Built to Last
Tags: #business #management #leadership #culture #vision #innovation #long-term thinking
Authors: Jim Collins, Jerry I. Porras
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Overview
In “Built to Last”, we set out to discover the timeless principles that have consistently distinguished outstanding companies, those that we call ‘visionary’ companies. Contrary to popular belief, it’s not about having a charismatic leader or a brilliant product idea. Instead, we found that visionary companies are guided by a deeply held core ideology and a relentless drive for progress. They preserve the core – their fundamental reason for being – while constantly stimulating change and improvement in everything else. We explore how these companies achieve this dynamic balance through mechanisms like setting Big Hairy Audacious Goals (BHAGs), fostering cult-like cultures, encouraging experimentation, and promoting home-grown management. We also dispel common myths, such as the need for a great idea to start a company or the belief that maximizing profits is the primary goal. Ultimately, “Built to Last” provides a practical framework and timeless principles that can be applied by leaders at all levels and in all types of organizations who aspire to build institutions that make a lasting impact on the world.
Book Outline
1. The Best of the Best
Building a visionary company - one that can thrive for generations - is less about hitting the market with a brilliant product and more about building a strong, enduring organization - a ticking clock, so to speak. It is an institution that can adapt, evolve, and remain vibrant regardless of product cycles or changes in leadership.
Key concept: “This is not a book about charismatic visionary leaders. It is not about visionary product concepts or visionary market insights. Nor even is it about just having a corporate vision. This is a book about something far more important, enduring, and substantial. This is a book about visionary companies.”
3. More Than Profits
Visionary companies are more than just successful businesses. They are driven by a core ideology - their fundamental reason for being. This core ideology consists of core values that should never change and a purpose that transcends mere profit. While visionary companies change and adapt in response to the world, their core ideology acts as a guiding star, remaining fixed.
Key concept: “The company should be viewed as a vehicle for the principles, not the other way around.”
4. Preserve the Core/Stimulate Progress
Visionary companies have mastered the art of balancing continuity and change. They preserve their core ideology - the ‘why’ of their existence - while constantly stimulating progress and change in everything that is not part of the core. This interplay between core and progress is essential for long-term success.
Key concept: “Preserve the Core/Stimulate Progress”
5. Big Hairy Audacious Goals
Visionary companies set Big Hairy Audacious Goals (BHAGs) - ambitious, long-term goals that challenge the organization and create forward momentum. These are not just ordinary goals; they are bold and daunting, often seemingly impossible to achieve, yet they galvanize the company and inspire extraordinary effort.
Key concept: “A BHAG should be so clear and compelling that it requires little or no explanation. Remember, a BHAG is a goal —like climbing a mountain or going to moon—not a ‘statement’. If it doesn’t get people’s juices going, then it’s just not a BHAG.”
6. Cult-Like Cultures
Visionary companies have strong, ‘cult-like’ cultures that fiercely protect and preserve their core ideology. This doesn’t mean they are oppressive or unpleasant places to work, but it does mean they are highly selective about who they let in and are extremely demanding of those who remain. Only those who truly ‘fit’ with the core ideology will thrive.
Key concept: “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.
7. Try a Lot of Stuff and Keep What Works
Visionary companies are masters of ‘purposeful evolution,’ constantly experimenting, trying new things, and adapting to their environment. They don’t rely solely on grand strategic plans but also embrace a ‘try a lot of stuff and keep what works’ approach. This allows them to discover unexpected paths to success and avoid becoming stagnant.
Key concept: “Give it a try —and quick!”
8. Home-Grown Management
Visionary companies heavily emphasize developing and promoting managerial talent from within the organization. This ensures a deep understanding of and commitment to the core ideology at all levels of leadership, leading to continuity and stability over time.
Key concept: “Promote from within to preserve the core.”
9. Good Enough Never Is
Visionary companies embrace a culture of continuous self-improvement. They never think they’ve “arrived” and are constantly striving to do better tomorrow than they did today. This relentless pursuit of improvement is not a program or a fad, but a deeply ingrained way of life.
Key concept: “Discipline is the greatest thing in the world. Where there is no discipline, there is no character. And without character, there is no progress.”
10. The End of the Beginning
Building a visionary company requires alignment - a consistent set of signals and actions that reinforce the core ideology and stimulate progress. This means aligning everything from strategy and tactics to cultural practices and organization structure to support the company’s core values and purpose.
Key concept: “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.”
11. Building the Vision
This chapter provides practical guidance for articulating a coherent vision within an organization. It introduces a vision framework with two components: core ideology (core values and purpose) and envisioned future (a ten- to thirty-year BHAG and vivid descriptions). This framework guides organizations in establishing a clear and compelling direction for the future.
Key concept: “Core Ideology = Core Values + Purpose”
Essential Questions
1. What defines a visionary company, and what are some prominent examples?
Visionary companies are defined by their enduring impact and ability to thrive across generations and product cycles. They possess a unique institutional quality that transcends individual leaders, product offerings, or market trends. Examples of visionary companies cited in the book include 3M, Disney, and Merck, all known for their long-term success and impact on their respective industries.
2. What is the core principle of “Preserve the Core/Stimulate Progress” and why is it essential?
This central idea highlights the importance of a company’s enduring essence - its core ideology - consisting of core values and purpose. These should remain largely unchanged, acting as a guiding star for the company even as it adapts and evolves in response to a changing world. This contrast emphasizes that while strategy, tactics, and practices change, the fundamental ‘why’ of a company should remain constant.
3. Does a company need a “great idea” to become visionary, and what does the book suggest about this common myth?
Surprisingly, visionary companies are not necessarily founded on a ‘great idea’. In fact, many started without a clear initial concept, evolving and discovering their path over time. The book emphasizes that the drive to build an enduring company, coupled with a core ideology, is more important than a brilliant initial concept. This is liberating for entrepreneurs, as it encourages action and experimentation rather than waiting for the perfect idea.
4. What does “alignment” mean in the context of a visionary company, and how is it achieved?
Visionary companies achieve alignment by ensuring that every aspect of the organization - from strategy and structure to culture and people - works in concert to support the core ideology and drive progress. This requires not only establishing core values and purpose, but also translating them into tangible mechanisms, policies, and practices that are consistently applied throughout the organization. Alignment creates a coherent, unified environment that guides behavior and decision-making at all levels.
5. How does the concept of “alignment” relate to the analogy of a visionary company as a great work of art?
The authors draw an analogy between visionary companies and great works of art. Just as a masterpiece like Michelangelo’s Sistine Chapel isn’t defined by a single element, but by the totality of its parts working together, a visionary company is the culmination of various mechanisms, processes, and practices all aligned to support the core ideology and drive for progress. No single element is sufficient on its own; it’s the coherent whole that creates enduring greatness.
Key Takeaways
1. Define a Core Ideology
Defining core ideology provides a foundation for building a strong company culture and making consistent decisions. It acts as a compass, guiding the company’s direction and ensuring that all actions align with its fundamental beliefs.
Practical Application:
For example, an AI product engineer could define their core values as ‘ethical development,’ ‘user-centricity,’ and ‘cutting-edge innovation.’ These values should guide all product decisions, from data selection and algorithm design to user interface and safety considerations.
2. Embrace Audacious Goals (BHAGs)
BHAGs can create momentum, inspire innovation, and foster a sense of purpose within an organization. They stretch the company beyond its perceived limits and encourage it to achieve extraordinary results.
Practical Application:
An AI startup, instead of focusing on ‘building the best chatbot,’ could set a BHAG to ‘revolutionize customer service by 2030’. This ambitious goal would inspire the team and provide a clear focus for their efforts.
3. Promote Purposeful Evolution
This approach allows companies to discover unexpected paths to success, adapt quickly to changing circumstances, and avoid becoming stagnant. It fosters a culture of innovation and continuous learning.
Practical Application:
In an AI team, this could mean encouraging engineers to dedicate a portion of their time to exploring new research papers, experimenting with novel algorithms, or participating in hackathons. Failures should be seen as learning opportunities, not setbacks, and the focus should be on generating variation and selecting the most promising approaches.
4. Cultivate Home-Grown Management
Cultivating leadership from within fosters a deep understanding of and commitment to the core ideology. It ensures continuity of leadership and prevents disruption from bringing in outside executives who may not be aligned with the company’s fundamental beliefs.
Practical Application:
For instance, an AI company could implement a mentoring program where senior engineers guide junior engineers, not only in technical skills but also in the company’s values and culture. This would ensure continuity and preserve the core ideology through successive generations of employees.
5. Never Settle for “Good Enough”
This relentless pursuit of improvement is essential in a fast-paced, ever-evolving field like AI. It pushes companies to constantly innovate and stay ahead of the competition. By rejecting complacency, visionary companies ensure they are always striving to be better tomorrow than they were today.
Practical Application:
An AI team could regularly hold ‘discomfort meetings’ where they critically evaluate their work, identify areas for improvement, and brainstorm new approaches. This could involve challenging assumptions, seeking external feedback, or conducting ‘red team’ exercises to identify vulnerabilities.
Suggested Deep Dive
Chapter: Chapter 7 - Try a Lot of Stuff and Keep What Works
This chapter resonates deeply with the iterative, experimental nature of AI development. Visionary companies, like successful AI teams, embrace trial and error, rapidly prototyping, and continuous learning to navigate uncharted territories and achieve breakthroughs. Understanding how companies like 3M have fostered a culture of experimentation can provide valuable insights for AI product engineers.
Memorable Quotes
Chapter 1 - The Best of the Best. 21
“What makes the truly exceptional companies different from the other companies?”
Chapter 3 - More Than Profits. 46
“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.”
Chapter 4 - Preserve the Core/Stimulate Progress. 90
“INTENTIONS are all fine and good, but it is the translation of those intentions into concrete items—mechanisms with teeth—that can make the difference between becoming a visionary company or forever remaining a wannabe.”
Chapter 5 - Big Hairy Audacious Goals. 101
“AS in the Philip Morris case, BHAGs are bold, falling in the gray area where reason and prudence might say ‘This is unreasonable,’ but the drive for progress says, ‘We believe we can do it nonetheless.’ Again, these aren’t just “goals”; these are Big Hairy Audacious Goals.”
Chapter 6 - Cult-Like Cultures. 189
“’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.”
Comparative Analysis
“Built to Last” shares common ground with other influential management books like “In Search of Excellence” by Peters and Waterman, but with a distinct emphasis on the historical perspective. While “In Search of Excellence” focuses on a snapshot of successful companies at a given time, “Built to Last” examines the entire lifespan of companies, drawing lessons from their evolution over decades. This long-range lens allows Collins and Porras to identify enduring principles, separating lasting success from fleeting trends. Similarly, “Good to Great” by Collins, delves deeper into the transition of good companies to great ones, highlighting the importance of disciplined leadership, culture, and execution. “Built to Last” provides a broader framework for understanding what makes companies visionary, while “Good to Great” focuses on a specific transition point. Both books emphasize the need for rigor and discipline in building enduring organizations. “Built to Last” complements and expands upon the work of these authors, adding a valuable historical dimension to the conversation on building great companies.
Reflection
“Built to Last” offers a compelling and valuable framework for building enduring institutions, but it is important to note that it is not a one-size-fits-all prescription. While the book focuses on large corporations, its principles can be applied to organizations of all sizes, including startups and non-profits. The authors are careful to emphasize that visionary companies are not perfect, and that striving for a perfect score on every dimension is unrealistic. Instead, the book encourages leaders to identify the key elements that resonate with their own values and purpose and align their organizations accordingly. While the book relies heavily on historical analysis, the authors acknowledge that the world is constantly changing and that their findings should be applied with a healthy dose of critical thinking and adaptation. The real value of the book lies in its ability to provoke self-reflection, stimulate new ideas, and inspire a commitment to building organizations that are not only successful, but also meaningful and enduring. In an age of rapid technological change and increasingly complex global challenges, the principles of “Built to Last” are perhaps more relevant than ever.
Flashcards
What is a visionary company’s core ideology?
Their fundamental reason for being, which remains consistent over time, transcending product cycles, technological breakthroughs, management fads, and individual leaders.
What are the two key components of a visionary company’s core ideology?
Core Values and Purpose
What are Core Values?
A small set of timeless guiding principles that require no external justification. They are the organization’s essential and enduring tenets.
What is a company’s Purpose?
The organization’s fundamental reason for existence beyond just making money. It’s a guiding star on the horizon, forever pursued but never fully reached.
What is the fundamental dynamic of a visionary company?
Preserve the Core / Stimulate Progress
What are Big Hairy Audacious Goals (BHAGs)?
Ambitious, long-term goals that challenge the organization and create immense forward momentum. They are clear, compelling, and often risky, stimulating progress and pushing the company beyond its comfort zone.
What is “cultism” in the context of visionary companies?
A series of practices that create a strong, almost ‘cult-like’ environment around the company’s core ideology. This includes rigorous screening for ideological fit, strong indoctrination, and a clear distinction between insiders and outsiders.
What does “Good Enough Never Is” mean for a visionary company?
A constant process of relentless self-improvement, striving to be better tomorrow than today, driven by a deep inner urge for progress and change.
What does “alignment” mean in a visionary company?
Ensuring that all elements of the company - strategy, structure, culture, processes, etc. - work together in concert to support the core ideology and stimulate progress.