Anyhoo, Built to Last: Successful Habits of Visionary Companies, by James C. Collins and Jerry I. Porras (HarperBusiness, 1994) is unusual in the genre for two reasons: one, it's pretty old (considering) and still on the shelf; and two, it's got a fair bit of substance. The book is the result of an extensive study the authors, both Stanford professors, conducted on 18 visionary companies: companies which had been in business at least 50 years, premeir institutions in their industries, and widely respected by businesspeople In The Know. Their intent was to determine what set these companies apart from others in the same industries with similar longevity, but without quite the same stature or financial returns.
The companies selected are all household names, and they're a pretty varied lot, including 3M, Merck, Citicorp, Walt Disney, Marriott, Wal-Mart, and Hewlett-Packard. Borrowing from my last review of Never Eat Alone (partly because I find it darned hard to really review books on topics outside my area of expertise, and partly because this one, too, was interesting enough for me to want to take notes), I'm going to do less of a review here and more a summary of the key characteristics Collins and Porras found which were common to the companies they studied.
- Clock building, not time telling. In short, a "visionary company" doesn't need to have its genesis in a single, brilliant idea -- Hewlett and Packard went into business together knowing only that they wanted to start a company that had something to do with electrical engineering -- or a charismatic leader. Rather, it's the company itself and what it stands for that is and isn't visionary. This theme of "clock building," which recurs throughout the book, is explained as follows:
- More than profits: While profits are important and necessary to all the visionary companies studied, they're not the end in and of themselves. Rather, these companies tended to focus on earning a good profit or a fair profit in a manner consistent with their core ideologies, rather than on making the maximum profit possible, regardless of how they got there
- Preserve the core/ stimulate progress: While having a core, unchanging ideology is important, that doesn't mean these companies refuse to change. On the contrary, "[a] visionary company carefully preserves and protects its core ideology, yet all the specific manifestations of its core ideology must be open for change and evolution."
- Big Hairy Audacious Goals (BHAGs -- pronounced "Bee-Hags" -- for short) -- clear, daunting goals that everyone can remember and understand -- are a great way to focus effort and stimulate team spirit.
- Along with the fervently-held core ideology, visionary companies tend to have cult-like corporate cultures. Those who fit with the ideology and enjoy working somewhere where everyone's expected to be gung-ho about their work tend to love it and stay a while; those who don't tend to leave or be fired quickly.
- Try a lot of stuff and keep what works. Sure, BHAGs are important, but evolutionary progress is equally so. Since you never know exactly where the next big thing is going to come from (witness the accidental invention of Post-It Notes at 3M, and, much earlier, of talcum powder and Band-Aids at Johnson & Johnson), it's best to give employees and departments a fair degree of freedom -- a/k/a "let a thousand flowers bloom" -- and, when you find something that works well, spread it around and/or run with it.
- Home-grown management. This was a surprise to me, but actually, only 2 of the 18 companies ever brought in a new CEO from the outside. Rather, part of how these companies preserved their core ideologies and stimulated progress was through extensive succession planning and a long-standing practice of promoting from within. Lest you think this means big, revolutionary changes are all but impossible, note that Jack Welch at GE was a home-grown CEO.
- Good enough never is. True visionary companies don't rest on their laurels; instead, they build in mechanisms to keep them from getting too comfortable, and seek constant improvement.
"Imagine you met a remarkable person who could look at the sun or stars at any time of day or night and state the exact time and date: 'It's April 23, 1401, 2:36 A.M., and 12 seconds.' This person would be an amazing time teller, and we'd probably revere that person for the ability to tell time. But wouldn't that person be even more amazing if, instead of telling the time, he or she built a clock that could tell the time forever, even after he or she was dead and gone? Having a great idea or being a charismatic visionary leader is 'time telling'; building a company that can prosper far beyond the presence of any single leader and through multiple produce life cycles is 'clock building.'"