In “Built to Last”, Jim Collins and Jerry Porras focus on timeless success principles that can be learned from visionary companies like Marriott, Proctor & Gamble and Walt Disney, whose success have lasted the test of time. Unlike individuals, organizations can transcend time and generations; they can be built to last. Although most of the companies studied were American corporations, the authors have since verified that the principles work across countries, cultures and different organization types e.g. corporations, NGOs etc. The findings debunked many myths about successful companies, and the insights can be applied by anyone, be it CEOs, managers, or entrepreneurs. In this Built to Last summary, we’ll share some of the key highlights from the book.
The findings came from 6 years of extensive research of 18 Visionary Companies, compared to 18 Comparison Companies. As of the end of 1990, the Comparison Companies did twice as well as the stock market since 1926, while the Visionary Companies did 15 times as well as the stock market.
Visionary Companies are:
• Premier institutions in their industries
• Widely admired by knowledgeable business individuals
• Have made an indelible impact on the world
• Had multiple generations of chief executives
• Have been through multiple product/ services life cycles
• Are at least 50 years old
Some of the Visionary Companies include: 3M (vs Norton), American Express (vs Wells Forge), Boeing (vs Douglas Aircraft), Citicorp (vs Chase Manhattan), Hewlett Packard (vs Texas Instruments), Marriott (vs Howard Johnson), Proctor & Gamble (vs Colgate), and Walt Disney (vs Columbia Pictures).
The findings show 12 myths about great companies and the key success factors of these visionary companies. In this article, we’ll briefly outline the success factors. For the full details (and a breakdown of the 12 myths), do get a copy of the book the book or our full 13-page summary.
Built to Last Philosophies
There are several underlying philosophies that set Visionary Companies apart from Comparison Companies to create phenomenal success that lasts decades. Here’s an overview of the key factors:
Visionary companies’ long-term successes do not come from a great idea or a charismatic, visionary leader. Rather, they are successful because of strong foundations embedded in the organizations that allow them to prosper beyond leaders and product life cycles. Their ultimate creation is the company itself – by focusing on organizational design rather than a specific idea or a unique market opportunity visionary companies build enduring institutions that outlive specific product lines.
GENIUS OF THE “AND”
Visionary companies do not limit themselves to the “Tyranny of the OR”, e.g. stability OR change, low cost OR high quality. Instead, they find ways to embrace both extremes of various dimensions e.g. profits AND purpose, conservative AND bold, ideological control AND autonomy. They go beyond mere balance or compromise, to excelling at both extremes.
MORE THAN PROFITS
Visionary companies pursue a cluster of objectives, of which money is only one component. They understand that profitability is necessary for the organization to exist and fulfil its purpose, but they are much more than profits. They pursue both profits and ideology. And, this core ideology is used to guide and inspire its people on all fronts.
PRESERVE THE CORE, STIMULATE PROGRESS
A visionary company has a relentless drive for progress, yet it is concurrently ideological and progressive, i.e. it adapts without compromising its core ideals. There’s an ongoing dynamic interplay between the core and progress, and the visionary company embraces both successfully. To achieve this, they must translate them into concrete, tangible mechanisms that are deeply infused into the organization.
Observable Behaviors and Mechanisms
To translate philosophy into results and long-term success, visionary companies build tangible mechanisms in 5 key ways:
Big Hairy Audacious Goals (BHAGs)
BHAGs (“bee-hags”) are a powerful mechanism to stimulate progress. Good BHAGs are clear and compelling, are aligned with the core ideology, are constantly replaced by another (once they are achieved), come with a high level of goal commitment and belief, and fall well outside the comfort zone.
Visionary companies preserve their zealously-held ideology in specific, tangible ways, including indoctrination, strict HR processes to ensure a tight fit, and elitism. In the book / complete summary, we elaborate more on these these approaches.
Experiment a lot and keep what works
Collins & Parros found that in 1700 years of combined history of visionary companies, there were only 4 cases of an outside being brought in for the role of CEO. Visionary companies were 6 times more likely to promote insiders to chief executives than comparison companies. Promotion from within preserves the core and provides continuity of leadership (besides quality). In the book / full 13-page summary, we explain the “Leadership Continuity Loop” that can be used to effectively preserve the core, stimulate progress and plan for internal succession.
Good Enough Never is
In visionary companies, continuous improvement is not just a program or process improvement. It is an institutionalized habit, a way of life; it means doing everything possible to make the company better tomorrow than it is today. It can be easy to get complacent once you become the market leader. To combat complacency, visionary companies embed mechanisms to create discomfort, and instill a ruthless self-discipline.
So here we are, the 5 observable mechanisms that Visionary Companies use to bring their core principles to life. In the book and our Built to Last summary bundle, we elaborate on these 5 mechanisms with examples, including tips on how to build your vision, and to translate your core ideology and drive for progress into every aspect of your company.
Other Details in “Built to Last”
For those who are particular about research methodology, Jim Collins & Porras elaborate on how they selected their choice of companies and their approach (e.g. how they defined and selected “comparison companies”) in the preface and research appendices (especially Appendix 1 on research issues).
Some other details include core ideologies in the visionary companies, a ist of the Visionary Companies’ Core + BHAGs, a list of mechanisms used to stimulate progress at 3M, detailed case studies of how Ford, Merck and Hewlett-Packard created alignment, the founding roots of all the visionary and comparison companies studied, and FAQs.
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