The Best of the Best

Visionary Companies Visionary companies are premier institutions in their industries, widely admired by their peers and having a long track record of making a significant impact on the world around them. The key point is that a visionary company is an organization, not an individual or product. Despite facing setbacks and mistakes, visionary companies display a remarkable resiliency, an ability to bounce back from adversity. As a result, visionary companies attain extraordinary longterm performance. Twelve Shattered Myths
y

Myth 1: It takes a great idea to start a great company. Few of the visionary companies began life with a great idea. In fact, some began life without any specific idea and a few even began with outright failures.

Myth 2: Visionary companies require great and charismatic visionary leaders. A charismatic visionary leader is absolutely not required for a visionary company They concentrated more on architecting an enduring institution than on being a great individual leader.

Myth 3: The most successful companies exist first and foremost to maximize profits. Visionary companies pursue a cluster of objectives, of which making money is only oneand not necessarily the primary one. Theyre equally guided by a core ideology.

Myth 4: Visionary companies share a common subset of correct core values. There is no right set of core values for being a visionary company. The crucial variable is not the content of a companys ideology, but how deeply it believes its ideology.

Myth 5: The only constant is change. A visionary company almost religiously preserves its core ideology. [However, they] display a powerful drive for progress that enables them to change and adapt without compromising their cherished core ideals.

Myth 6: Blue-chip companies play it safe. Visionary companies may appear straitlaced and conservative to outsiders, but theyre not afraid to make bold commitments to Big Hairy Audacious Goals (BHAGs).

Myth 7: Visionary companies are great places to work, for everyone. Only those who fit extremely well with the core ideology and demanding standards of a visionary company will find it a great place to work.

Myth 8: Highly successful companies make their best moves by brilliant and complex strategic planning. Visionary companies make some of their best moves by experimentation, trial and error, opportunism, andquite literallyaccident.

Myth 9: Companies should hire outside CEOs to stimulate fundamental change. Home-grown management rules at the visionary companies to a far greater degree than at comparison companies.

Myth 10: The most successful companies focus primarily on beating the competition. Visionary companies focus primarily on beating themselves.

Myth 11: You cant have your cake and eat it too. Visionary companies do not [believe in the] purely rational view that says you can have either A OR B, but not both. They embrace the paradoxical view that allows them to pursue both A AND B at the same time.

Myth 12: Companies become visionary primarily through vision statements. Creating a statement can be a helpful step but it is only one of thousands of steps in a never-ending process.

Clock Building, Not Time Telling

Having a great idea or being a charismatic visionary leader is time telling; building a company that can prosper far beyond the presence of any single leader and through multiple product life cycles is clock building. The Myth of the Great Idea Few of the visionary companies in our study can trace their roots to a great idea or fabulous initial product. Some began with outright failures. Waiting for The Great Idea Might Be a Bad Idea If you want to start a visionary company but have not yet taken the plunge because you dont have a great idea, we encourage you to lift from your shoulders the burden of the great-idea myth. The Company Itself is the Ultimate Creation

Never, never, never give up. But what to persist with? Their answer: The company. Be prepared to kill, revise, or evolve an idea but never give up on the company. The Myth of the Great and Charismatic Leader A high-profile, charismatic style is absolutely not required Perhaps the continuity of superb individuals atop visionary companies stems from the companies being outstanding organizations, not the other way around. An Architectural Approach: Clock Builders at Work The evidence suggests to us that the key people at formative stages of the visionary companies had a stronger organizational orientation than in the comparison companies, regardless of their personal leadership style. The Message for CEOs, Managers, and Entrepreneurs If youre involved in building and managing a company think less in terms of being a brilliant product visionary or seeking the personality characteristics of charismatic leadership, and to think more in terms of being an organizational visionary and building the characteristics of a visionary company. Bill Hewlett and Dave Packards ultimate creation wasnt the audio oscilloscope or the pocket calculator. It was the Hewlett-Packard Company and the HP Way. If youre a high-profile charismatic leader, fine. But if youre not, then thats fine, too, for youre in good company right along with those that built companies like 3M, P&G, Sony, Boeing, HP, and Merck. Not a bad crowd.

No Tyranny of the OR
The Tyranny of the OR pushes people to believe that things must be either A OR B, but not both. Highly visionary companies liberate themselves with the Genius of the ANDthe ability to embrace both at the same time.

More Than Profits

A fundamental element of a visionary company is a core ideologycore values and sense of purpose beyond just making moneythat guides and inspires people throughout the organization and remains relatively fixed for long periods of time. Pragmatic Idealism (No Tyranny of the OR) Visionary companies aim for both high ideals and pragmatic self-interest. Core Ideology: Exploding the Profit Myth We did not find maximizing shareholder wealth or profit maximization as the dominant driving force or primary objective through the history of most of the visionary companies. Is There a Right Ideology? No single [value] shows up consistently across all the visionary companies. The critical issue is whether it [even] has a core ideology.

Words or Deeds? Visionary companies dont merely declare an ideology; they also take steps to make the ideology pervasive throughout the organization and transcend any individual leader. Guidelines for CEOs, Managers, and Entrepreneurs Core Ideology = Core Values + Purpose Core Values The organizations essential and enduring tenetsa small set of general guiding principles; not to be confused with specific cultural or operating practices; not to be compromised for financial gain or short-term expediency. Purpose The organizations fundamental reasons for existence beyond just making moneya perpetual guiding star on the horizon; not to be confused with specific goals or business strategies. Profitability is a necessary condition for existence and a means to more important ends, but it is not the end in itself for many of the visionary companies. Profit is like oxygen, food, water, and blood for the body; they are not the point of life, but without them, there is no life. Visionary companies like Motorola dont see it as a choice between living their values or being pragmatic; they see it as a challenge to find pragmatic solutions and behave consistent with their core values. In short, we did not find any specific ideological content essential to being a visionary company. Our research indicates that the authenticity of the ideology and the extent to which a company attains consistent alignment with the ideology counts more than the content of the ideology. 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.

Preserve the Core/Stimulate Progress

A visionary company carefully preserves and protects its core ideology, yet all the specific manifestations of its core ideology must be open for change and evolution. It is absolutely essential not to confuse core ideology with culture, strategy, tactics, operations, policies, or other noncore practices. Drive for Progress Core ideology works hand in hand with a relentless drive for progress that impels change and forward movement in all that is not part of the core ideology. An Internal Drive

The drive to go further, to do better, to create new possibilities needs no external justification. The drive for progress is never satisfied with the status quo, even when the status quo is working well. Preserve the Core and Stimulate Progress A visionary company does not seek mere balance between core and progress; it seeks to be both highly ideological and highly progressive at the same time, all the time. Key Concepts for CEOs, Managers, and Entrepreneurs

This framework has two layers. You can think of the top layer as a set of guiding intangibles that are necessary requirements. To become a visionary company requires translating these intangibles down into the second layer. Intentions are all fine and good, but it is the translation of those intentions into concrete items mechanisms with teeththat can make the difference between becoming a visionary company or forever remaining a wannabe. If you are involved in building and managing an organization, the single most important point to take away from this book is the critical importance of creating tangible mechanisms aligned to preserve the core and stimulate progress. This is the essence of clock building.

Big Hairy Audacious Goals

Visionary companies have a commitment to challenging, audaciousand often riskygoals and projects toward which a visionary company channels its efforts. BHAGs: A Powerful Mechanism to Stimulate Progress There is a difference between merely having a goal and becoming committed to a huge, daunting challenge. A Clearand CompellingGoal

A true BHAG is clear and compelling and serves as a unifying focal point of effort often creating immense team spirit. It [also] has a clear finish line. Commitment and Risk A goal cannot be classified as a BHAG without a high level of commitment to the goal. The Hubris Factor Highly visionary companies seem to have self-confidence bordering on hubris. The Goal, Not the Leader (Clock Building, Not Time Telling) The key mechanism at work here is not charismatic leadership. The goal itself [is] the [key] motivating mechanism. BHAGs and the Postheroic Leader Stall Corporations regularly face the dilemma of how to maintain momentum after the departure of highly energetic leaders (often founders). Guidelines for CEOs, Managers, and Entrepreneurs A BHAG should be:
y y y y y

So clear and compelling that it requires little or no explanation. Fall well outside your comfort zone. So bold and exciting that it would continue even if the organizations leaders disappeared. Inherently dangerous enough that, once achieved, an organization can stall and drift into the weve arrived syndrome. Consistent with a companys core ideology.

A BHAG engages peopleit reaches out and grabs them in the gut. It is tangible, energizing, highly focused. People get it right away; it takes little or no explanation. As in the Philip Morris case, BHAGs are bold, falling in the gray area where reason and prudence might say This is unreasonable, but the drive for progress says, We believe we can do it nonetheless. Again, these arent just goals; they are Big Hairy Audacious Goals. The BHAGs looked more audacious to outsiders than to insiders. The visionary companies didnt see their audacity as taunting the gods. It simply never occurred to them that they couldnt do what they set out to do.

Cult-Like Cultures
Visionary companies are great places to work for only those who buy in to the core ideology; those who dont fit with the ideology are ejected like a virus. This also helps to preserve the core. Ejected Like a Virus! Visionary companies tend to be more demanding of their people than other companies, both in terms of performance and congruence with the ideology. Joining these

companies [is like] joining an extremely tight-knit group or society. And if you dont fit, youd better not join. The Message for CEOs, Managers, and Entrepreneurs Unlike many religious sects or social movements which often revolve around a charismatic cult leader (a cult of personality), visionary companies tend to be cult-like around their ideologies. Creating an environment that reinforces dedication to an enduring core ideology is clock building. A cult-like culture can be dangerous and limiting if not complemented with the other side of the yin-yang. Cult-like cultures, which preserve the core, must be counterweighted with a huge dose of stimulating progress.

Ideological control preserves the core while operational autonomy stimulates progress. Visionary, we learned, does not mean soft and undisciplined. Quite the contrary. Because the visionary companies have such clarity about who they are, what theyre all about, and what theyre trying to achieve, they tend to not have much room for people unwilling or unsuited to their demanding standards. IBM attained its greatest successand displayed its greatest ability to adapt to a changing worldduring the same era that it displayed its strongest cult-like culture. The point of this chapter is not that you should set out to create a cult of personality. Thats the last thing you should do.

Try a Lot of Stuff and Keep What Works

Visionary companies practice high levels of action and experimentationoften unplanned and undirectedthat produce new and unexpected paths of progress and enable visionary companies to mimic the biological evolution of species. This also helps to stimulate progress. Corporations as Evolving Species Visionary companies are stimulated by evolutionary progress, which is an unplanned progress. Darwins Theory of Evolution Applied to Visionary Companies

The central concept of evolutionary theory is that species evolve by a process of undirected variation (random genetic mutation) and natural selection. Of course, all companies evolve to some degree. [However,] visionary companies more aggressively harness the power of evolution. Lessons for CEOs, Managers, and Entrepreneurs Here are five basic lessons for stimulating evolutionary progress in a visionary company: Give it a tryand quick! Do something. If one thing fails, try another. Fix. Try. Do. Adjust. Move. Act. No matter what, dont sit still. Accept that mistakes will be made In order to have healthy evolution, you have to try enough experiments (multiply) of different types (vary), keep the ones that work (let the strongest live), and discard the ones that dont (let the weakest die). Take small steps If you want to create a major strategic shift in a company, you might try becoming an incremental revolutionary and harnessing the power of small, visible successes to influence overall corporate strategy. Give people the room they need When you give people a lot of room to act, you cant predict precisely what theyll do and this is good. [Also,] allow people to be persistent. Mechanismsbuild that ticking clock! Send a consistent set of reinforcing signals. Good intentions alone simply wont cut it. You also need to provide incentives to reinforce their evolutionary progress. We like to describe the evolutionary process as branching and pruning. The idea is simple: If you add enough branches to a tree (variation) and intelligently prune the deadwood (selection), then youll likely evolve into a collection of healthy branches well positioned to prosper in an ever-changing environment. If well understood and consciously harnessed, evolutionary processes can be a powerful way to stimulate progress. And thats exactly what the visionary companies have done to a greater degree than the comparison companies. Although the invention of the Post-it note might have been somewhat accidental, the creation of the 3M environment that allowed it was anything but an accident. If we mapped 3Ms portfolio of business units on a strategic planning matrix, we could easily see why the company is so successful (Look at all those cash cows and strategic stars!), but the matrix would utterly fail to capture how this portfolio came to be in the first place.

Home-Grown Management

Visionary companies practice promotion from within, bringing to senior levels only those whove spent significant time steeped in the core ideology of the company. This also helps to preserve the core. Promote From Within to Preserve the Core Visionary companies develop, promote, and carefully select managerial talent grown from inside the company [They also] had better management development and succession planning. The Message for CEOs, Managers, and Entrepreneurs Your company should have management development processes and long-range succession planning in place to ensure a smooth transition from one generation to the next. To have a Welch-caliber CEO is impressive. To have a century of Welch-caliber CEOs all grown from insidewell, that is one key reason why GE is a visionary company. Put another way, across seventeen hundred years of combined history in the visionary companies, we found only four individual cases of an outsider coming directly into the role of chief executive. As companies like GE, Motorola, P&G, Boeing, Nordstrom, 3M, and HP have shown time and again, a visionary company absolutely does not need to hire top management from the outside in order to get change and fresh ideas.

Good Enough Never Is

Visionary companies practice a continual process of relentless self-improvement with the aim of doing better and better, forever into the future. This also helps to stimulate progress. Mechanisms of Discontent Visionary companies thrive on discontent. They understand that contentment leads to complacency, which inevitably leads to decline. Build for the Future (And Do Well Today) Visionary companies habitually invest, build, and manage for the long term, meaning multiple decades out. Greater Long-Term Investment in the Visionary Companies Visionary companies invested for the future to a greater degree than the comparison companies. This includes investments in equipment, R&D, human resources, new technologies, and innovative management practices. The Message for CEOs, Managers, and Entrepreneurs If youre involved in building and managing a company, we urge you to consider the following questions:

y y y

What mechanisms of discontent can you create that would obliterate complacency and bring about change and improvement from within, yet are consistent with your core ideology? What are you doing to invest for the future while doing well today? Does your company continue to build for the long-term even during difficult times? Do people in your company understand that comfort is not the objectivethat life in a visionary company is not supposed to be easy?

Comfort is not the objective in a visionary company. Indeed, visionary companies install powerful mechanisms to create discomfortto obliterate complacencyand thereby stimulate change and improvement before the external world demands it. Managers at visionary companies simply do not accept the proposition that they must choose between short-term performance or long-term success. They build first and foremost for the long term while simultaneously holding themselves to highly demanding short-term standards.

The End of the Beginning

The essence of a visionary company comes in the translation of its core ideology and its own unique drive for progress into the very fabric of the organizationinto goals, strategies, tactics, policies, processes, cultural practices, management behaviors, building layouts, pay systems, accounting systems, job designinto everything that the company does. Just because a company has a vision statement (or something like it) in no way guarantees that it will become a visionary company! A statement might be a good first step, but it is only a first step. Lessons of Alignment for CEOs, Managers, and Entrepreneurs 1. Paint the Whole Picture Its the nearly overwhelming set of signals and actionssignals to continually reinforce the core ideology and to stimulate progressthat lead to a visionary company. 2. Sweat the Small Stuff Social cognition research shows that individuals pick up on all the signals in their work environmentbig and smallas cues for how they should behave. 3. Cluster, Dont Shotgun Visionary companies put in place pieces that reinforce each other, clustered together to deliver a powerful combined punch. 4. Swim in Your Own Current, Even if You Swim Against the Tide

Alignment means being guided first and foremost by ones own internal compass, not the [trends and buzzwords] of the outer world. Not that you should ignore reality [either, but your] ideology and ambitions should [be the] guide. 5. Obliterate Misalignments Attaining alignment is also a never-ending process of identifying and doggedly correcting misalignments. 6. Keep the Universal Requirements While Inventing New Methods You should be working to implement as many methods as you can think of to preserve a cherished core ideology [as well as] to invent mechanisms that create dissatisfaction with the status quo and stimulate change, improvement, innovation, and renewal. Visionary companies do not rely on any one program, strategy, tactic, mechanism, cultural norm, symbolic gesture, or CEO speech to preserve the core and stimulate progress. Its the whole ball of wax that counts. The real question to ask is not Is this practice good? but Is this practice appropriate for us does it fit with our ideology and ambitions?

Building the Vision

This is a conceptual framework that defines vision, adds clarity and rigor to the vague and fuzzy set of concepts swirling around that trendy term, and gives practical guidance for articulating a coherent vision within an organization. The Vision Framework

A well-conceived vision consists of two major componentscore ideology and an envisioned future. It defines what we stand for and why we exist that does not change (the core ideology) and sets forth what we aspire to become, to achieve, to create that will require significant change and progress to attain (the envisioned future).

Core Ideology Core ideology provides the bonding glue that holds an organization together as it grows, decentralizes, diversifies, expands globally, and attains diversity within. Core Values The organizations essential and enduring tenets. Core Purpose The organizations fundamental reason for being. A Few Key Points on Core Ideology You cannot install new core values or purpose into people. [They] are not something people buy in to. People must already have a predisposition to holding them. Envisioned Future Envisioned future consists of two parts: a ten- to thirty-year Big Hairy Audacious Goal and vivid descriptions of what it will be like when the organization achieves the BHAG. Vision-level BHAG Setting the BHAG ten to thirty years into the future requires thinking beyond the current capabilities of the organization and current environmental trends, forces, and conditions. In creating such a vision-level BHAG we suggest thinking about the following four categories:
y y y y

Target BHAGs can be quantitative or qualitative. Common-enemy BHAGs involve focusing on beating a common enemya David versus Goliath BHAG. Role-model BHAGs are particularly effective for up-and-coming organizations with bright prospects. Internal Transformation BHAGs tend to be effective in old or large organizations in need of internal transformation.

Vivid Descriptions Vivid description is a vibrant, engaging, and specific description of what it will be like to achieve the BHAG. Passion, emotion, and conviction are essential parts of this. A Few Key Points on Envisioned Future Dont confuse core ideology and envisioned future Weve found, therefore, that some executives make more progress by starting first with the vivid description and backing from there into the BHAG. Also, beware the weve arrived syndromecomplacent lethargy that arises once an organization has achieved a BHAG and fails to replace it with another. Putting It All Together

Keep in mind that this dynamic[, preserving the core/stimulating progress], not vision or mission statements, is the primary engine of enduring great companies If you do it right, you shouldnt have to do it again for at least a decade, and you can get on with the most important work: creating alignment.
======
"This is not a book about charismatic visionary leaders. It is not about visionary product concepts or visionary products or visionary market insights. Nor even is it about just having a corporate vision. This is a book about something far more important, enduring, and substantial. This is a book about visionary companies." So write James C. Collins and Jerry I. Porras in this groundbreaking book that shatters myths, provides new insights, and gives practical guidance to those who would like to build landmark companies that stand the test of time.Drawing upon a six-year research project at the Stanford University Graduate School of Business, Collins and Porras took eighteen truly exceptional and long-lasting companies -- they have an average age of nearly one hundred years and have outperformed the general stock market by a factor of fifteen since 1926 -- and studied each company in direct comparison to one of its top competitors. They examined the companies from their very beginnings to the present day -- as start-ups, as midsize companies, and as large corporations. Throughout, the authors asked: "What makes the truly exceptional companies different from other companies?"What separates General Electric, 3M, Merck, Wal-Mart, Hewlett-Packard, Walt Disney, and Philip Morris from their rivals? How, for example, did Procter & Gamble, which began life substantially behind rival Colgate, eventually prevail as the premier institution in its industry? How was Motorola able to move from a humble battery repair business into integrated circuits and cellular communications, while Zenith never became dominant in anything other than TVs? How did Boeing unseat McDonnell-Douglas as the world's best commercial aircraft company -- what did Boeing have that McDonnell-Douglas lacked?By answering such questions, Collins and Porras go beyond the incessant barrage of management buzzwords and fads of the day to discover timeless qualities that have consistently distinguished outstanding companies. They also provide inspiration to all executives and entrepreneurs by destroying the false but widely accepted idea that only charismatic visionary leaders can build visionary companies.Filled with hundreds of specific examples and organized into a coherent framework of practical concepts that can be applied by managers and entrepreneurs at all levels, Built to Last provides a master blueprint for building organizations that will prosper long into the twentyfirst century and beyond.

=====

Book Review: Built to Last

Posted on 23 Feb 2009 by Callum

Ive just finished reading Built to Last by Jim Collins and Jerry I. Porras. I picked up a copy of Fortune magazine on my Frontier Airways flight from San Jose, Costa Rica to Los Angeles. One of the articles

that caught my eye was about Jim Collins and the book hes working on. They referenced his earlier work Built to Last. I picked up a copy a week later at LAX before my flight to New York. Jim Collins and Jerry I. Porras wrote the book as the product of a 6 year research project. They selected 18 companies which they identified as visionary. Each company was at least 50 years old and had survived and indeed thrived under multiple generations of leadership and multiple product cycles. The idea was to find companies that had succeeded beyond the success of one individual product or leader. They then painstakingly researched these companies, some founded in the 1800s, and compared them against a carefully selected set of comparison companies. The comparison companies all outperformed the market, but were not as highly regarded or as profitable as the visionary companies. In effect, they compared a list of great companies against a list of outstanding companies. Over a 6 year period they identified a series of trends, patterns, consistent behaviours that set visionary companies apart. These findings are the subject of their book.
Clock building

The first concept the authors introduce is that of time telling versus clock building. They define clock building as the art of building something that will endure, that will perform, over a very long time (over 50 years in this case). Whereas time telling is the act, the trade, the work of a person. A great time teller may be able to tell you the exact time, to the second, at any point, night or day. That person is incredibly skilled and (in the context of the metaphor) extremely useful. However, the clock builder by comparison, creates a device that tells any person the time, long after the time teller or clock builder themselves will be dead. The authors assert that the leaders of visionary companies are clock builders, not just time tellers. They build organisations, institutions in fact, that are designed to endure, to perform over the long term (50+ years). These leaders build companies which transcend their personal leadership and even the current products of the company. The so-called visionary companies are like wonderful, artistic clocks. They tick and whir and continue to operate through many generations of people, products and markets. As a result, these visionary companies drastically outperform their comparison companies in financial terms. The visionary companies performance is in an entirely different league to that of a market average company.
Genius of the and

The authors warn of the tyranny of the or. They propose that visionary companies strive to achieve multiple objectives simultaneously. For example, to plan for 10 to 30 year goals while also performing exceptionally well today. To give back to their communities, employees and customers while also making healthy profits.

This is a wonderful concept to me. Ive long held the belief that being ethical or doing the right thing is not counter to being successful. The authors described this concept wonderfully in calling it the genius of the and. They showed that time and time again, visionary companies set extremely high milestones in areas which might traditionally appear to be in conflict. The most common example is financial performance, profit. Visionary companies show that treating people well, treating the environment well, is actually a hugely profitable strategy, far more profitable than the average company who views these objectives as mutually exclusive.
Preserve the core, stimulate progress

Using the yin / yang symbol, the authors introduce the motto preserve the core, stimulate progress. This is essentially a simple concept. Define what the company is about, not what it does, and remain true to that while changing everything else. This means truly defining what your company is about, what it means, what it believes, not merely the actions it performs. This can be thought of as the companys personal values, belief systems. What does the company believe to be important beyond just profit. Once that has been discovered, and it can only be discovered not prescribed, remain absolutely true to it. While remaining true to these core values, change as necessary in response to market conditions, the outside world, and all manner of other factors. In fact, change constantly, recognise change as the only constant. This is linked to the idea of the genius of the and. In addition to constant change, the core must remain solid. Remain true to the ideals of the company, but respond to the external world proactively.
Seek consistent alignment

Tied into the concepts above, work tirelessly and continually to keep the company in alignment with its core values, its core beliefs, what it stands for. Any misalignment between these two must be stamped out ruthlessly. New and creative ways must be perpetually sought to bring the company more into alignment with its ideals. This is a crucial point. To simply write a mission statement, values, and so on, means nothing. A company must truly live these values. Everything within the company must constantly reinforce these values. In other words, talk is cheap. If a key value is to treat all staff as equal, this must be carried through in every decision the company makes. If upper management travel by private jet while other people within the company do not, this is out of alignment. This is a clear signal that the company does not truly live its so-called values. This process of seeking alignment is a perpetual one.

Summary

I enjoyed the book. I read it in less than 10 days. The content of the book is excellent. The points made are spot on. The actual writing style of the book I found a little long winded, slightly academic and at times dull. But not so much that I stopped reading it or skipped sections. Overall, I thoroughly recommend Built to Last to anyone interested in business, organisations or better understanding the world around them. I gained deeper insight into how the world works through this book. This entry was posted in Business, Reviews and tagged book reviews, Built to Last, business learning, Jerry I Porras, Jim Collins, visionary companies by Callum. Bookmark the permalink.

1. Nice review Callum. I read the book a while ago and it made a big effect on me. Not sure if its that I was already thinking alike (comforted me) or it made me think this way. Either way its a great book. The most interesting thing about books like this is that very often people only take the piece(s) that falls into their belief system and leave the rest aside. Big mistake. Anyway, you should also like his other book Good to Great. Prequel, sequel? I dont remember!
V

=====

Built to Last
From WikiSummaries, free book summaries
Jump to: navigation, search

By Jim Collins and Jerry Porras Jerry Porras and Jim Collins Built to Last is a philosophical blueprint based on research into the development of some of the United States most successful corporations. Recognizing struggling competitors whose businesses disappear after a period of time, Collins and Porras focus their research towards 18 bona fide, visionary companies and analyze them in accordance with guidelines theyve set on what makes a good company. Selection criteria and research between the two authors was extensive, with attention paid towards companies with average founding dates of 1897 and prior along with a surefire system evaluating companies as start-ups, midsize companies, and large companies. In the face of sociological events, Porras and Collins wanted to

answer the question what makes the truly exceptional companies different from the other companies? with an emphasis on timeless management principles instead of trends and innovations like employee empowerment and shared values. Porras and Collins learned that their prior beliefs were misfires. During a six year research process, they unlearned much of what they learned with large corporations successes. In place of former beliefs lays a new groundwork for what exemplifies visionary companies. Here are some of the former myths removed with their research:
1. 2. 3. 4. 5. A great idea is needed to start companies Visionary organizations need charismatic leaders Maximizing profits is the dominate goal with visionary companies Visionary companies focus on beating competitors Hiring outsiders as CEO s is the best way to spark an organization

Some of the core beliefs Porras and Collins discuss in Built to Last include preserving a core ideology, the BHAG (Big Hairy Audacious Goals) concept, owning a cult-like culture, trying new things, refusing the idea of a great idea to start a company, and consistent innovation. Preserving a core ideology allows companies stay in tune with competition through the constant evolution of products. The BHAG (Big Hairy Audacious Goals) philosophy encourages organization leaders to conduct paradigm shifts with their products by constantly launching missions, like new products and the building of firsts. Both authors also dive into the cult-like culture mantra, where every single employee in the company must adapt to a leaders vision and become cohesive and non-fragmented to survive. Porras and Collins provide the examples of fantastic department store sales people and companies devotion to technological products as milestones. Other philosophies described in Built to Last include constant innovation, refusing the idea of a great idea, and embracing evolution. According to the authors, innovating allows companies to keep products and services updated to beat the competition. They use Boeing Engineering as an example of an innovative leader and rival McDonnell Douglas as a company struggling to meet industry standards. Porras and Collins denounce the great idea based on research that found many past founders did not start companies with established ideas (i.e. Hewlett Packards involvement with failed products prior to discovering electronics as a niche.) In essence, Built to Last is an analysis of how visionary companies should operate. It revolves around value arrangement and does not specifically ask companies to fire employees, remove resources, etc. It asks for companies to assume a workmanlike culture and keep an eye out for tomorrow and the long term.

Contents
[hide]
y y

1 Main Character List 2 Chapter Summaries o 2.1 Chapter 1 Best of the Best o 2.2 Chapter 2 Clock Building, Not Time Telling o 2.3 Chapter 3- More than Profits o 2.4 Chapter 4 Preserve the Core/Stimulate Progress o 2.5 Chapter 5- Big Hairy Audacious Goals o 2.6 Chapter 6 Cult-like Cultures o 2.7 Chapter 7 Try a Lot of Stuff and Keep What Works o 2.8 Chapter 8 Home Grown Management o 2.9 Chapter 9 Good Enough Never Is o 2.10 Chapter 10 The End of the Beginning o 2.11 Chapter 11 Building the Vision

Main Character List

Jerry Porras is the co-author along with Jim Collins. He is currently a Professor of Organizational Behavior and Change at the prestigious Stanford Graduate School of Business and was former director of the Schools Executive Program on Leading and Managing Change for 16 years. His academic work includes courses in leadership, organizational development, and interpersonal dynamics. With his expertise, he has served as a management consultant to numerous companies, including Start Farm Auto Insurance and Quaker Fabric. He is a regularly featured writer for many publications and has also written another book on organizational success titled Stream Analysis: A Powerful New Way to Diagnose and Manage Organizational Change.

Jim Collins is the co-author of Built to Last: Successful Habits of Visionary Companies and has authored three other books along with a slew of articles featured in Fortune Magazine, Business Week, and the Wall Street Journal. He is a professor at the Stanford Graduate School of Business and the founder of a management laboratory in Colorado where he researches and teaches executives on the aspects of corporate leadership. Some of his clients include the Johns Hopkins Medical School, the Marines, and the Girl Scouts of America. In his free time, he loves to rock climb and has made it a point to conquer Yosemite Valley.

Chapter Summaries

Chapter 1 Best of the Best

This chapter reiterates the authors intentions of describing visionary companies, not visionary product concepts, market insights, or visions. Porras and Collins define a visionary company as a premier institution in their industries, widely admired by their peers and having a long track record of making a significant impact on the world around them. They define a visionary company as an organization and describe powerful individual leaders and ideas as inevitably short-lived. Both authors ask readers to compile a list of visionary companies according to reputation, contribution to society, life before 1950, and more. Porras and Collins outline their goals of selecting visionary companies and comparison companies that dont quite match visionary status.

Chapter 2 Clock Building, Not Time Telling

In this chapter, Porras and Collins liken the longevity of a company to time telling and clock building. According to the authors, time telling is having a great idea or being a charismatic visionary leader and clock building is building a company that can prosper far beyond the presence of any singer leader and through multiple product life cycles. Porras and Collins explain the importance of building an organizations core value system instead of relying on great product ideas, charismatic leaders, and paying too much attention to profit. They denounce the idea of charismatic leaders and explain the great idea myth by pointing out Bill Hewlett and Dave Packards ventures into non-electronic products and Masaru Ibukas Sony Corporations brainstorming sessions on which products to make after starting the company.

Chapter 3- More than Profits

In this chapter, Porras and Collins talk about how important it is to recognize that core ideology alone does not make a visionary company, since everything around you is always changing. In order to meet the demands of a changing world, companies must be prepared to change everything about itself except its basic beliefs as it moves through corporate life. According to the authors, companies must preserve its core ideology while allowing room for the manifestations of the core ideologies to change. This means product lines, profit strategies, cultural tactics, and organization structure can change but a core ideology should not. Preserving the core and stimulating progress tactics are discussed.

Interlude No Tyranny of the Or (Embrace the Genius of the And)

In this chapter, Porras and Collins make reference to their use of the yin/yang symbol from Chinese philosophy in order to explain the visionary mentality of not oppressing themselves to the tyranny of the OR which means hell for those that cannot live with two contradictory ideas at the same time. According to the authors, inferior companies hold proclamations such as you can invest for the future or do well in the short-term and you can have low cost or high

quality. This limits companies to a short-minded frame of reference where there is only one choice, but not both. The authors ask readers to embrace both extremes and to figure out a way to have both choices. Visionary companies find ways to do well in the short-term and long-term, rather than sacrifice one for the other. They dont look for a balance rather, acquiring both to the max. The purpose of the yin/yang symbol is to illustrate this concept.

Chapter 4 Preserve the Core/Stimulate Progress

This chapter describes the ways companies should do business by being able to adapt and change over time in response to market conditions. Over time, competencies, strategies, and goals change but the core ideology must remain intact. One visionary company Porras and Collins use as an example of one preserving its core is Boeing and its fleet of 747 jumbo aircrafts. In the 1950s, Boeing ventured into new territory and took a gamble on building commercial airliners instead of sticking to military aircraft, which earned most of its profit. As a result, its rival Douglas Aircrafts was left in the dust. Both authors sat that the drive for change in a visionary company is internal, where philosophy takes precedent over external forces like market conditions and profit motives to make them change. Visionary companies must have the confidence to set the big hairy audacious goals discussed in the next chapter. They also instill mechanisms in place to preserve the core and stimulate progress.

Chapter 5- Big Hairy Audacious Goals

Chapter 5 discusses a visionary company characteristic of taking risk and setting super goals as a hallmark for success. It starts off with Boeings pursuit of the commercial airline market in the 1950s, which was underdeveloped and needing a major player for jet aircrafts. Unlike its rival Douglas Aircraft, who avoided entering the commercial market, Boeing took a gamble and developed a prototype for the commercial airliners used today. This chapter introduces the BHAG concept as a way for companies to enhance team spirit and shooting for goals to become visionary. Porras and Collins describe BHAGs as nearly impossible, but possible with confidence and a bit of arrogance on behalf of the company. It stresses high commitment and working outside of a comfort zone. The Kennedy moon mission is also an example of a BHAG.

Chapter 6 Cult-like Cultures

Porras and Collins discuss visionary companies as not a great place to work for everyone. All employees within a visionary company must adapt and embrace the core values assigned to them

in order for the organization to make strides. According to the authors, visionary companies are demanding of its employees to seek accomplishment and to follow the core ideology. The authors outline four common characteristics of cults that apply to the visionary organizational philosophy fervently held ideology, indoctrination, tightness of fit, and elitism. Fervently held ideology All employees believe strongly in the company ideology. Indoctrination Management is responsible for introducing and encouraging the proper work culture to employees. Tightness of fit Employees who do not believe in the same ideology should switch positions or be fired altogether. Elitism Recognizing the sense of responsibility that comes from being a member of a visionary company. The beginning of Chapter 6 uses Nordstrom as an example of a visionary company where an interviewer tells an interviewee what is expected of him, in accordance with the company philosophy of excellent customer service and starting from the bottom to work your way to the top.

Chapter 7 Try a Lot of Stuff and Keep What Works

This chapter discusses Porras and Collins visionary company research and how theyve come to the realization experimentation, trial & error, accidents, and opportunism were ahead of detailed strategic planning. An example of Johnson & Johnsons accidental discovery of using talc as a skin soother after customers complained of skin irritation from medicated plastics they were producing. They sold packaged baby powder soon after. Other example companies include 3M getting into the masking tape business and Walmart introducing people greeters. Both authors describe opportunistic experimentation through trial and error as a way to make evolutionary progress. According to Porras and Collins, five ways to make evolutionary progress includes:
1. 2. 3. 4. 5. Giving ideas a quick try Accept mistakes and letting the weakest die Taking small steps to achieve small failures in order to get ahead Persistence Building a ticking clock as described in Chapter 1 to turn the aforementioned points into a process.

Chapter 8 Home Grown Management

Porras and Collins describe a characteristic of visionary companies as likely to hire inside employees to high positions as opposed to other organizations that hire from the outside. This allowed for consistent excellence in leadership from within the ranks, from employees who have

adhered to the companys core ideology. In the overall picture, this is a way for companies to preserve the core while stimulating progress a mantra discussed in Chapter 4. To support their claims, both authors cite comparison companies are six times more likely than visionary companies to hire their CEO from a pool of outside applications. At visionary companies, only 4% of CEOs came from the outside.

Chapter 9 Good Enough Never Is

In this chapter, Porras and Collins ask wannabe visionary companies to ask the following question: how can we do better tomorrow than we did today? instead of lesser questions posed by lesser companies like how well are we going and how well do we have to perform in order to meet the competition. They reject the idea of a finish line and define a visionary company as one who is never satisfied with its results. All visionary companies hold high standards and reject the practices of comparison companies that make money off successful products. Porras and Collins stress investing for the future and adapt to newer ideas and technology earlier than others. Out of 18 companies researched, 16 were found to drive themselves harder for improvement.

Chapter 10 The End of the Beginning

In this chapter, Porras and Collins use the end of the beginning concept to explain how visionary companies translate their core ideologies into the every day workings of the organization. Core ideology is translated into the strategies, behaviors, business practices, and goals of the organization. Porras and Collins used Hewlett-Packard as an example of a core ideology into practice organization with their management methods of providing well defined objectives to employees and allowing them as much freedom as they wanted to work towards that goal with the intention of recognizing the individuals efforts throughout the organization. Some business practices Porras and Collins explain are paying attention to details, combining pieces to perform tasks (i.e. employee talents), asking if a practice is appropriate to a companys ideology and goals instead of is this practice good? and taking care of misalignments within the organization.

Chapter 11 Building the Vision

Building the vision is a rearrangement of values intended to stimulate progress. It asks potential visionary organizations to strive for self-improvement day in and day out and to invest in new technologies and new management methods to take risks instead of lying back and remaining conservative. An eye should always be kept for the long term instead of the short term, even when it is hard to do so.