Unlike individuals, organizations can transcend time and generations; they can be built to last. In this book, 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. 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. The findings debunked many myths about successful companies, and the insights can be applied by anyone, be it CEOs, managers, or entrepreneurs. In this free Built to Last summary, you’ll learn some of the key highlights from the book.
Built to Last: An Overview
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.
Characteristics of Visionary Companies
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).
Key Success Factors of Visionary Companies
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 check out 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 fulfill 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.
You can find out about all these in more detail in our 13-page Built to Last summary.
Observable Behaviors and Mechanisms
To translate philosophy into results and long-term success, visionary companies build tangible mechanisms in 5 key ways:
i. 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.
ii. Cult-like Cultures
Visionary companies preserve their zealously-held ideology in specific, tangible ways, including indoctrination, strict HR processes to ensure a tight fit, and elitism. Our full summary elaborates more on these these approaches.
iii. Experiment a lot and keep what works
Visionary companies do plan, but many of the best moves came from experimentation, trial and error, opportunism and accident. We zoom in on some of these examples in our complete summary.
iv. Home-Grown Management
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). Our 13-page summary explains the Leadership Continuity Loop that can be used to effectively preserve the core, stimulate progress and plan for internal succession.
v. 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. Our full Built to Last summary elaborates 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.
Getting the Most from 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). For more details, examples and actionable insights, do check out our full book summary bundle which includes an infographic, a 13-page text summary, and a 25-minute audio summary.
The book also includes other details such as: core ideologies in the visionary companies, a list 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. You can buy the book here or visit jimcollins.com for mroe details.
About the Authors of Built to Last
Built to Last: Successful Habits of Visionary Companies is authored by Jim Collin & Jerry Porras.
James C. “Jim” Collins is an American author, lecturer and business consultant on leadership and what makes great companies tick. He holds a bachelor’s degree in Mathematical Sciences and an MBA from Stanford University, and honorary doctoral degrees from the University of Colorado and the Peter F. Drucker Graduate School of Management at Claremont Graduate University. Collins has authored/ co-authored 6 books, including Good to Great, Built to Last, How the Mighty Fall, and Great by Choice.
Jerry I. Porras is a professor at Stanford University Graduate School of Business and Lane Professor Emeritus of Organizational Behavior and Change, as well as a business and management analyst. Besides Built to Last: Successful Habits of Visionary Companies, he also co-authored the book Success Built to Last: Creating a Life that Matters.
Built to Last Quotes
“Like the parable of the tortoise and the hare, visionary companies often get off to a slow start, but win the long race.”
“It might be better to not obsess on finding a great idea before launching a company… because the great-idea approach shifts your attention away from seeing the company as your ultimate creation.”
“Be prepared to kill, revise or evolve an idea, but never give up on the company.”
“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 do not ask, ‘What should we value”’. They ask, ‘What do we actually value deep down to our toes?’”
“There is a difference between merely having a goal and becoming committed to a huge, daunting challenge.”
“Like the genetic code in the natural world, which remains fixed while species vary and evolve, core ideology in a visionary company remains unchanged throughout all its mutations.”
“A visionary company is like a great work of art…it’s the entire work – all the pieces working together to create an overall effect – that leads to enduring greatness.”
“We all know vision is important, but most people don’t know what exactly it is.”