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"Built To Last:
Successful Habits Of Visionary Companies" (paperback edition)
By James C. Collins and
Jerry I. Porras
Published by Harper Business, 1997--ISBN
0-88730-739-6
Reviewed by Matt M. Starcevich, Ph. D.
"This is not a business book but a book about building
enduring, great human institutions of any type-volunteer, schools, churches and
governments". I found this to be an exciting, groundbreaking book. Valuable for
individual contributors, consultants, line managers and executives.
This is not a book about visionary leaders it is a book about 18
visionary companies—that are the crown jewels—in their industries:
- Premier institutions in its industry
- Widely admired by their peers
- Made an indelible imprint on the world in which we live.
- Had multiple generations of chief executives
- Been through multiple product (or service) life cycles
- Founded before 1950
The authors exhaustively studied the eighteen companies relative
to a comparison group to define essential differences. The comparison companies criteria:
- Same founding era
- Similar founding products and markets
- Not a dog company-they wanted to compare gold medal teams to
silver and bronze metal teams to give real meaning to our findings. E.g., Boeing versus
McDonnel Douglas, Citcorp versus Chase Manhattan, Merck versus Pfizer.
They studied the companies throughout their entire history
tracking 19 categories of information e.g., organization policies, procedures and
systems—social norms, rituals, mythology—vision, core values,
purpose—financial analysis (the visionary companies stock from 1926 to 1990 out
performed the comparison companies by a factor of six and the general stock market by 15.
Or a $1 invested in the comparison companies would have grown to $955 but, to $6,356 if
invested in the visionary companies stock fund.
The findings shattered twelve myths:
- It takes a great ideas to start a great company. The
concentration was primarily on building an organization. Bill Hewlett and David Packer
decided first to start a company and then figure out what they would make. Waiting for the
great idea shifts your attention away from seeing the company as your ultimate creation.
- Visionary companies require great and charismatic visionary
leaders. A high profile, charismatic style is absolutely not required to successfully
shape a visionary company. The continuity of superb individuals atop visionary companies
stems from the companies being outstanding organizations, not the other way around.
- The most successful companies exist first and foremost to
maximize profits. Visionary companies pursue a cluster of objectives, of which making
money is only one—and not necessarily the primary one. They are equally guided by a
core ideology—core values and sense of purpose beyond just making money. Yet,
paradoxically, they make more money than the more purely profit-driven comparison
companies.
- Visionary companies share a common subset of
"correct’ core values. The crucial variable is not the content of a
company’s ideology, but how deeply it believes its ideology and consistently lives,
breathes and expresses it in all that it does.
- The only constant is change. A visionary company
religiously preserves its core ideology-changing it seldom, if ever. Yet it also
stimulates progress, everything else is open to change. Preserve the core and stimulate
progress.
- Blue-chip companies play it safe. The authors chronicle the
"Big Hairy Audacious Goals"-the bold and risky commitments judiciously used by
visionary companies to stimulate progress and blast past the comparison companies. E.g.,
GE—to become #1 or #2 in every market we serve, Boeing—bet the pot on the B-17,
707, 747.
- 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. It’s almost cult
like. There is no middle ground either fit and flourish or you will likely be expunged
like a virus.
- Highly successful companies make their best moves by brilliant
and complex strategic planning. Visionary companies make some of their best moves by
experimentation, trail and error, opportunism and quite literally accident.
- Companies should hire outside CEOs to stimulate fundamental
change. In seventeen hundred years of combined life spans across the visionary
companies, they found only four individual incidents of going outside for a CEO—and
those in only two companies. Home grown management roles at the visionary companies.
- The most successful companies focus primarily on beating the
competition. Visionary companies focus primarily on beating themselves. They
continuously ask themselves: "How can we improve ourselves to do better tomorrow than
we did today?" Good enough never is.
- You can’t have your cake and eat it too. Visionary
companies believe you can have both A and B at the same time and refuse to think that you
can have either A or B. e.g., investment for the long-term and demands for short-term
performance—a relatively fixed core ideology and vigorous change and movement.
- Companies become visionary primarily though "vision
statements". Creating a statement can be a helpful step in building a visionary
company, but it is only one of thousands of steps in a never-ending process of expressing
the fundamental characteristics they identified across the visionary companies. In the
paperback edition the authors present a conceptual framework that defines vision, adds
clarity and rigor to the vague and fuzzy set of concepts swirling around that trendy term,
and give practical guidance for articulating a coherent vision within an organization.
I would recommend this book for those who are
looking for timeless, fundamental principles and patterns that might apply across eras.
Secondly, read the paper back edition for the "how to" chapter on values which
is adapted from the authors Harvard Business Review article.
Order today
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