Built to Last: Successful Habits of Visionary Companies

“The only truly reliable source of stability is a strong inner core and the willingness to change and adapt everything except that core…it is better to understand who you are than where you are going—for where you are going will almost certainly change.”

A recurrent motif in the text is the eloquent assertion that nothing is deemed sacred within a company except the core ideology. In light of this, the authors emphasize that scrutinizing and elucidating the core ideology holds greater enduring value than strategic planning. While plans are inherently subject to change, the constancy of the core ideology stands unwavering, offering a more steadfast foundation for long-term success.

“Visionary companies make some of their best moves by experimentation, trial and error, opportunism, and—quite literally—accident. What looks in retrospect like brilliant foresight and preplanning was often the result of ‘Let’s just try a lot of stuff and keep what works.’”

Collins and Porras dismantle various business myths through their research, including the notion that visionary companies solely thrive on genius and meticulous strategic planning. While visionary companies engage in planning, the authors reveal that these plans do not always lead to the company’s most significant successes. However, many of these triumphs stem from meticulously crafted policies, procedures, and a deliberate organizational culture, showcasing the paradox between unplanned successes and the disciplined planning that underpins them.

“Visionary companies focus primarily on beating themselves. Success and beating the competitors comes to the visionary companies not so much as the end goal, but as a residual result of relentlessly asking the question ‘How can we improve ourselves to do better tomorrow than we did today?’”

Collins and Porras challenge the myth that companies primarily concentrate on outperforming their competition. Instead, the authors highlight a paradigm shift where visionary companies prioritize self-improvement. This strategic emphasis on internal enhancement, rather than an exclusive focus on competitors, emerges as a critical factor contributing to the success of visionary companies, preventing stagnation and fostering continuous growth.

“In a nutshell, we had two primary objectives for the research project: 1. To identify the underlying characteristics and dynamics common to highly visionary companies (and that distinguish them from other companies) and to translate these findings into a useful conceptual framework. 2. To effectively communicate these findings and concepts so that they influence the practice of management and prove beneficial to people who want to help create, build, and maintain visionary companies.”

This quote encapsulates the dual objectives that drove Collins and Porras in their research project. The emphasis on distinguishing the unique qualities of visionary companies from those of other companies suggests a meticulous examination to pinpoint the unique elements that set visionary companies apart. The second objective reflects the practical application of their research. By translating their findings into a conceptual framework, the authors aim to make the insights accessible and applicable to business.

“Preserve the core and stimulate progress.”

“Preserve the core and stimulate progress” is a recurring refrain in Built to Last and an important theme in the guide, echoed 32 times, signifying its centrality to Collins and Porras’s concept of visionary company success. According to the authors, this theme serves as the linchpin for the triumph of visionary companies. Embracing the dual principles of progress while unwaveringly adhering to core ideologies distinguishes these companies, setting them apart from their competitors.

1.  “Nonetheless, even taking full account of those concerns, the sheer volume of information we examined combined with the continual looping process from research to theory to practice gives us confidence that our conclusions are reasonable and—perhaps most important—helpful to the development of outstanding organizations. We do not claim to have found Truth with a capital T. No one in the social sciences can claim that. But we do claim that this research has given us better understanding of organizations and better conceptual tools for building outstanding companies than we had before.”

While acknowledging the value of Collins and Porras’s work, it is essential to note that their research methods have faced scrutiny. The authors themselves recognize concerns surrounding their approach. However, despite these challenges, the authors maintain that their research yields reasonable conclusions and contributes to a deeper understanding of the distinctions between visionary companies and their competitors.

“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 product life cycles is ‘clock building.’”

The analogy of clock-building versus time-telling recurs throughout the text. The central idea is that leadership in visionary companies transcends charisma. Instead, it revolves around the creation and enforcement of methods and procedures that cultivate enduring organizational success. In the epilogue, the authors cite “clock-building” as an evergreen concept in their book which will likely remain true over time, whereas technology and culture may change other aspects of their advice and methodology.

“Indeed, 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.”

Collins and Porras debunk another myth, asserting that exceptional companies do not originate from great ideas. Instead, the authors propose an alternative perspective, suggesting that, in reality, many companies launching with a great idea tend to fixate on the idea itself rather than the holistic development of the company.

“Luck favors the persistent. This simple truth is a fundamental cornerstone of successful company builders. The builders of visionary companies were highly persistent, living to the motto: Never, never, never give up. But what to persist with? Their answer: The company. Be prepared to kill, revise, or evolve an idea (GE moved away from its original DC system and embraced the AC system), but never give up on the company.”

Critics contend that the successes of visionary companies were luck-based, but the authors counter that persistence is the more critical factor. The crucial lesson underscores the importance of unwavering dedication, not solely to a specific idea but to the enduring commitment to the company itself. The example of General Electric adapting its approach while steadfastly maintaining commitment to the overarching company illustrates the adaptability necessary for sustained success, emphasizing that persistence transcends adherence to a specific plan and entails an enduring commitment to the company’s mission and existence.

“But as F. Scott Fitzgerald pointed out, ‘The test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function.’”

This quote echoes the theme of embracing duality and managing opposing concepts—an essential perspective in understanding visionary companies. Holding two opposed ideas simultaneously aligns with the book’s emphasis on visionary companies seamlessly integrating seemingly conflicting elements, such as stability and adaptability, idealism and profit, or short-term and long-term goals. This quote underscores the intellectual agility required for leaders of visionary companies to navigate complexity and successfully implement the paradoxical principles that contribute to their enduring success.

"Contrary to business school doctrine, 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 necessarily the primary one…And—this is they key point—[visionary companies] have a core ideology to a greater degree than the comparison companies in our study.”

This quote refutes the misconception that visionary companies prioritize maximizing profits and shareholder returns. Most visionary companies position shareholders at the bottom of their hierarchy of responsibilities. Instead, their primary focus is preserving the core ideology, understanding that this dedication catalyzes sustainable profitability.

“PROFITABILITY is a necessary condition for existence and a means to more important ends, but it is not the end in itself for many of the visionary companies. Profit is like oxygen, food, water, and blood for the body; they are not the point of life, but without them, there is no life.”

The authors emphasize that profitability is indeed a concern for visionary companies, recognizing the indispensability of profits for sustainability. However, they assert that visionary companies are not solely motivated by profit, highlighting a broader set of motivations and values that guide their organizational principles.

“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—likable or not—that gives guidance and inspiration to people inside that company.”

This quote challenges the misconception that visionary companies universally share core values and ideology, asserting the falsehood of this assumption. Furthermore, it underscores that the specific content of the ideology is immaterial; what truly matters is the extent of the company’s commitment to preserving and upholding this ideology.

“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.”

The authors highlight a common pitfall where managers and executives often create a written core ideology without implementing accompanying mechanisms. They stress the futility of ideologies without enforceable mechanisms and emphasize the necessity for procedures that facilitate progress. When in place, these mechanisms and procedures become instrumental in establishing and maintaining an enduring company.

“A BHAG engages people—it reaches out and grabs them in the gut. It is tangible, energizing, highly focused. People ‘get it’ right away; it takes little or no explanation.”

This quote encapsulates the essence of a BHAG (Big Hairy Audacious Goal) as a powerful motivational tool within visionary companies. The emphasis on a BHAG’s ability to engage people emotionally, reaching them on a visceral level, underscores its significance as a catalyst for inspiration. Overall, the quote underscores the transformative impact of a well-crafted BHAG in instilling a shared sense of purpose and understanding among team members within visionary companies.

“‘VISIONARY,’ we learned, does not mean soft and undisciplined. Quite the contrary. Because the visionary companies have such clarity about who they are, what they’re all about, and what they’re trying to achieve, they tend to not have much room for people unwilling or unsuited to their demanding standards.”

The authors dispel the misconception that visionary companies are effortlessly accommodating workplaces. Instead, these companies cultivate employee devotion among individuals who align with their culture. Employees who resonate with the company’s core ideology take pleasure in their association, while those incompatible with the culture may perceive these organizations as decidedly uncomfortable environments.

“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!’”

The authors adopt 3M’s strategy for fostering evolutionary progress, with the first aspect involving constant experimentation and adjustment by employees and embracing mistakes as integral to this process. 3M considers mistakes valuable but advises starting small and implementing changes incrementally to mitigate potential losses. 3M allows a great deal of employee autonomy to facilitate experimentation. Additionally, the company enforces various mechanisms to stimulate experimentation and emphasize the development of new products.

“A visionary company absolutely does not need to hire top management from the outside in order to get change and fresh ideas.”

Collins and Porras dispel the myth that companies require external CEOs for rejuvenation, contending that internal CEOs possess equal capability for instigating change. They argue that internal leaders are more adept at understanding the company’s core ideology, leading to changes that are typically well-aligned with the organization’s values.

“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 take an unconventional approach, rejecting comfort and stability as their primary objectives. Instead, these companies intentionally cultivate discomfort as a strategic mechanism to thwart complacency. The emphasis on powerful mechanisms for creating discomfort suggests a deliberate effort to challenge the status quo within the organization, prompting continuous change and improvement. By proactively stimulating discomfort, visionary companies position themselves to adapt and innovate before external pressures necessitate such responses.

“The essence of a visionary company comes in the translation of its core ideology and its own unique 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.”

Core ideology and the pursuit of progress needs to be part of every aspect of a visionary company. This quote’s mention of goals, strategies, tactics, policies, and various operational components highlights the comprehensive integration of these foundational principles into the company’s daily functions. It suggests that a visionary company’s identity is not confined to abstract ideals but intricately woven into tangible elements. The quote emphasizes the all-encompassing and pervasive nature of a visionary company’s core values and commitment to progress.

“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.”

The authors emphasize the holistic and multifaceted approach that visionary companies adopt in their quest for longevity and progress. The rejection of reliance on singular elements like programs or strategies emphasizes the comprehensive nature of their organizational philosophy. It suggests that visionary companies recognize the complexity of their endeavors, necessitating a comprehensive and integrated approach rather than relying on isolated measures for preserving core values and driving progress.

“1. Be a clock builder-an architect- not a time teller. 2. Embrace the ‘Genius of the AND.’ 3. Preserve the core / stimulate progress. 4. Seek consistent alignment.”

This succinct set of principles encapsulates the core tenets presented by Collins and Porras in Built to Last. The first directive, “Be a clock builder—an architect—not a time teller,” emphasizes the importance of visionary leaders focusing on building enduring organizations. The second, “Embrace the ‘Genius of the AND,’” advocates for embracing dualities and finding synergies between seemingly opposing ideas. The third, “Preserve the core / stimulate progress,” underscores the delicate balance visionary companies must maintain between preserving their core ideologies and fostering continuous advancement. Lastly, “Seek consistent alignment” highlights the ongoing effort required to ensure that every facet of the organization aligns with its core values and long-term objectives.

“Creating alignment, which is a key part of our ongoing work to help companies transform themselves into visionary companies, requires two key processes: 1) developing new alignments to preserve the core and stimulate progress, and 2) eliminating misalignments—those that drive the company away from the core ideology and those that impede progress toward the envisioned future.”

This quote underscores the critical role of alignment in the transformative journey of companies aspiring to become visionary. The two essential processes outlined highlight the dynamic nature of alignment as an ongoing and strategic endeavor. Identifying and removing misalignments, whether diverging from core ideology or hindering progress toward the envisioned future, underscores the meticulous approach required for sustained success in pursuing visionary status.