New Delhi Times - Gaurav Bhatnagar reporting from New Delhi, India

I have been reading the excellent book "Built to Last" lately. The book analyzes why some companies last while others just peak out and even disappear with time. According to the book, one of the key factors that is common amongst most long lasting companies is a well defined reason for existence. From my reading of the book, I can see two key reasons why many companies don't last the test of time:

1. Company was created to exploit a particular short lived oppurtunity. An example would be scores of body-shopping companies that mushroomed at the time of Y2K. There was a very specific problem that needed to be solved and obviously, money to be made in the short term. Founders of many of those companies would have realized even when they started that this was a small window of oppurtunity. So they perhaps didn't  mind cashing out and closing shop once the oppurtunity went away. Note that I am not saying it is wrong to start a business on the basis of a lucrative immediate oppurtunity. But that can only be the starting point. Companies like Infosys and Wipro used the same Y2K opportunity to propel themselves to the next level. They had long term vision and perspective. They did not cash out but instead reinvested and diversified with the money they made at that time. Which is why these companies are still around and flourishing.

2. Company revolved around its co-founders/CEO. It is natural that a company's direction and growth depend on the abilities of its co-founders. But this dependence must reduce with time. The company must become bigger than its founders. It is surprising how many very big companies have thrived solely on the charisma, leadership or business intellect of its founder. The problem with "larger than life CEOs" is that they can't last forever. They will leave one day. And if the company was too dependent on the top guy, it runs the risk of losing direction and focus. The book gives several such examples of large companies that went downhill after a change of guard at the top.

There are several other interesting cases presented in the book. I am not even half through it yet but I will highly recommend it to anybody involved with running a company.