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Built to last by Jim Collins & Jerry I. Porras – Remarks

Posted by Raul Barral Tamayo en Martes, 23 de junio, 2020

Copyright © 1994, 1997, 2002 by Jim C. Collins and Jerry I. Porras

Drawing upon a six-year research project at the Stanford University Graduate School of Business, James C. Collins and Jerry I. Porras took eighteen truly exceptional and long-lasting companies and studied each in direct comparison to one of its top competitors. They examined the companies from their very beginnings to the present day, as start-ups, as midsize companies, and as large corporations.

Throughout, the authors asked: “What makes the truly exceptional companies different from the comparison companies and what were the common practices these enduringly great companies followed throughout their history?”

Filled with hundreds of specific examples and organized into a coherent framework of practical concepts that can be applied by managers and entrepreneurs at all levels, Built to Last provides a master blueprint for building organizations that will prosper long into the 21st century and beyond.

Jim Collins is a student and teacher of enduring great companioes, how they grow, how they attain superior performance, and how good companies can become great companies.

Jerry I. Porras is the Lane Professor of Organizational Behavior and Change, Emeritus, at the Stanford University Graduate School of Business where he served as an Associate Dean for Academic Affairs and frequent executive education teacher. He studies ways of aligning companies around their purpose and core values to produce lasting high performance.

Comments extracted from the book, they could be right or wrong, you decide for yourself:

  • Even the visionary companies studied need to continually remind themselves of the crucial distinction between core and noncore, between what should never change and what should be open for change, between what is truly sacred and what is not.
  • If there is any one “secret” to an enduring great company, it is the ability to manage continuity and change.
  • When operating at their best, enduring, great companies do not abandon their core values and high performance standards when doing business in different cultures.
  • Social-cause organizations being in response to a specific problem, much as companies often begin in response to a specific great idea or timely market opportunity.
  • Conceptually, we see little difference between for-profit visionary companies and nonprofit visionary organizations. Both face the need to trascend dependence on any single leader or great idea. Both depend on a timeless set of core values and an enduring purpose beyond just making money. Both need to change in response to a changing world, while simultaneously preserving their core values and purpose.
  • The concepts inb Built to Last can be applied at the societal/governmental level.
  • A significant number of people have reported to us that they’ve found the key concepts useful in their personal and family lives. Who am I? What do I stand for? What is my purpose? How do I maintain my sense of Self in this chaotic, umpredictable world? How do I infuse meaning into my life and work? How do I remain renewed, engaged and stimulated?
  • The only truly reliable source os stability is a strong inner core and the willingness to change and adapt everything except that core.
  • Those who built the visionary companies wisely understood that it is better to understand who you are than where you are going, for where you are going will almost certainly change.
  • We took a set of truly exceptional companies that have stood the test of the time and studied them form their very beginnings, through all phases of their development to the present day; and we studied them in comparison to another set of good companies that had the same shot in life, but didn’t attain quite the same stature.
  • What makes the truly exceptional companies different form the other companies?
  • Many of today’s buzzwords (employee ownership, empowerment, continous improvement, TQM, common vision, shared values, and others) are repackaged and updated versions of practices that date back, in some cases, to the 1800s.
  • Just about anyone can be a key protagonist in building an extraordinary business institution. The lessons of these companies can be learned and applied by the vast majority of managers at all levels.
  • This a book about visionaries companies. Visionary companies are premier institutions in their industries, widely admired by their peers and having a long track record of making a significant impact on the world around them.
  • They are more than successful. They are more than enduring.
  • All of the visionary companies in our study faed setbacks and make mistakes at some point during their lives, and some are experiencing dificulty as we write this book.
  • Twelve shattered myths:
    1. It takes a great idea to start a great company. Visionary companies often get off to a slow start, but win the long race.
    2. Visionary companies require great and charismatic visionary leaders. Some of the most significant CEOs in the history of visionary companies did not fit the model of t he high-profile, charismatic leader.
    3. 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 neccessarily the primary one.
    4. 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 how consistently it lives, breathes, and expresses it in all that it does.
    5. The only constant is change. A visionary company almost religiously preserves its core ideology, changing it seldom, if ever.
    6. Blue-chip comapnies play it safe. They’re not afraid to make bold commitments.
    7. 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.
    8. Highly successful companies make their best moves by brilliant and complex strategic planning. Visionary companies make some of their best moves by experimentation, trial and error, opportunism and (quite literally) by accident.
    9. Companies should hire outside CEOs to stimulate fundamental change. We found only four individual incidents of going outside for a CEO.
    10. The most successful companies focus primarily on beating the competition. Visionary companies focus primarily on beating themselves.
    11. You can’t have your cake and eat it too. They reject having to make a choice. They embrace the “Genius of the AND”, the paradoxical view that allows them to pursue both A and B at the same time.
    12. Companies become visionary primarily through “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 we identified across the visionary companies.
  • The critical question is not “What’s common across a group of companies?”. Rather, the critical issues are: “What’s essentially different about these companies? What distinguishes one set of companis from another?”.
  • We hope you think critically and objectively as you read; we would rather that you thoughfully consider and ultimately reject our findings than that you blindly and unquestioningly accept them. Let the evidence speak for itself. You’re the judge and jury.
  • The builders of visionary companies tend to be clock builders, not time tellers. They concentrate primarily on building an organization rather than on hitting a market just right with a visionary product idea and riding the growth curve of an attractive product life cycle.
  • We found that creating and building a visionary company absolutely doesn not require either a great idea or a great and charismatic leader. We found evidence that great ideas brought forth by charismatic leaders might be negatively correlated with building a visionary company.
  • The evidence suggests that it might be better to not obsess on finding a great idea before launching a company. Why? Because the great-idea approach shifts your attention away from seeing the company as your ultimate creation.
  • We had to shift from seeing the company as a vehicle for the products to seeing the products as a vehicle for the company.
  • Luck favors the persistent. This simple truth is a fundamental cornerstone of successful company builders.
  • We don’t mean to imply that the visionary companies never had superb products or good ideas. They certainly did. Most of them view their products and services as making useful and important contributions to customers’ lives. These companies don’t exist just to “be a company”; they exist to do something useful.
  • We found no evidence to support the hyphotesis that great leadership is the distinguished variable during the critical, formative stages of the visionary companies.
  • Pshychological evidence indicates that personality traits get set relatively early in life through a combination of genetics and experience, and there is little evidence to suggest that by the time you’re in a managerial role you can do much to change your basic personality style.
  • We’re not claiming that the architects of these visionary companies were poor leaders. We’re simply pointing out that a high-profile, charismatic style is clearly not required for building a visionary company.
  • We speculate that a highly charismatic style might show a slight negative correlation with building a visionary company.
  • We think it unlikely that a company can remain highly visionary with a continous string of mediocre people at the top.
  • We found that the visionary companies did a better job than the comparison companies at developing and promoting highly competent managerial talent from inside the company.
  • Most of what’s required to build a visionary company can be learned. You don’t have to sit around waiting until you’re lucky enough to have a great idea.
  • A visionary company doesn’t seek balance between short-term and long-term. It seeks to do very well in the short-term and very well in the long-term. It seeks to be highly idealistic and highly profitable. It aims to be distinctly yin and distincly yang, both at the same time, all the time.
  • High ideals (a core ideology) often existed in the visionary companies not just when they were successful, but also when they were struggling just to survive.
  • In nearly all caes, we found evidence of a core ideology that existed not merely as words but as a vital shaping force.
  • We did not find “maximizing shareholder wealth” or “profit maximization”as the dominant driving force or primary objective through the history of most of the visionary companies. They have tended to pursue a cluster of objectives, of which making money is only one, and not neccesarily the primary one.
  • Visionary companies like Motorola don’t see it as a choice between living to their values or being pragmatic; they see it as a challenge to find pragmatic solutions and behave consistent with their core values.
  • We did not find any specific ideological content essential to being a visionary company. Our research indicates that the authenticity of the ideology and the extent to which a company attains consistent alignment with the ideology counts more than the content of the ideology.
  • We concluded that the critical issue is not whether a company has the “right” core ideology or a “likable” core ideology but rather whether it has a core ideology that gives guidance and inspiration to people inside that company.
  • Social pshychology research strongly indicates that when people publicly espouse a particular point of view, they become much more likely to behave consistent with that point of view even if they did not previously hold that point of view. The very acting of stating a core ideology influences behavior toward consistency with that ideology.
  • The visionary companies don’t merely declare an ideology; they also take steps to make the ideology pervasive throughout the organization and trascend any individual leader.
  • We did not find that the visionary companies have always been perfect exemplars of their ideologies. They have not always been perfect.
  • Core values are the organization’s essential and enduring tenets, not to be compromised for financial gain or short-term expediency.
  • Beliefs must always come before policies, practices, and goals. The latter must always be altered if they are seen to violate fundamental beliefs.
  • In most cases, a core value can be boiled down to a piercing simplicity that provides substantial guidance.
  • The core value can be stated a number of different ways, yet it remains simple, clear, straightforward, and powerful.
  • Visionary companies tend to have only a few core values, usually between three and six.
  • Which values would we be willing to change or discard if the environment no longer favored them? These questions can help you identify which values are authentically core.
  • We strongly encourage you not to fall into the trap of using the core values from the visionary companies as a soruce for core values in your own organization. When articulating and codifying core ideology, the key step is to capture what is authentically believed, not what other companies set as their values or what the ourside world thinkgs the ideology should be.
  • Purpose is the set of fundamental reaosn for a company’s existence beyond just making money.
  • original entry: https://raulbarraltamayo.wordpress.com/2020/06/23/built-to-last-by-jim-collins-jerry-i-porras/
  • Purpose need not be wholly unique.
  • The primary role of purpose is to guide and inspire, not neccesarily to differentiate.
  • When properly conceived, purpose is broad, fundamental, and enduring, a good purpose should serve to guide and inspire the organization for years, perhaps a century or more.
  • A visionary company continually pursues but never fully achieves or completes its purpose.
  • We did not find an explicit and formal statement of purpose in all of our visionary companies.
  • There’s absolutely no reason why you can’t articulate a core ideology for your own work group, department, or division.
  • Not all of the visionary companies began life with a well-articulated core ideology.
  • In the early stages, most visionary companies just tried to get off the ground and make a go of it and their ideology became clear only as the company evolved.
  • We believe IBM began to lose its stature as a visionary company in the late 1980s and early 19902 in part because it lost sight of Watson’s incisive caveat.
  • Companies get into trouble by confusing core ideology with specific, noncore practices. It is absolutely essential to not confuse core ideology with culture, strategy, tactics, operations, policies, or other noncore practices.
  • This brings us to the centrl concept of this book: the underlying dynamic of “Preserve the core and stimulate progress” that’s the essence of a visionary company.
  • Self-confidence allows a visionary company to set audacious goals and make bold and daring moves.
  • A visionary company thereby ceomes its own harshest critic.
  • A highly visionary company does have concrete, tangible mechanisms to preserve the core ideology and to stimulate progress.
  • If you are involved in building and managing an organization, the single most important point to take away from this book is the critical importance of creating tangible mechanisms aligned to preserve the core and stimulate progress. This is the essence of clock building.
  • Boeing has a long and consistent history of commiting itself to big, audacious challenges. In 1965, Boeing made one of the boldiest moves in business history: the decision to go forward with the 747 jumbo jet, a decision that nearly killed the company.
  • A true BHAG is clear and compelling and serves as a unifying focal point of effort, often creating immense team spirit.
  • The essential point of a BHAG is better captured in such questions are: Does it stimulate forward progress? Does it create momentum? Does it get people ongoing? Does it get people’s  people’s juices flowing? Do they find it stimulating, exciting, adventurous? Are they willing to throw their creative talents and human energies into it?
  • A BHAG only helps an organization as long as it has not yet been achieved. If your organization has a BHAG, you might want to think about what’s next before you complete the current one.
  • It’s not just the presence of a goal that estimulates progress, it is also the level of commitment to the goal, a goal cannot be classified as a BHAG without a high level of commitment to the goal.
  • Highly visionary companies seem to have self-confidence bordering on hubris (the dictionary defines hubris as “overbearing pride, confidence, or arrogance”).
  • To set Big Hairy Audacious Goals requires a certain level o unresonable confidence.
  • The BHAGs looked more audicious to outsiders than to insiders. The visionary companies didn’t see their audacity as taunting the gods. It simply never ocurred to them that they couldn’t do what they set out to do.
  • BHAGs can be applied to stimulate progress at any level of an organization.
  • A BHAG should be so clear and compelling that it requires little or no explanation. A BHAG is a goal not a “statement”. If it doesn’t get people’s juices going, then it’s just not a BHAG.
  • A company should be careful to preserve its core while pursuing BHAGs.
  • The visionary companies didn’t launch blindly toward any random BHAG, but only toward those that reinforced their core ideologies and reflected their self-concept.
  • WE speculated that our evidence would show the visionary companies to be great places to work. However, we didn’t find this to be the case, al least not for everyone.
  • Visionary tend to be more demanding of their people than other companies, both in terms of performance and congruence with the ideology. They tend to not have much room for people unwilling or unsuited to their demanding standards.
  • We found four common characteristics of cults that the visionary companies display to a greater degree than the comparison companies: Fervently held ideology, indoctrination, tightness of fit, elitism.
  • We’re not saying that visionary companies are cults. We’re saying that they are more cult-like, without actually being cults.
  • Visionary companies put more emphasis on employee training in general. Not just ideological orientation, but also skills and professional development training.
  • Visionary companies tend to be cult-like around their ideologies.
  • Cult-like cultures, which preserve the core, must be counterweighted with a huge dose of stimulating progress. In a visionary company, they go hand in hand, each side reinforcing the other.
  • It’s important to understand that you can have a cult-like culture of innovation, or a cult-like culture of competition, or a cult-like culture of change.
  • Visionary companies were significantly more decentralized and granted greater operational autonomy than the comparison companies as a general pattern
  • R. W. Johnson, former CEO, Johnson & Johnson: “Failure is our most important product”.
  • What looks like in hindsight like a brilliant strategy was often the residual result of opportunistic experimentation and “purposeful accidents”.
  • Evolutionary progress is unplanned progress. Species were not directly created in a specific preplanned form; they evolved.
  • We like to describe the evolutionary process as “branching and pruning”. The idea is simple: If you add enough branches to a tree (variation) and intelligently prune the deadwood (selection), then you’ll likely evolve into a collection of healthy branches well positioned to prosper in an ever-changing environment.
  • Visionary comapnies stimulate evolutionary progress toward desired ends within the context of a core ideology, a process we call purposeful evolution.
  • If we had to bet our lives on the continued success and adaptability of any single company in our study over the next fifty to one hundred years, we would place that bet on 3M.
  • McKnight, 3M:
    • Listen to anyone with an original idea, no matter how absurd it might sound at first.
    • Encourage; don’t pitnick. Let people run with an idea.
    • Hire good people, and leave them alone.
    • If you put fences around people, you get sheep. Give people the room they need.
    • Encourage experimental doodling.
    • Give it a try, and quick!
  • Innovation that didn’t “turn into products and processes that someone somewhere will find useful” would be of no interest to 3M.
  • 3M understood that big things often evolve from little things, but since you can’t tell ahead of  time which little things will turn into big things.
  • Although the invention of the Post-it note might have been somewhat accidental, the creation of the 3M environment that allowed it was anything but an accident.
  • Five basic lessons for stimulating evolutionary progress in a visionary company:
    1. Give it a try, and quick!
    2. Accept that mistakes will be made.
    3. Take small steps.
    4. Give people the room they need.
    5. Mechanisms, build that ticking clock!
  • Good intentions alone simply won’t cut it.
  • Never forget to preserve the core while stimulating evolutionary process.
  • To have a Welch-caliber CEO is impressive. To have a century of Welch-caliber CEOs all grown from inside, well, that is one key reason why GE is a visionary company.
  • As an interesting aside, more GE alumni have become chief executives at American corporations than alumni of any other company.
  • It would be naive to suggest that any random person could become CEO of a visionary company, and it would still continue to tick along in top form.
  • It is not the quality of leadership that most separates the visionary companies from the comparison companies. It is the continuity of quality leadership that matters, continuity that preserves the core.
  • If you’re involved with an organization that feels it must go outside for a top manager, then look for candidates who are highly compatible with the core ideology. They can be different in managerial style, but they should share the core values at a gut level.
  • As companies like GE, Motorola, P&G, Boeing, Nordstrom, 3M, and HP have shown time and again, a visionary company absolutely does not need to hire top management from the outside in order to get change and fresh ideas.
  • Our research leads us to conclude that it is extraordinarily difficult to become and remain a highly visionary company by hiring top management from outside the organization.
  • The key is to develop and promote insiders who are highly capable of stimulating healthy change and progress, while preserving the core.
  • All individual leaders eventually die. But a visionary company can tick along for centuries, pursuing its purpose and expressing its core values long beyond the tenure of any individual leader.
  • William Faulkner: “Don’t bother just to be better than your contemporaries or predecessors. Try to be better than yourself”.
  • Visionary companies attain their extraordinary position not so much because of superior insight or special “secrets” of success, but largely because of the simple fact that they are so terribly demanding of themselves. Becoming and remaining a visionary company requires oodles of plain old-fashioned discipline.
  • Comfort is not the objective in a visionary company. Indeed, visionary companies install powerful mechanisms to create discomfort, to obliterate complacency, and thereby stimulate change and improvement before the external world demands it.
  • Visionary companies invested for the future to a greater degree than the comparison companies.
  • The visionary companies also invested much more aggressively in human capital via extensive recruiting, employee training, and professional development programs.
  • The visionary companies invest earlier and more aggresively than the comparison companies in such aspects as technical knowhow, new technologies, new management methods, and innovative industry practices.
  • The discipline of self-improvement stands out as one of t he most clear differences between the visionary and comparison companies.
  • The essence of a visionary company comes in the translation of its core ideology and its own drive for progress into the very fabric of the organization (into goals, strategies, tactics, policies, processes, cultural practices, management behaviors, building layouts, pay systems, accounting systems, job design) into everything that the company does.
  • Visionary companies do not rely on any one program, strategy, tactic, mechanism, cultural norm, symbolic gesture, or CEO speech to preserve the core and stimulate progress. It’s the whole ball of wax that counts.
  • Visionary companies put in place pieces that reinforce each other, clustered together to deliver a powerful combined punch. They search for synergy and linkages.
  • The real question to ask is not “Is this practice good?” but “Is this practice appropiate for us, does it fit our ideology and ambitions?”.
  • A company must have a core ideology to become a visionary company. It must also have an unrelenting drive for progress. And finally, it must be well designed as an organization to preserve the core and stimulate progress, with all the key pieces working in alignment.
  • The builders of visionary companies tend to be simple in their approaches to business. Yet simple does not mean easy.
  • They distinguish their timeless core values and enduring core purpose (which should never change) from their operating practices and business strategies (which should be changing constantly in response to a changing world).
  • The most lasting and significant contribution of the architects of visionary companies is the core ideology.
  • There is no universally “right” set of core values. The key is not what core values an organization has, but that it has core values.
  • Ask about each core value: “If the circumstances changed and penalized us for holding this core value, would we still keep it?” If you can’t honestly answer yes, then it’s not core and should be dropped.
  • What core values do you personally bring to your work, core values you hold to be so fundamental that you would keep them regardless of whether they are rewarded? If you awoke tomorrow morning with enough money to retire for the rest of your life, would you continue to live according to these core values? Would you want to hold these core values, even if at some point one or more of them became a competitive disadvantage?
  • Core purpose, the second component of core ideology, is the organization’s fundamental reason for being. It captures the soul of the organization.
  • What would be lost if the company ceased to exist?
  • You do not “create” or “set” core ideologies. You discover core ideology. You get at it by looking inside. It has to be authentic. You can’t fake an ideology. Nor can you just “intellectualize” it. Core values and purpose must be passionately held on a gut level or they are not core.
  • You cannot “install” new core values or purpose into people. Core values and purpose ar enot something people “buy in” to. People must already have a predisposition to holding them. The task is to find people who already have a predisposition to share your core values ad purpose, attract and retain these people, and let those who aren’t disposed to share your core calues go elsewhere.
  • Once you’re clear about the core ideology, you should feel free to change absolutely anything that is not part of the core ideology. If it’s not core, it’s up for change. You also must determine what type of progress you want to stimulate, which brings us to the second component of the vision framework.
  • Vision requires a special type of BHAG that applies to the entire organization and requires ten to thirty years of effort to complete. It requires thnking beyond the current capabilities of the organization and current environmental trends, forces, and conditions. Inventing such a goal forces an executive team to be visionary, rather than just strategic or tactical.
  • It makes no sense to analyze whether an envisioned future is the “right” one. With a creation there can be no right answer. Did Beethoven create the “right” Ninth Symhony? Did Shakespeare create the “right” Hamlet?
  • The visionary companies tend to have even more audicious ambitions than the comparison companies.
  • The only way to make any company visionary is through a long-term commitment to an eternal process of building the organization to preserve the core and stimulate progress.
  • Once a visionary company does not neccesarily mean always a visionary company! Like democracy, visionary companies require eternal vigilance.
  • We found extensive compatibility with the work of Peter Drucker. In fact, we came away with immense respect for Drucker’s prescience.
  • Building a visionary company is a design problem, and great designers apply general principles, not mechanical lockstep dogma.
  • Our research would not capture companies that have visionary characteristics yet fail.
  • We cannot prove that the characteristics of visionary companies will neccesarily lead to enduring success in all cases.
  • However, the basic elements we found to distinguish the visionary companies usually appeared in the companies long before they became hugely successful premier institutions. The fact that such characteristics generally preceeded ultimate success gives us confidence that we have found more than chance correlation.
  • Highly visionary companies are not immune to setbacks and difficult times, yet they display resiliency and have built remarkable long-term track records.
  • We believe that the basic dynamics of being a visionary company will hold up across cultures and nationalities, but we also suspeect that the flavour of those dynamics will vary across cultures.

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