wisdom to win

 Wisdom to Win
search bar left
search bar right
 

Jim Collins and Jerry Porras, Built to Last (1994)Jim Collins and Jerry Porras, Built to Last (1994)

 

Collins is an American management expert on business success (pictured right).

Worked at Stanford Business School in California with Jerry Porras (pictured right below), where they wrote the book.

 

See also...Jim Collins and Jerry Porras, Built to Last (1994)

Jim Collins in the Management Gurus section.

 

Book summary

 

What is a great company?

 The best (“visionary”) companies are built to last, because they balance:

  • continuity (from everlasting values and purpose).
  • change (continually adapting to changing customer requirements).

“To be built to last you must be built to change” (Jim Collins wrote in the preface to the 2004 edition) - see point 1 below.

 

What makes visionary companies great

1. Preserve the Core/Stimulate Progress
2. Envisioned future
3. Inspired employees
4. Genius of the AND
5. Evolutionary progress
6. Great leadership

Here are these six points in more detail: 

 

1. Preserve the Core/Stimulate Progress

A visionary company:

  • preserves (never changes) its core ideology – see below.
  • changes (constantly) its business practices and strategies (in response to external changes like different customer needs). Jim Collins and Jerry Porras, Built to Last (1994) 

Core ideology (the organization’s soul and character) consists of

  • core values (everlasting guiding principles).
  • core purpose (“fundamental reasons for existence beyond just making money” which should last at least a 100 years).

This core ideology:

  • inspires change (by exciting people inside the organization).
  • is discovered from the values employees are passionate about (cynicism will result, if values aren’t shared by everyone).
  • doesn’t necessarily have to be written down in a vision or mission statement.
  • isn’t a core competency (Sony’s competency is miniaturization but its ideology is based on creatively using technology for the benefit of the public - see below)

Two further points...

 Jim Collins and Jerry Porras, Built to Last (1994)

a) core ideology helps global companies

A global visionary company applies its core ideology globally but changes its practices and strategies to suit local cultures and markets.

 

b) don’t confuse strategy with ideology

For example, quality may be a vital strategic objective but not a core value (why? Quality won’t be an everlasting value, if competitors achieve the same quality)

 

Examples of core values

 Jim Collins and Jerry Porras, Built to Last (1994)

Merck (American pharmaceutical company)

  • Corporate social responsibility.
  • Unequivocal excellence in all aspects of the company.
  • Science based innovation.
  • Honesty and integrity.
  • Profit, but profit from work that benefits humanity.

 Jim Collins and Jerry Porras, Built to Last (1994)

Walt Disney

  • No cynicism.
  • Nurturing and promulgating “wholesome American values”.
  • Creativity, dreams and imagination.
  • Fanatical attention to consistency and detail.
  • Preservation and control of the Disney magic.

 Jim Collins and Jerry Porras, Built to Last (1994)

Sony

  • Elevation of the Japanese culture and national status.
  • Being a pioneer – not following others; doing the impossible.
  • Encouraging individual ability and creativity.

 

Examples of core purpose

 

Merck

To preserve and improve human life

 

Walt Disney

To make people happy

 

Sony

To experience the joy of advancing and applying technology for the benefit of the public.

 Jim Collins and Jerry Porras, Built to Last (1994)

3M (makers of Scotch tape and Post-It notes)

To solve unsolved problems innovatively.

 

2. Envisioned futureJim Collins and Jerry Porras, Built to Last (1994)

This consists of two parts:

 

a) Big Hairy Audacious Goals (BHAG’s)

Great companies set themselves extremely challenging objectives for 10-30 years ahead (BHAG’s).

Examples are:

  • Become the dominant firm in the commercial airline market (Boeing, 1950)
  • Democratize the automobile (Ford Motor Company, early 1900’s). Jim Collins and Jerry Porras, Built to Last (1994) 
  • To put an American safely on the moon by the end of the 1960’s (President John F. Kennedy's, pictured right, announcement in 1961).
  • Become the Harvard of the West (Stanford University, California, 1940’s)

But don’t be complacent – when you’ve achieved a BHAG, immediately replace it with another.

 

b) Vivid descriptionJim Collins and Jerry Porras, Built to Last (1994)

An inspiring description of what it will be like to achieve the BHAG.

For example, Henry Ford (pictured right) wanted to make the price of a car so low that “everyone will have one”.

Sony’s vivid description said:

“Fifty years from now, our brand name will be as well known as any in the world... and will signify innovation and quality that rival the most innovative companies anywhere”.

 

3. Inspired employees

Only one per cent of success is defining your core ideology and envisioned future, the rest depends on inspired people who brilliantly implement them.

“The crucial variable is not the content of a company’s ideology, but how deeply it believes its ideology and how consistently it lives, breathes, and expresses it in all that it does”, Collins and Porras say.

Visionary companies aren’t suited to everyone. They are “cult-like cultures” in which company values are:Jim Collins and Jerry Porras, Built to Last (1994)

  • indoctrinated by management.
  • held with religious zeal.
  • supported by extremely high performance standards.

Companies will be great, only if their people truly believe in their values and purpose.

 

4. Genius of the AND

Visionary companies don’t believe in choosing between two apparent opposites (the “Tyranny of the OR”) but doing both simultaneously (the “Genius of the AND”).

For example:Jim Collins and Jerry Porras, Built to Last (1994)

  • continuity and change.
  • strongly held values (“cult-like cultures” – see point 3) and individual autonomy and desire for change.
  • making money and living according to values and purpose.
  • challenging aims (Big Hairy Audacious Goals – see above) and evolutionary (incremental) improvement (see point 5).
  • long term and short term performance

 

5. Evolutionary progress

To be successful, great companies don’t rely on strategic planning but evolutionary progress through:Jim Collins and Jerry Porras, Built to Last (1994)

  • trying new ideas and products (from experimentation, trial and error, market opportunism and accident).
  • taking small steps (to minimize the impact of failure).
  • persistence (accepting and learning from mistakes).
  • continuous improvement (so great companies win the long race, even after a slow start).

Improvement is achieved by focusing not on beating competitors but on constantly asking the question:

“How can we improve ourselves to do better tomorrow than we did today?”Jim Collins and Jerry Porras, Built to Last (1994)

Great companies:

  • have extremely high standards.
  • are never complacent, or satisfied with their results.

 

6. Great leadership

The best leaders are “clock builders, not time tellers”.

In other words, they are most concerned with building a great institution (like the Founding Fathers who created the American Constitution).Jim Collins and Jerry Porras, Built to Last (1994)

Time telling (“having a great idea or being a charismatic visionary leader”) isn't so important in great companies.

A charismatic visionary leader:

  • is not required for a great company
  • may be detrimental to its long term prospects.

Leaders of great companies are much more likely (by a factor of six) to be promoted internally.

 

Key quote on corporate culture

The crucial variable is not the content of a company’s ideology, but how deeply it believes its ideology and how consistently it lives, breathes, and expresses it in all that it does.

 

Key quotes on change

Contrary to popular wisdom, the proper first response to a changing world is not to ask, “How should we change?” but rather to ask, “What do we stand for and why do we exist?”

The very fact that purpose can never be fully realized means that an organization can never stop stimulating change and progress in order to live more fully to its purpose.

 

Key quotes on business success

To be built to last you must be built to change (Jim Collins, preface, 2004 edition).

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?”

 

Key quote on human resource management

For it is through the power of human organization - of individuals working together in common cause—that the bulk of the world’s best work gets done

 

Free Newsletter
Enter your name and e-mail address to receive our free newsletter with analysis of business issues and new business books

Quotes