Built to Last – Part 1
Most of us are familiar with the book called Built to Last: Successful Habits of Visionary Companies, written by Jim Collins and Jerry I. Porras and first published in October 1994. It’s been a modern classic book, translated in over 25 languages. It is not a book about charismatic visionary leaders. It is not about visionary product concepts or visionary products or visionary market insights either. Nor is it about just having a corporate vision. It is a book about something far more important, enduring, and substantial. It is a book about visionary companies.
Just to have an idea of the magnitude of this book and its importance and popularity, it is # 5 in the list of the Top 50 Best Selling Management Books of All Time, having sold more than 3.5 million copies worldwide. The rationale behind this iconic best seller publication is the question – why do some companies flourish for decades, while others decline and die?
As the result of a six-year research project around that question, the authors were able to list a total of eighteen companies that they identified as ‘visionaries’. Within this list, they ensured representation across all industries and various sizes of organizations by sampling from Fortune 500 industrial companies, Fortune 500 service companies, Inc. 500 private companies and Inc. 100 public companies. The criteria used to identify visionary companies were: a) the company should be a leading institution in its industry; b) it is widely admired by well-informed business-people; c) it has left a positive mark on the world; d) it had multiple generations of CEOs; e) it had multiple product/service life cycles, and finally f) it was founded before 1950.
Based on the conditions mentioned above and using the results of a survey with 1,000 CEOs, Collins and Porras arrived to the following companies identified as visionaries: 1) 3M; 2) American Express; 3) Boeing; 4) Citigroup; 5) Disney; 6) Ford; 7) General Electric; 8) Hewlett Packard; 9) IBM; 10) Johnson & Johnson; 11) Marriott; 12) Merck; 13) Motorola; 14) Nordstrom; 15) Philip Morris; 16) Procter & Gamble; 17) Sony and 18) Walmart.
One of the favorite quotes of Collins is “Visionary companies pursue a cluster of objectives, of which making money is only one – and not necessarily the primary one”. With this in mind, let’s walk together through this exciting bestseller by revisiting some of the key points raised by the authors in Built to Last. This article is the part one of this journey.
During the process of learning what makes visionary companies last and succeed, Porras and Collins had to discard much of what they (and us, too!) had previously learned about large corporations’ successes. Some of the former myths removed with their research are as follows:
- A great idea is needed to start companies – visionary companies constantly turn out great ideas, just because they generate so many of them, in the first place;
- Hiring outsiders as CEOs is the best way to spark an organization – in these companies, insiders and homegrown management rules to a greater degree than at other companies;
- Visionary organizations need charismatic leaders – typically, they concentrate more on architecting an enduring institution than on being a great individual leader;
- Visionary companies focus on beating competitors – in a journey for continuous improvement, visionary companies focus primarily on beating themselves rather than the competitors;
- Maximizing profits is the dominant goal with visionary companies – as the quote above says, they pursue a cluster of objectives and are equally guided by a core ideology.
The authors describe 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’. In short … the best of the best. They define a visionary company as an organization and describe powerful individual leaders and ideas as inevitably short-lived. In their research, both authors ask readers to gather a list of visionary companies according to reputation, contribution to society, life before 1950, and some other points. Porras and Collins outline their goals by selecting visionary companies and ‘comparison companies’ that don’t quite match visionary status.
The authors compare the longevity of a company to time telling and clock building. According to them, 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 organization’s ‘core value system’ instead of relying on great product ideas, charismatic leaders, and paying too much attention to profit. They criticize the idea of charismatic leaders and clarify the ‘great idea’ myth by pointing out the creators of HP’s ventures into non-electronic products as well as Sony’s brainstorming sessions on which products to make after starting the company.
This article is for general, indicative purpose only and should not be considered investment advice. Florida Connexion is not liable for any financial loss, damage, expense or costs arising from your investment decisions based on this article.
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Built to Last: Successful Habits of Visionary Companies, by Jim Collins and Jerry I. Porras