas. Both companies delivered exceptional results, their stock-return charts looking almost like carbon copies of each other from 1972 to 1986, beating the market by more than ten times. But then Ames fell, and it continued to fall into utter irrelevance. Today Ames does not even exist, while Wal-Mart holds the No. 1 spot on the Fortune 500, with $379 billion in revenue.

The point: Here we have two companies facing almost identical circumstances with identical trajectories up to a moment in history, yet one falls and the other continues to rise. The cause simply cannot be attributed to changes in their environment.

Both Ames and Wal-Mart had strong entrepreneurial founders who guided their early growth, but whereas Sam Walton passed the company to a home-grown insider, Ames replaced its entrepreneurial leader with an outsider. Both Ames and Wal-Mart had vast, untapped opportunity with their basic strategy of low-price rural discounting, but while Wal-Mart maintained steady organic growth consistent with that strategy, Ames deviated from the strategy in favor of wild growth. In 1988, it acquired Zayre, aiming to double the size of the company in a single year. Wal-Mart retained focus on small towns before making an evolution into urban sites; Ames revolutionized itself overnight into urban retailing and catapulted itself into decline. Wal-Mart created its own success, and Ames caused its own death.

It depends on what you do to yourself

It doesn't matter what lens we look through - the lens of those that go from good to great, the lens of zero to great in exciting new industries, or the lens of those that prevail in adversity and last 100 years - one lesson stands out: Whether you prevail or fail, endure or die, whether you make it onto the Fortune 500, and whether you stay there, depends more on what you do to yourself than on what the world does to you.

Teledyne could still have been on the list today - admired, independent, successful - if its extraordinary co-founder, Henry Singleton, had transcended his "genius with 1,000 helpers" style of leadership to build an executive team and culture that could thrive beyond his visionary presence.

Bethlehem Steel, which once ranked as high as No. 8 on the 500, could still be on the list if it had confronted the brutal fact that its byzantine class stratification of executives and workers could no longer succeed in the face of mini-mills and low-cost steel. Global competition is often the reason given for the undoing of Bethlehem Steel. But how does that excuse hold up in the face of the prosperous Nucor and the revitalized U.S. Steel? It doesn't.

Throughout history the greatest companies have used adverse times to their advantage. In the 1970s, under the farsighted leadership of Dick Cooley and Carl Reichardt, Wells Fargo created a culture of discipline years before deregulation upended the banking industry. It built a team of Spartans: cost-obsessed executives exhilarated by the prospect of fierce competition. When deregulation ripped away the protective cocoon that had enabled mediocre banks to survive, Wells Fargo pounced. It bought Crocker Bank, pulverizing its languid culture into the Spartan ethic, and systematically invaded Bank of America's strongholds in California, trouncing its ill-prepared cross-street rival (which in turn merged with an upstart regional bank out of North Carolina).

Just because Joseph Schumpeter's creative-destruction argument proves correct for the vast majority of businesses does not mean that the companies that create those businesses must fall and die - after all, you can practice creative destruction inside your own walls and thereby endure for decades, perhaps centuries. Yes, all products, services, markets, and even specific solutions to social problems eventually become obsolete. But that does not mean that the organizations and societies that produce them must themselves become obsolete and irrelevant.

When you've built an institution with values and a purpose beyond just making money - when you've built a culture that makes a distinctive contribution while delivering exceptional results - why would you surrender to the forces of mediocrity and succumb to irrelevance? And why would you give up on the idea that you can create something that not only lasts but also deserves to last?

The best corporate leaders never point out the window to blame external conditions; they look in the mirror and say, "We are responsible for our results!" Those who take personal credit for good times but blame external events in bad times simply do not deserve to lead our institutions. No law of nature dictates that a great institution must inevitably fall, at least not within a human lifetime. That most do fall - and we cannot deny this fact - does not mean you have to be one of them.

Jim Collins is the author of "Good to Great" and co-author of "Built to Last."

Research Associate Susan M. Kaufman contributed to this article. To top of page

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Enduring Greatness - Jim Colins

http://money.cnn.com/2008/04/18/news/companies/enduring_greatness.fortune/index.htm

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