Built to Last

Jim Collins and Jerry Porras wrote "Built to Last" for one
purpose, to find out what makes a company really
exceptional and different from the rest. To understand the
characteristics of the most successful companies in the
United States and what they have in common, they
observed 18 visionary companies and analyzed them in
dozens of criteria defined by the authors. With an
emphasis on management principles that are timeless,
they spent 6 years trying to understand how big
companies become big and stay on top. From this
research came the book that breaks down several myths of
the business world and reveals the characteristics of a
secular company. The main myths broken in this book
are:

 You need a good idea to set up a large company;

 You need a charismatic leader;
 Maximizing profits is the primary goal of visionary
companies;
 A company made to last is necessary to destroy the
competition;
 Bringing CEOs from other companies helps to evolve the
organization;
The book goes through these myths and also brings many
other fantastic perspectives for you who want to create or
transform your company into a great legacy.

Built To Last

To study the biggest and best companies in the United

States, Jim Collins interviewed hundreds of market
executives. From this research, he selected the 18 most
cited and called them visionary companies. These
companies were surveyed over 6 years, always compared
to companies that, even without fantastic performances,
competed in the same market. These were not bad
companies, but they were called visionaries much less
often by the executives interviewed. The companies were
evaluated according to their age. In both groups, the
average founding date of the companies dates back to the
end of the 19th century. The survey data were obtained
through demonstration of results, interviews with
executives, news and covered all aspects of the company.
The research took into account dozens of factors such as
corporate culture, corporate structure, employee
satisfaction and market penetration. To exemplify just
how extraordinary visionary companies are, Jim Collins
proposes a simulation. If you had invested a dollar in
visionary companies in 1920, in the 1990s, you would
have accumulated more than $ 6,000. For comparison
purposes, if you had invested the same dollar on the
American stock market, you would have accrued only $
400 in the same period. That's right. The companies
evaluated as visionary had a performance 15 times better
than the performance of the stock market. The
comparison companies of the study also had positive
reviews, with a performance 2 times better than the stock
market in this period. One of the most exciting points of
the research is that it destroys many myths associated
with success in the corporate world, outlining the winning
companies. Let's study them.

You Don't Need A Great Idea To Build A Great

Company

Few of the visionary companies started with a great idea.

In fact, many started without a specific idea, and several
of them started with bad ideas that ended up being
abandoned halfway. The authors cite the example of Sony,
which began with no thought in mind. The company
considered venturing into the sale of food to the final
consumer and even sporting goods. Hewlett-Packard (HP)
also had no specific idea in mind when it was founded. Its
founders tried to sell automatic discharges to bathrooms
and bowling equipment. Obviously, these were not the
ideas that turned these companies into the powers that
they are today.
Visionary Companies Do Not Need Visionary And

Charismatic Leaders

They are focused on architecting an institution built to

last. Successful companies have focused much more on
architecting a lasting organization than on having a
charismatic individual leader. As much as visionary
companies had notable individuals at the top, they were
generally simple and modest people. Also, many of the
comparison companies also had visionary leaders, and
this was not enough for success. Instead of focusing on its
leader, the visionary companies studied built
organizations that constantly generated great ideas and
new leaders. The true creation of the founders was not a
product, but the company itself, which was constantly
advancing independently of a person or idea. Visionary
companies are not personality cults, centered around a
charismatic CEO or founder, but rather around their core
values. Although charismatic personalities can also
stimulate passionate work, such "cults" inevitably collapse
when the person leaves, and this is not characteristic of a
company built to last.

Visionary Companies Do Not Exist To Maximize

Profits
They care first about their core values. They have a set of
goals and profitability is just one of them and, in many
cases, it is not the main one. They are guided by a
fundamental ideology, a set of core values. They have a
greater purpose for their existence and have relevant
principles that control all their decisions - this purpose
forms their ideology: solid principles that guide the
company through generations. Johnson & Johnson, for
example, wrote its core values in the 1930s in a document
called "Our Beliefs." The company's responsibilities were
already set there. First, what J & J sought was to serve its
customers well. Then its employees. Once these priorities
had been met, then the shareholders should receive a
return on their investments.

Visionary companies do not share a set of predefined

values. Each company has its values. There is no
fundamental set of values to become a visionary
enterprise. The most important point is not what the
content of the company's ideology is but how much the
organization believes in those values. Core values are
important not only when visionary companies succeed,
but also when they face crises that can threaten their
existence. When Ford faced an extreme crisis in the
1980s, its executives stopped to discuss and clarify what
the company represented and how they could remain
faithful to the values of its founder, Henry Ford.
The Only Constant Is Not Just Change

The established system also matters a great deal. A

visionary company religiously preserves its core values.
They are focused on the progress that allows them to
change and adopt innovations, but they never
compromise their core values. This preservation is
constant even as they seek relentlessly to stimulate
progress and improvements. For example, Wal-Mart's
motto of "exceeding customer expectations" is a stable
element of core values, but greeting customers entering
their stores is a practice that may change.

Visionary Companies Do Not Opt For Safe

Strategies

They experiment, get it right, fail and learn from their

mistakes. Although people believe that visionary
companies are conservative and bureaucratic, they are not
afraid of taking risks and are always committed to big,
audacious goals. To achieve progress, visionary companies
often define incredibly bold goals with which they fully
commit themselves. They can often seem unrealistic, yet
they are also clear and tangible enough to energize and
increase the focus of the organization. A well-known
example of a goal like this is that set by John F. Kennedy
in 1961 when he proclaimed that the US would take a man
to the moon and return safely until the end of the decade.
At the time, this was an almost ridiculously courageous
commitment, but it did move the US vigorously forward.
Boeing has set many goals of its kind throughout its
history, including its commitment to the development of
the enormous 747 jet. Boeing pursued this goal with full
force without even considering the possibility of failure.
The CEO said he would complete the model even if it
consumed the entire company. That almost happened, at
one point he had to shut down 60% of the company's
workforce because airplane sales did not live up to
expectations. J & J, for example, took risks and failed with
a line of focused gypsum products to immobilize children
with fractures. The kids loved the product, but the
hospitals had a huge rejection, after all, they did not want
to have to deal with that kind of dirt on their stretchers
and the parts that went to the laundromats and got
colored with plaster. Visionary companies understand
that failed experiments are the price they need to pay for
evolution and take these risks to reinvent themselves.

Visionary Companies Are Not Necessarily The

Best Places To Work For Everyone

They are great places for people who share their values to
work together. Only those who fit the core values will find
the company a great place to work. They reinforce their
ideologies with such determination that their corporate
cultures are almost like sects. Employees often become
completely immersed in the core values of the company.
Consider IBM, for example, where future training
managers sang group marches with their employees. At
the Walt Disney Company, the employees have to live and
breathe their ideology of healthy fun for the family. For
example, bearded men were not accepted as staff at the
theme parks, and if someone cursed in the presence of
Walt Disney himself, he was fired immediately, no matter
his place in the hierarchy. New employees in these
companies often realize that they either fit in perfectly and
succeed or not and become unhappy and leave the
company. There is no middle ground in visionary
companies, but because employees are confident and
adhere to the core values, they also have the freedom to
experiment. There is no space in visionary companies for
people who do not meet their expectations and rigid
standards.

Visionary Companies Do Not Move By Bright And

Extremely Well Planned Strategies

They are betting on experimentation. In general, the best

results from featured companies comes from their ability
to experiment, trial and error approaches and in some
cases even accidentally. They stimulate evolutionary
progress, always encouraging experimentation. Visionary
companies understand the need to foster a progressive
evolution within their business. They encouraged their
employees and managers to try out new ideas, products,
and practices, some of which became great successes. J &
J's famous Band-Aids were born when an employee
gathered some bandages and gauze to quickly bandage his
wife's fingers after she accidentally cut herself with a
kitchen knife. He mentioned the idea to executives at J &
J, who embraced the idea and launched the product on
the market. Quickly, the Band-Aid product line became
the best-selling category in the company. In the case of
3M, the company encourages employees to spend 15% of
their time on projects of their choice. Some of the
company's extremely successful items such as Post-its
came from this management model that embraces
experimentation, while its direct competitors never
ventured into the creation of products of greater
commercial risk.

Visionary Companies Do Not Hire Market CEO's

To Manage Change; They Create a Constant Flow

Of New Leaders Formed In House

House rules and practices are adopted much more often

in visionary firms than in comparison group companies.
While the visionary companies studied had notable CEOs
at various times, what was most impressive was their
ability to continue to produce quality leaders at all times.
These organizations focused massively on the cultivation
of managerial talent within the company itself so that new
leaders could always be retained to continue to perform by
their fundamental values. Visionary companies have
always invested in clear succession plans to ensure
continuity of leadership even if something unexpected
happens. General Electric (GE) has as its most famous
CEO the legendary Jack Welch. But in fact, thanks to the
company's fervent emphasis on internal leadership
training, GE has always had leaders of the caliber of
Welch. More leading professionals trained at GE have
gone on to become executives of large US companies than
any other company. Jack Welch, for example, designed his
succession plan seven years before retiring. Bob Galvin,
the former CEO of Motorola, planned his next generation
of leadership a quarter of a century before leaving. In
contrast, comparison group companies often hire outside
CEOs who were unfamiliar with the company and who in
many cases ended up pointing in the wrong direction. In
the comparison group, company CEOs were very little
involved in succession planning, leaving holes in the lead
when they left. In some comparison firms, CEOs actively
prevented any succession planning and sabotaged
potential candidates.
Visionary Companies Do Not Focus On Beating

The Competition

They focus on continuous improvement of themselves.

The most successful companies never have their focus on
competition and to gain more market share than their
competitors. They strive to compare themselves and be
better than they were in the past, implementing processes
that encourage continuous improvement. Wal-Mart, for
example, spurred steady growth with its "Beat Yesterday"
campaign, which was based on monitoring and helping its
employees always to increase sales over the previous day
and year. Hewlett-Packard has also created a continuous
improvement mechanism based on employee rankings.
These rankings helped people develop and barred
employees who were looking for promotions without
really striving.

Visionary Companies Do Not Have a Limiting

Vision of What Is Possible

They do many things at once and pursue seemingly

antagonistic goals. Visionary companies do not believe in
the view that you have to choose rationally between a
restrictive option A or B. They think in the paradoxical
view that they can pursue multiple goals at the same time
and seek A and B at the same time. The central value of
Boeing is to be a pioneer in the field of commercial
aviation, but the construction of jumbo jets is a
manifestation that the company can choose more than
one way without losing its essence. This flexibility shows
how visionary businesses refuse to adhere to the so-called
"tyranny," in which a company must choose to remain
faithful to its core values or to stimulate progress. Instead,
visionary companies use the "e" path, relying on
experimenting and reconciling diverse models.

Visionary Companies Do Not Just Have a Clear

And Well Defined Vision

They put their vision and values into practice, every day.
Creating a statement defining the vision and purposes of
the company can help, but it is only one of thousands of
steps in an endless continuous improvement process.
When Merck wanted to become a benchmark in medical
research, it deliberately modeled its labs from the models
of academic research centers and allowed its researchers
to publish their findings in academic journals. That was
unusual for private companies, and they were against the
tide. The company also decided that the product
development process should be driven by the research
team and not by marketing, as it was in many other
companies. That attracted the best scientists to Merck's
laboratories and made the company stay true to its values.
Becoming A Company Built To Last

To turn a business into an organization built to last, you

need to have a well-designed vision that has 2 key
components. The set of core values of the company and a
visualization of the future. A well-designed vision should
explain why the company exists, but also the aspirations
of what the company seeks and what progress should be
achieved over time. Core values are the glue that joins the
pieces of an organization as it grows, becomes
decentralized, diversifies, and yet remains coherent. They
should be divided between the essential practices and
beliefs of the day to day business of the company and the
central purpose of the company, the reason the company
exists. It is not possible to install new core values in
people, so it is essential that they already have them. The
future visualized also consists of two parts. A daring long-
term plan with a remarkably challenging and clear
objective and a vivid description of how the company will
be when it achieves this goal. Defining a long-term goal
asks you to understand precisely the current capabilities
of the organization, but also take into account market
forces and future conditions. An audacious goal should be
so clear that it needs no explanation, but should also be
out of your comfort zone. Objectives should be focused on
20, 30 years and can be qualitative or quantitative. They
may involve a common enemy when it is based on
winning something that is established, as in the fight
between David and Goliath. Or they can also be based on a
major internal transformation or even become the
primary reference in a given sector. It is essential to keep
in mind that this constant dynamics of revising core
values and not necessarily focusing on mission phrases
and values is the main machine to create companies made
to last. If done correctly, you will not need to revise it for
at least a decade and will have created a great alignment
in the organization.

Final Notes:

Visionary companies must create a core set of values and

remain faithful to them in all aspects of the business.
These core values of the company make clear to everyone
what the reason the company exists. Profits are not the
most important thing, and before them, one should
always focus on the customers and employees of the
company. If your core ideology is solid enough, to the
point that people live daily on these principles and
focused on continuous improvement, it may be that you
have built a company built to last.