Built to Last: Successful habits of visionary companies

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Built to Last - Successful Habits of visionary companies a great book to read. It tells the basics not just to built a highly successful company but even the basics to become highly successful individual in life.Click To Tweet

Built to Last – Infographics

Built To Last
What do highly successful companies do to remain successful

 

 

This book is a must for you to excel in personal as well as professional life. If you are an entrepreneur dreaming to create a viable and successful company which grows and prospers for generations ahead, then you have a lot to learn from this book.

This book discuss about the companies with worldwide reputation for excellence in their chosen field. These companies prosper over a long time period, through multiple product life cycles and multiple generations of active leaders. The author calls them as VISIONARY COMPANIES.

What does the book mean by visionary company?

  • Being outstanding organizations, visionary companies keep yielding a continual stream of great products and services.
  • They have an uncanny ability to continually change and evolve across numerous product life cycles.
  • Similarly, they show the organizational strength to transcend and outlast any individual founder or leader. Moreover, remain energetically committed to success over a number of generations.

Tell me what comes in your mind when you read these names American Express, Boeing, Ford, General Electric, Hewlett-Packard, IBM, Johnson & Johnson, Marriott, Merck, Motorola, Procter & Gamble, Sony, Wal-Mart and Walt Disney. Aren’t these larger than life companies?

How do you build a visionary company?

You will be amazed to know that creating and building a visionary company does not require a great product idea or a charismatic leader. Most of the highly successful companies actually started with rather vague concepts about what the company would do.

Read this comment,

“When I talk to business schools occasionally, they look at me with eyes wide open when I say that we didn’t have any plans when we started. We were just opportunistic amd did anything that would make us money.  At one time, we had a bowling foul-line indicator, a clock drive for a telescope or a thing to make a urinal flush automatically and a shock machine to make people lose weight. Here we were, with about $500 in capital, trying whatever someone thought we might be able to do.” Bill Hewlett, Cofounder, Hewlett-Packard (HP)
  • Despite slow beginnings, these companies have risen above their competitors and developed into the powerhouses of today.
  • These companies are constantly building only ONE THING and that is A GOOD COMPANY.

But, what made them good company? What characteristics these companies possesses in common?

They go with Clock Building and not Time Telling

  • Having a great idea or being a charismatic visionary leader is “time telling”, where as building a company that can prospers through multiple product life cycles is “clock building”.
  • Visionary companies concentrate primarily on building an organization – building a ticking clock – rather than on hitting a market just right with visionary product idea.
  • Bill Boeing’s first airplane failed and his company faced such difficulty during its first few years of operations that it entered into the furniture business to keep itself going.
  • Walt Disney’s first cartoon series Alice in Cartoon Land was a huge failure in the theatres. The company kept on going and rest is history.

How these companies turned their failures into the massive success and became a brand?

  • A fundamental ingredient of any visionary company is a core ideology – core values and a sense of purpose beyond simply making money. Core ideology guides and inspires company personnel during bad patch. It forms a shaping force for the business.
  • There is no single “magic” ideology that is shared by all visionary companies that should be copied. The critical issue is not to mimic others, but to develop a core ideology that you personally feel passionate about and motivated by.

The company itself is the ideal creation

  • Bill Hewlett and Dave Packard’s ultimate creation wasn’t the audio oscilloscope or the pocket calculator. It was the HP Company itself. HP suffered a lot due to failures in initial phases, it learned humility out of it.
  • Bill Hewlett and Dave Packard kept tinkering, persisting, trying and experimenting until they figure out how to build an innovative company that would express their core values.
  • Similarly, Masaru Ibuka’s greatest product wan not the Walkman or the Trinitron, It was Sony the company and what it stands for. Every visionary company believe on the core values and stand by it may what happens.

“I have concentrated all along on building the finest retailing company that we possibly could. Creating a huge personal fortune was never particularly a goal of mine.” Sam Walton, Founder, Wal-Mart.
  • It is hence crucial to consider this shift in thinking- the shift to seeing the company itself as the ultimate creation. It means spending less of your time thinking about specific product lines and market strategies, and spending more time thinking about organization design.
  • Be a clock builder and not a time teller if you want your company to shine for years together.

They follow More than Profits Approach

  • When Merck & Company reached its 100th Birthday, it published a book entitled Values and Visions: A Merck Century. Noticed something? Merck could have titled the book A 100 years of Success at Merck etc etc. But the book doesn’t even mention what Merck does. It chose instead to emphasize that it has been throughout this 100 years guided and inspired by some values and visions.
  • That’s the real spirit of any visionary company. It looks far beyond just money or profits.

“Putting profits after people and products was magical at Ford. Don Peterson, Former CEO, Ford.

“Maximizing shareholder wealth has always been way down the list. Profit is the cornerstone of what we do. It is a measure of our contribution and a means of self-financed growth. We always knew that if we provide real satisfaction to real customers, we will be profitable”. John Young, Chief Executive, HP.
  • When Masaru Ibuka started Sony among the ruins of defeated and devastated 1945 Japan, what should be his first priorities? Generate cash flow? Figure out what business to be in? Launch products? Develop customer base?
  • He did concentrate on these tasks. But he also did something else – something remarkable. He codified an ideology for his newly founded company including purpose of organization, management guidelines etc.

Think about this for a moment. How many companies do you know that follows this path?

  • Indeed, for many of the visionary companies, business has historically been more than an economic activity, more than just a way to make money. This is the key point to build everlasting company.
  • Profitability is a necessary condition for existence and a means to more important ends, but it is not the end in itself for many of the visionary companies.

They Preserve the Core but Stimulate the progress

  • Though core ideology is an essential component of a visionary company, core ideology alone can not make any company a visionary company.
  • Visionary companies have an amazing ability to move forward and evolve with their markets while simultaneously staying true to their essential core ideology. They have an enormous drive to move further, to do better and to create new possibilities. They typically have a curious mix of self-confidence and self-criticism.
  • Healthy doses of self-criticism makes a visionary company change and improve, usually before the outside world is even aware a change is needed. This requires self-discipline and a willingness to move forward and adapt.

“You can’t just keep doing what works one time, because everything around you is always changing. To succeed, you have to stay out in front of the change.” Sam Walton.

  • Companies get into trouble by confusing core ideology with specific, non-core practise which needs to be changed with changing requirements.
  • HP’s “Respect and concern for individual employee” is a permanent, unchanging part of core ideology.But, serving fruits and doughnuts to all employees at 10 A.M. each day is a non-core practice that can change.
  • Wal-Mart’s “Exceed customer expectations” is a permanent. But, customer greeters at the front door is a non-core that can change.
  • Visionary companies never lose focus of drive for progress even when company is progressing well.
  • As Henry Ford said, “you have got to keep doing and going”

Big Hairy Audacious Goal (BHAG – Medium to long term goal)

  • The setting of BHAG needs to be an ongoing process. In absence ot it, the company becomes complacent. Author call is as “we’ve arrived” mindset. To prevent this, follow-on complementary goals must be set on continuous basis.
  • Such goals unify and energize companies by serving as a single focus for the company’s energies and activities.  BHAG is the powerful mechanism to stimulate the progress.

But, it is important that the goals must be

  1. directly linked with the core ideology of the company.
  2. clear and compelling as well as easily stated in just few words to create momentum, to get people moving and be exciting.
  3. Should fall outside of the comfort zone, it should require a bit of heroic efforts to complete the goal.

Once one goal is achieved, it should have follow-on BHAGs to avoid the “we’ve arrived” syndrome.

Few examples of bold, impressive goals of visionary companies are

  • General electric – GE will become # or #2 in every market we serve.
  • Ford Motors – To build a motor car so low in price that every man making a good salary will be able to afford one and everyone will have a one.
  • Boeing Aircraft Company – The Boeing will build the 747 even if it takes the resources of the entire company.
  • Microsoft – A computer on every desk and in every home.
  • Google –Organize the world’s information and make it universally accessible and useful.
  • It is found that visionary companies have high level of self-confidence to get through such big goals. This confidence can be developed when you know the real strength of your business which is invisible for the outsiders.

Cult-Like cultures

  • Working at a visionary company is almost like joining a cult. People who work at these companies feel they belong to something special, something elite.

Visionary companies often create such environment by

  1. Helping employee to get involved with the company emotionally by orientation and training program
  2. Rigorous promotions from within the traditions
  3. Awards and contests for outstanding accomplishments which are in line with the core ideology
  4. Ongoing incentive programs linked to ownership shares in the company.

“Of all the things I’ve done, the most vital is coordinating the talents of those who work for us and pointing them towards a certain goal”. Walt Disney.

Visionary companies intentionally create an environment to inspire loyalty, enthusiasm and high ideals for personal as well as professional life.

Try a lot of stuffs and keep what works

“Failure is our most important product”. R.W. Johnson, Ex-CEO, Johnson & Johnson.

  • The history of most real-world success stories are filled with favourable accidents, trial-and-errors.
  • They reward the  initiatives taken by employee and be prepared to fail periodically.
  • In fact, visionary companies show that frequently they make most of their best moves not by detailed strategic planning but by experimentation, opportunism and by accident.
  • Visionary companies are evolving species which constantly adapts to the changing requirements of the customers. But, while doing so, it never compromises with its core ideologies.
  • To a visionary company, it means try lots of things, keep those that work and discard those that don’t.

Key characteristics of this type of environments

  1. They show a tradition of vigorous action. Whatever happens, don’t sit still. Keep moving is the motto.
  2. An acceptance that mistakes will be made and accidents will happen. Failures are an integral aspect of evolutionary progress.
  3. Take small steps that harm less financially if things do not go as expected.
  4. Give people the room and the resources they need to try an original idea.
  5. Build tangible business mechanism that encourage and reward innovators who are trying new ideas
  6. Every new product developed must fit the core ideology of company.

Home Grown Management

  • Visionary companies develop, promote and carefully select managerial talent from within the company to a greater degree than other companies. As vital for such companies is the continuity of high quality leadership.
  • This continuity preserves the company’s core values better than any other strategy.
  • Such companies plan for top management changes 9-10 years in advance and they often deal it with serious approach.

Good is never enough

  • Every visionary company designs their own methodology by which they keep beating their own performance and keep upgrading. These companies never worry about simply beating the competition.
  • Moreover, such companies are built on a foundation of solid and consistent hard work, dedication to improvement and a mindset focused on building for the future.
  • Such companies constantly keep asking themselves, “how can we do better tomorrow than we did today?”.
  • They never tender a mindset which says they have made it and can relax now- rather, visionary companies demand more and more of themselves.
  • Also, visionary companies install powerful mechanism to create discomfort, thereby stimulate the change before the external world demands it.

Some examples of the way visionary companies go about generating creative discontent-

  1. Boeing assigns its managers to look at products as if they worked for their fiercest rival, and to unearth weaknesses to exploit and strengths to leverage.
  2. Wal-Mart keeps a “Beat Yesterday” ledger which tracks sales figures on the same day one year ago. This year has to be up on last year day by day, or there are serious problems.

“Discipline is the greatest thing in the world. Where there is no discipline, there is no character. And without character, there is no progress._ J. Willard Marriott Sr.

The End of the beginning

  • A company can’t become visionary company just because it has a vision statement. A company that has ability to translate its core ideology and drive for progress into everything it does becomes a visionary company.
  • Such company weaves such a impactful environment around its core ideology that persons working there get clear message about their roles and responsibilities. All the operations, strategies and tactics are aligned with the core values in such a way that it can translate core ideology into reality very effortlessly.
  • The trick is to be trying new mechanisms to establish what does work, while taking full advantage of the proven performance of the past.
  • Visionary companies do not try a little bit of everything. Rather, they develop integral business elements that reinforce and amplify each other.
  • Building a company is an endless process where everyone needs to put constant efforts. Its the remarkable comprehensiveness and consistency over time that counts.

Building the vision

Vision = Core Ideology + Envisioned future

Core Ideology = what we stand for (intrinsic values) and why we exist (purpose)

Envisioned Future = what we aspire to become, to create, to achieve.

Do not ask, “What core values should we hold?” Ask instead, “what core values do we actually hold?” You get it by looking inside and not derived by looking around.

At the end of the day, It’s not the content of the ideology that makes a company visionary, It’s the authenticity, discipline and consistency with which the ideology is lived.

“Disneyland will never be completed as long as there is an imagination in the world.” Walt Disney

This book is A MUST READ for success of an individual as well as any enterprise. Principles mentioned in the book are timeless and if followed can help everyone to lead a successful life.

Share this summary among your friend who are working to build an empire. It may be useful for them.

Don’t forget to give your comments as it will help me to improve my blog.

 

Vinod,

reading next book for you.

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