Book Review By - Nitesh Agrawal

Built to Last By James C. Collins and Jerry I. Porras

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Introduction: Built to Last makes a unique and valuable contribution to current business literature by applying this view to the corporation. They write, We set out to discover the timeless management principles that have consistently distinguished outstanding companies. The authors conclude that the most successful companies eschew merely following the latest fad. And the authors argue that a company does not require one great idea or some charismatic CEO to be successful. Rather the most successful companies in the world operate according to powerful and effective principles that are reproducible by any ambitious company (or department) that will take the time to understand and rigorously apply them. Built to Last sets out those principles. Ask the Experts In August of 1989, Stanford Universitys James C. Collins and Jerry I. Porras sent surveys to 700 Fortune 500, and Inc. 500 and 100 company CEOs. These business leaders were heads of industrial and service companies, both private and public. Each executive was asked to name five or less companies that they saw to be highly visionary. After receiving 165 responses (23.5% of those queried), the authors selected the twenty companies most frequently listed. Then, with the desire to exclude any company that might still be the benefactor of one great idea or leader, they threw out any company that began after 1950. They ended up with 18 companies, with 1897 being the average founding date. Realizing that these exceptional companies would have many characteristics in common with many other un-exceptional companies, the authors decided to select a group of comparison companies in order to determine the distinctive characteristics of the 18 visionary companies. Collins and Porras chose a sister comparison company for each visionary company, guided by the visionary companys date of founding, its product and markets. In addition, the comparison company could not be what they call a dog company, but it must be at least moderately successful. These are the companies studied in Built to Last: The Visionary Companies 3M American Express Boeing Citicorp Ford General Electric Hewlett-Packard IBM Johnson & Johnson Marriott Merck Motorola Nordstrom Philip Morris Procter & Gamble Sony Wal-Mart The Comparison Companies Norton Wells Fargo McDonnell Douglas Chase Manhattan GM Westinghouse Texas Instruments Burroughs Bristol-Myers Squibb Howard Johnson Pfizer Zenith Melville RJR Nabisco Colgate Kenwood Ames

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Walt Disney

Columbia

Indicative that the CEOs were accurate in evaluating the success of these 18 visionary companies is the fact that $1 invested in on January 1, 1926 would have yielded $6,356 at the end of 1990. This is fifteen times the performance of the general market ($415). And the $955 that the comparison companies would have netted after a similar investment shows that they too have been moderately successful, also out performing the general market. The authors then undertook a study unique in business literature: they studied each of these eighteen visionary companies and their sister comparison companies through their entire history. In this way, they sought to discover the timeless principles that determined the companies respective successes. Clock Building, Not Tome Telling One of the central ideas of Built to Last is that the leaders of the great visionary companies of the last one hundred years have focused on building the company rather than exclusively on building a product or presenting a service. The well-made product or the radically pro-customer service is seen as being serendipitous to the building of the company itself. The writers teach that if you focus on building a great company, then the excellence of service and product will naturally follow. Collins and Porras use a metaphor to illustrate this point. They draw the distinction between leaders who are able to merely tell the time or those, which have the capacity to build clocks. Those who can quickly motivate those around them by dent of their large or charismatic personality are time-tellers. Or, leaders that achieve a fast success on the basis of a great idea tell time. But the leaders who put together and maintain companies that succeed over time are those who build clocks. The successes of these companies transcend the occasional charismatic leader and the intermittent great idea. The writers use this metaphor to shatter the myth that great companies require charismatic leaders or fantastic product ideas. Bill Hewlett and Dave Packard started a company with only the desire to do something in electronic engineering. Bill says, We did anything that would bring in a nickel. We had a bowling foul-line indicator, a clock drive for a telescope, 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. After he started Sony, Masaru Ibuka joined in a meeting with his seven first employees to decide what to make! Their first product, a rice cooker, didnt work. What Built to Last calls their first significant product, which was a tape recorder, failed on the market. 3M began with a corundum mine that was so unsuccessful that its stock dropped to what the authors call the barroom exchange value of two shares for one shot of cheap whiskey. Their second president was not able to take a salary for his first eleven years! Imagine how profitable Procter & Gamble would be today if they still sold lamp oils, candles, and hog fat soap! Three of the visionary companies Collins and Porras selected started with a great idea, while eleven of the eighteen comparison companies started this way. Ten of these comparison companies were initially more successful than their sister visionary companies. Collins and Porras conclude, In short, we found a negative correlation between early entrepreneurial success and becoming a highly visionary company. They suggest that the reason for this inverse relationship is that the great idea distracts the leaders of the company from focusing on the company as what they call the ultimate creation. Do We Build A Product or a Company?

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The authors present the creator of visionary company General Electric, Charles Coffin, as a clock builder. While not an inventor, he did establish the General Electric Research Lab, a fundamental component of GE that has richly rewarded the company with many good ideas. George Westinghouse, on the other hand, not only founded Westinghouse but fifty-nine other companies as well. He was a productive inventor. He correctly believed that Westinghouses AC electrical system would prevail over the General Electrics DC system. The authors comment, Westinghouses greatest creation was the AC power system; Coffins greatest creation was the General Electric Company.1[9] He focused more on the company itself and, as a result, GE has been the more successful company over time. Hewlett-Packard also shows this emphasis. In the mid-1950s Bill Hewlett said, Engineering is one of our most important products. At HP, it is the process of creating a product and the organization of the company intrinsic to that process that is primary, not the product itself. Collins and Porras conclude, The continual stream of great products and services from highly visionary companies stems from them being outstanding organizations, not the other way around. In Search of the Mythopoeic Great Leader The authors challenge their readers to identify William McKnight. Most people even in the business world have never heard of him. And yet William McKnight was a top executive of Minnesota, Mining, and Manufacturing Company (better known as 3M) for fifty-two years!! Ibuka of Sony was thought of as being introspective and reserved. Procter and Gamble are described as stiff, prim, proper, and reserved -- even deadpan. Collins and Porras call Bill Allen the most significant CEO in Boeings history. Hes been described as having a benign appearance. The word restraint is used to describe Mercks George W. Merck. Contrary to conventional popular wisdom, the visionary companies arent populated at the top with tremendous charismatic visionary leaders over their histories. The evidence suggests that the organization is more critical to the success of the company rather than the presence of a large personality. In concluding their discussion of the distinction between time telling and clock building, the writers suggest that rather than waiting for the big idea or the high-profile charismatic leader, aspiring visionary companies can rather focus on learning the principles that underlie the visionary companies success. More Than Profit Whats at the center of the fine running clocks studied by Collins and Porras? Its a core ideology. Its the values and beliefs that form the foundation of the companys existence. It is, in fact, the companys raison dtre. The authors found that seventeen of the eighteen companies that they studied were guided more by their ideology and less by the desire to maximize shareholder wealth. In 1960, David Packard was speaking with a group of his employees responsible for a management development program that HP was initiating. To them, he stated, I want to discuss why a company exists in the first place. In other words, why are we here? I think many people assume, wrongly, that a company exists simply to make money. While this is an important result of a companys existence, we have to go deeper and find the real reasons for our being. As we investigate this, we inevitably come to the conclusion that a group of people get

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together and exist as an institution that we call a company so they are able to accomplish separately, they make a contribution to society, a phrase which sounds trite but is fundamental. The real reason for our existence is that we provide something, which is unique. The core ideology acts as a map for the visionary company. For example, in the case of HewlettPackard, their core ideology guided them away from simply developing a personal computer only because it was vastly popular. Hewlett-Packard would only enter the market when it felt that it had something unique to contribute to the personal computer market technologically. That resolve represented a commitment to a core value. In 1950 George Merck II, head of the pharmaceutical giant Merck & Company, said, We try to remember that medicine is for the patient. We try never to forget that medicine is for the people. It is not for the profits. The profits follow, and if we have remembered that, they have never failed to appear. The better we have remembered it, the larger they have been. High rhetoric? Many years ago the parasitic worms, which caused river blindness, plagued over one million people in Third World countries by swarming through body tissues and eventually painfully blinding the eyes. Merck developed Mectizan hoping that some third party, perhaps some government agency, would purchase the drug. No one did. And so Merck, because of his core values, gave the drug to everyone who needed it. And using his own money, Merck became directly involved in the drugs distribution. The Tyranny of the OR versus The Power of the AND The authors periodically revisit what they call the both/and nature of the visionary companies. Contradicting any presumption of inherent tension between strictly charting a companys progress by the compass of a core ideology and guiding a company by the desire to make money, Built to Last highlights Mercks decision to bring streptomycin to Japan. That drug-stopped tuberculosis in Japan and the company made no money on this venture. Yet today, Merck is the biggest pharmaceutical company America has on the island. In 1916 Henry Ford said, I dont believe we should make such an awful profit on our cars. A reasonable profit is right, but not too much. I hold that it is better to sell a large number of cars at a reasonably small profit...I hold this because it enables a larger number of people to buy and enjoy the use of a car and because it gives a larger number of men employment at good wages. Those are the two aims I have in life. Henry Ford really believed this. And because of his ideology, Ford made the automobile the ubiquitous icon of Americana. His ideology moved him to lower the price of the Model T by 58 percent between 1908 and 1916 (because it enables a larger number of people to buy and enjoy the use of a car). His ideology constrained him to double the standard industry rate of pay for his workers (and because it gives a larger number of men employment at good wages). In the short run, both of these decisions were unprofitable. Yet in the long run, they are two ways that Ford distinguished itself from the thirty plus car companies that existed at the dawn of the automobile industry. What changes and what Doesnt

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One of the balancing acts that Built to Last explores in the visionary companies is that between preserving the ideological core of the business while simultaneously stimulating progress. The core preserved is the group of values that form the foundation of the company. Nothing is done that is inconsistent with that set of values. And yet the stimulation of progress requires constant flexibility and change. Even corporate culture is changeable, as long as that change does not violate a core value. For example, at 3M, Respect for individual initiative is a part of their core value group. Procedurally, one way that this value is translated in their corporate culture is for every technical employee to be given the chance to spend 15% of their workweek on a project of their own choosing. This procedure could change; the value behind it must not. If the 15% procedure were discarded by reason of some business exigency, that would not threaten the companys growth. If it were part of a management trend away from Respect for Individual Initiative, then the value core of the company would be threatened and its structural integrity. Its long-term profitability would be threatened, even if in the short run profits would increase or more money would be saved. The authors emphasize that once a companys core values are determined (whether its by a mission statement or a vision statement or whatever) then it is absolutely critical that management put into place tangible mechanisms, which communicate and apply these values. They say, This is the essence of clock building. Similarly, tangible mechanisms must also be instituted that stimulate progress.

Big Hairy Audacious Goals (BHAGs) One of the mechanisms that the writers discovered visionary companies use to stimulate growth is what they call BHAGs or Big Hairy Audacious Goals. In 1952 Boeings engineers were developing a vision for the first big commercial jet airplane. Previous to this point, four-fifths of their business was from the United States Air Force. Commercial airlines were not interested in jets. And Boeing estimated that it would take about 25% of the companys net worth just to develop a prototype. But because it fit with Boeings core ideology and because it would stimulate growth, Boeing decided to move forward with the development of what came to be known as the 707. Its comparison company, Douglas, did not bring a commercial jet aircraft to market for another six years, and still never achieved the sales of Boeing. Not all of the visionary companies used BHAGs. But the companies that do find that they enable their employees to get a vision of the companys core ideology incarnate. Its touchable. Its tangible. And its big! Walt Disney saw a BHAG when he visualized Disney World. In the beginning of the sixties, IBM spent more money to develop a new computer - the IBM 360 than the United States Government had spent on the Manhattan Project.2[19] IBM took a huge gamble

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spending $5 billion on the 360; its success would cast most of their product lines into obsolescence. Target BHAG can be Quantitative or Qualitative. Examples: Become a $ 125 billion company by year 2000. (Wal-Mart, 1990) Democratize the automobile. (Ford, early 1900s) Become the company that most changes the worldwide image Japanese product as being of poor quality. (Sony, early 1950s) To become the most powerful, most serviceable, the most far-reaching financial institution that has ever been. (Citi Bank, 1915) Become the dominant player in commercial aircraft, and bring the world into jet age. (Boeing, 1950)

Common-enemy BHAGs involving beating a common enemya David versus Goliath BHAGs. Examples: Knock off RJR as the number one tobacco company in the world. (Phillip Morris, 1950s) Crush Adidas. (Nike, 1960s) Yamaha Wo tsubusu. (We will crush, squash, slaughter Yamaha!!). (Honda, 1970s) Role model BHAGs are particularly effective for up-and-coming organization with bright prospects. Examples: Become the Nike of the cycling industry. (Giro Sport Design, 1986) Become as respected in twenty years as Hewlett-Packard is today. (Warkins-Johnson, 1996) Become the Harvard of the West. (Stanford University, 1940s) Internal transformation BHAGs tend to be effective in old or large organization in need of organizational transformation. Examples: Become number one or two in every market we serve and revolutionize this company to have strength of a big company combined with the leanness and agility of a small company. (General Electric, 1980s) Transform this company from a defense contractor into the best-diversified hightechnology company in the world. (Rockwell, 1995)

Cult Like Culture Consistent with its commitment to a strongly held core ideology, the visionary companies tend to have an almost cult like atmosphere. The cultures are tight and inclusive. Not everyone will like it. There is a distinguishable period of indoctrination into the culture at the beginning of an employees career. Nordstrom's has this kind of atmosphere. They encourage employees to write stories about the heroic exploits of fellow employees. They hire those who are young and more malleable. They give more money, recognition, and prizes to those who perform in accordance with their tightly defined core values. Those who fall short receive marks in their folder and other penalties. They call themselves Nordies. These companies communicate those those who work there are part of the elite. They are the chosen.

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Thomas J. Watson, Jr. put together country clubs, which IBM managed to encourage their employees to socialize among themselves. In their training program, IBMers sing songs from the Songs of the IBM like Ever Onward and The Star-Spangled Banner. The 1985 edition of The 100 Best Companies to Work For reads, You must be willing to give up some of your individual identity to survive [IBM]. Every employee of Walt Disney must go through Disney University. No man has facial hair. They have their own nomenclature: on duty is onstage; a crowd is an audience; a job description is a script; and so forth. If any Walt Disney employee cursed in their founders presence, they were immediately terminated. Procter & Gamble expects their employees to spend free time mostly with other P&Gers, even go to the same churches! The company frowns on employees using luggage identification cards that indicate they work for P&G. One mustnt talk about business in a public place. It must be stressed here that many of the items mentioned above are cultural. These practices themselves dont explain the success of these companies. What they do explain is the degree to which the company takes its core ideology seriously. The way it communicates or expresses that ideology varies from company to company; the level of commitment to their core values does not. And that is the key point. If a companys management really believes its core ideology, there will be some tangible manifestations of that belief in the organization, culturally appropriate for the companys workforce and its socio-cultural environment. All new hires at Disneyland experience a multi day training program where they learned new language: Employees are cast members. Customers are Guests. A crowd is an audience. A work shift is a performance. A job is a part. A job description is a script. A uniform is a costume. The personnel department is casting. Being on duty is onstage Being off duty is backstage

Try a Lot of Stuff and Keep What Works Visionary companies made some of their best moves not by detail strategic planning, but rather by experimentation, trial & error, opportunism, and-quite literally-accident a purposeful accidents. In 1920, Earle Dickson used surgical tape, gauze, and a covering, which wouldnt stick to skin to make something to cover his wifes wounds. She seemed predisposed to cutting herself with knives in the kitchen. He mentioned it to the marketing people in Johnson and Johnson, where he worked, and after much experimentation, the Band-Aid was born. It became J&Js most successful product category. In 1890 Fred Kilmer sent some Italian talc to a physician who said

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that his patients skin was being irritated by medicated plasters he had bought from Freds company. This became Johnsons Toilet and Baby Powder. In 1937 J.Williard Marriott observed that people about to fly out of Washington, DCs Hoover Airport would buy food and stuff it wherever they could. He pondered this and the next day he struck a deal with Eastern Air Transport to give them prepackaged lunches. Later he added American Airlines. Eventually Marriott spread to over one hundred airports. Action. The writers present this step as another way to stimulate progress. They write, ...evolutionary progress usually begins with small incremental steps or mutations, often in the form of quickly seizing unexpected opportunities that eventually grow into major--and often unanticipated-strategic shifts. One of the reasons that these changes are even possible is that the visionary companies tend to be atmospheres that facilitate whats been called intrepreneurship. Intrepreneurship is the manifestation of innovation within an established business structure. Employees are given the chance to try out their ideas and to spend company time and resources while on their exploration. Tom Peters calls them skunk works. Seeing what works presumes that much will not work. And so the visionary companies tend to have a greater tolerance for innovative failure. Many mistakes accompany the intrepreneur on the road to eventual success. While the authors presenting evolution as a metaphor of a company seizing small incremental opportunities to improve is, in our opinion, somewhat tortured and drawn out through this chapter, nevertheless the progress of this type of change does reflect a habit of the visionary companies.

Home Grown Management Consistent with the visionary companys deep, heartfelt commitment to its core ideology is its tendency to promote from within. One of the reasons for this commitment is that it tends toward preserving the core ideology. 3.5% of the 113 CEOs of the 18 visionary companies came from outside of the company. 22.1% of the comparison companies 140 CEOs came from outside of the respective company. The authors pointedly comment, Across seventeen hundred years of combined history in the visionary companies, we found only four individual cases of an outsider coming directly into the role of chief executive. Procter & Gambles commitment to preserve its ideological core by consistently developing management talent for successions at every level of its hierarchy, P&Gs program for developing managers is so thoroughgoing and consistent that the company has talent stacked like cordwood -- in every job and in every level. Reginald Jones of General Electric put together A Road Map for CEO Succession seven years before Jack Welch took the helm. He then spent 2 years trimming down the list of potential CEOs from inside the company from 96 down to 6. Finally, Welch was chosen. Oftentimes the decision to go outside of the company for any key manager, or a CEO, can be motivated by a commendable desire to reinvigorate the company. Sometimes such a decision is a companys leaderships way of fishing for fresh energy, or perhaps even new ideas, in the new hire. Or, worse, the company is forced to go outside of itself to garner talent because it is not

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developing talent internally. Many times going outside of a company can be a desired short cut that managers choose to jump-start an ailing organization. Instead of treating re-invigoration as a crap shoot dependent on who can be pulled off the street, these companies need to change their system - their organization - and not merely patch up their talent repertoire with the occasional hire. And if the new worker enters a system that is not already one that empowers its employees, she/he will have a more difficult time flourishing anyway. Michael Hammer & James Champy, in their Reengineering the Corporation, write about the company where workers are not expected to innovate or think or do anything other than simply what they are told. They call it industrial feudalism. We have observed a similar prejudice in todays business environment: a prejudice against the hourly worker. If endemic to an organization, this prejudice weakens the company significantly. This attitude does not allow the synergy that can develop when a company realizes that all of its workers have something significant to contribute. And this contribution is much, much more than the occasional good idea dropped in the ubiquitous suggestion box. Visionary managers actively seek to engage the brains of those who report to them, not just respond with condescending thanks when the hourly employee or front-line employee presents a fine idea. Oftentimes, the desire to go outside of ones own company to hire talent reflects a subtle professional disdain for those already working within the company, those who are waiting to be given a chance to show just what theyre capable of.

Good Enough Never Is Built to Last presents another mechanism, which the visionary companies employ to ensure constant growth: creating corporate discomfort. In other words, the visionary companies are never satisfied with what they have achieved so far, but are always stretching ahead to beat themselves. Procter & Gamble allow brands to compete against each other within the company. Motorola instituted a practice of stopping the production of developed products before they had finished their product life cycle to force the constant developing of new products. Boeing uses a mechanism that Collins and Porras call the eyes of the enemy in which managers act as if they were managers of competition companies planning how to beat Boeing in the marketplace. Sam Walton encouraged his retailers to always attempt to beat the sales of the same day in the previous year. The visionary companies also invested more of their profit back into the company while giving out lower shareholder cash dividends than the comparison companies. They also invest more in their peoples training, spending a significant amount in training centers. Motorola sets a goal of forty hours of training per employee per year. Disney requires every one of its employees to go through Disney University. 3M, Procter & Gamble, General Electric, Marriott, IBM, and Motorola all have some form of training center. City Bank consistently invested in imported new methods earlier than Chase Manhattan: Divisional profitability statements Merit pay Management training programs College recruiting program Organization by industry (versus geography)

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National charter ATMs Credit cards Retail branches Foreign branches

Indeed the principle of self-improvement stands out as one of the clearest differences between the visionary and comparison companies.

Preserve the Core/ Stimulate Progress The visionary companies have many, many instruments in place that reinforce the core ideology. Merck has videos, books, seminars, speeches, outside magazine articles, journals, and internal magazines and newsletters, which continuously stress the companys core values. HewlettPackard took its managers off-site in the 1950s to write the companys constitution. HP also has a healthy dose of apocryphal and true Bill and Dave stories which usually are anecdotes that illustrate HP core values. Nordstroms gives all of its salespersons business cards to emphasize their core value that their employees are important and that they are professionals. At the same time, the writers suggest that those companies that wish to operate on a par with the visionary companies also need to exercise diligence to correct misalignments with core values.

Examples of Core Purpose: 3M To solve unsolved problems innovatively Cargill: To improve the standard of living around the world HewlettPackard: To make technical contribution for the advancement and welfare of humanity Israel: To provide a secure place on Earth for the Jewish people McKinsey: To help leading corporations and governments be more successful Merck: To preserve and improve human life Nike: To experience the emotion of competition, winning, and crushing competitors Sony: To experience the joy of advancing and applying technology for the benefit of the public Wal-Mart: To give ordinary folk the chance to buy the same things as rich people Walt Disney: To make people happy

Coe Ideology Provide continuity and stability

Drive for Progress Urge continual change (new directions, new methods, new strategies, and so on)

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Plant a relatively fixed stake in the ground goals, improvement, an envisioned form, and so on). Limits possibilities and directions for the company (to those consistent with the Content of the Ideology). Has clear content ( This is our core Ideology and we will not breach it ) Installing a core ideology is, by its very nature a conservative act.

Impels constant movement (towards

Expand the number and variety of possibilities that the company can consider. Can be Content-free ( Any progress is good, as long as it is consistent with our core) Expressing the drive for progress can Lead to dramatis, radical, and revolutionary changes.

The interplay between core and progress is one of the most important finding of the Authors work

Building the Vision: A well-conceived vision consists of two major components core ideology and an envisioned future. A good vision builds on the interplay: it defines what we stand for and why we exist and sets forth what we aspire to become, to achieve, to create Envisioned future consists of a BHAG (Big Hairy Audacious Goal), which takes 10- 30-years and the whole organization to achieve and vivid descriptions of what it will be like when the organization achieves it. The vivid description is a vibrant, engaging, and specific description of what it will be like to achieve the BHAG, translating the vision from words into pictures, an image that people carry in their heads, picture-painting. This requires thinking beyond the current capabilities of the organization and current environmental trends, forces, and conditions. It should not be a sure bet maybe 50-70% probability but the organization must believe we can do it anyway. It should require extraordinary effort, and perhaps a little luck. Identifying core ideology is a discovery process, setting the envisioned future is a creative process. In identifying the core values, push with relentless self-honesty for truly CORE values. If you articulate more than five or six, youre not getting down to the essentials. About each one, ask, If the circumstances changed and penalized us for holding this core value, would we still keep it? Do not ask, What core values should we hold? Ask instead: what core values do we actually hold? Core values and purpose must be passionately held on a gut level or they are not core. Values you think the organization ought to have, but that you cannot honestly say that it does

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have, should not be mixed into the authentic core values. To do so creates cynicism throughout the organization. Core ideology need only be meaningful and inspirational to people inside the organization; it need not be exciting to all outsiders. You cannot install new core values or purpose into people. Core values and purpose are not something people buy in to. People must already have a predisposition to holding them. Executives often ask, How do we get people to share our core ideology? You dont. You cant! Instead, the task is to find people who already have a predisposition to share your core values and purpose, attract and retain these people, and let those who arent disposed to share your core values go elsewhere. Once youre clear about the core ideology, you should feel free to change absolutely anything that is not part of the core ideology. From then on, anytime someone says something shouldnt change because Its part of our culture or Weve always done it that way or any of the other excuses for resisting change, remind them of this simple rule: If its not core, its up for change.

Frequently Asked Questions Authors end their book with a helpful list of frequently asked questions. The first question is Where should we begin? And that is an excellent place for us to end our summary and comments. They give a number of answers to that query: 1 - Determine the companys core ideology, which is comprised of two aspects: a. What are the organizations core values? There should be only five or six of these. And they must not be time contingent. It is not what is popular at the present time. Its a value thats upheld consistently no matter what. b. Why does the company exist? The authors give a helpful question to determine this: Suppose we could shut this company down with no adverse economic consequences to employees or owners. Why shouldnt we do so? What would the world lose if the company ceased to exist? What would we lose if it ceased to exist? 2. Institute mechanisms in the company that preserve the core values. Is it a training center? How many hours a year should employees be in training? Does the company have a library where books that elucidate core values are available to all? What can be done to recognize employees, in a big and public way, that heroically apply core values in their service to customers, external and internal? Are those that best reflect the companys core values the best compensated? Are the awards of the company in line with these values? 3. Institute mechanisms in the company that stimulate progress. Do all employees have a forum for expressing ideas for stimulating business? for better serving the customer? What Big Hairy Audacious Goal would be appropriate? Is innovative failure

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allowed? Is failure encouraged?? Are intrepreneurial employees recognized with much fanfare and hoopla? 4. Correct misalignments with the companys core values. Is there a regular forum for employees to highlight company practices that are inconsistent with the companys core ideology? Is the exploration of misalignment a regular topic of managers meetings? Is healthy peer pressure encouraged for those whose attitude is inconsistent with the companys core values? The authors state that failure to take this step is a common mistake. Perhaps it is so common because it is easier to institute a new process or policy or procedure, but to change one that already exists is likely to threaten someone. Someone thought that it would be a good idea to put that misaligned process in place to begin with, and someone else has probably grown quite comfortable with it by now. Alignment is sometimes painful, but it is always necessary.

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Conclusion Built to Last gives many examples of companies that have focused more on building a fine organization rather than making a product, providing a service, or making a profit. Many of the most successful companies of the last one hundred years have operated with an almost religious fervor in their passionate commitment to a core ideology. They have a host of mechanisms in place that preserve this core. They also creatively seek to stimulate progress by using such mechanisms as Big Hairy Audacious Goals and constant incremental improvements. The companies that would succeed in the 21st Century need not come up with the one fantastic idea, or hire the charismatic and visionary CEO. The visionary companies of the next 100 years will succeed because they have patiently applied the laws of the farm, the timeless principles that have worked for the visionary companies of the last 100 years. 1 - Determine the companys core ideology, which is comprised of two aspects: a. What are the organizations core values? There should be only five or six of these. And they must not be time contingent. It is not what is popular at the present time. Its a value thats upheld consistently no matter what. b. Why does the company exist? The authors give a helpful question to determine this: Suppose we could shut this company down with no adverse economic consequences to employees or owners. Why shouldnt we do so? What would the world lose if the company ceased to exist? What would we lose if it ceased to exist? 2. Institute mechanisms in the company that preserve the core values. Is it a training center? How many hours a year should employees be in training? Does the company have a library where books that elucidate core values are available to all? What can be done to recognize employees, in a big and public way, that heroically apply core values in their service to customers, external and internal? Are those that best reflect the companys core values the best compensated? Are the awards of the company in line with these values? 3. Institute mechanisms in the company that stimulate progress. Do all employees have a forum for expressing ideas for stimulating business? for better serving the customer? What Big Hairy Audacious Goal would be appropriate? Is innovative failure allowed? Is failure encouraged?? Are intrepreneurial employees recognized with much fanfare and hoopla? 4. Correct misalignments with the companys core values. Is there a regular forum for employees to highlight company practices that are inconsistent with the companys core ideology? Is the exploration of misalignment a regular topic of managers meetings? Is healthy peer pressure encouraged for those whose attitude is inconsistent with the companys core values?

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The authors state that failure to take this step is a common mistake. Perhaps it is so common because it is easier to institute a new process or policy or procedure, but to change one that already exists is likely to threaten someone. Someone thought that it would be a good idea to put that misaligned process in place to begin with, and someone else has probably grown quite comfortable with it by now. Alignment is sometimes painful, but it is always necessary. .

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