As I dutifully plow through the currently popular business books - and I read only the ones that I need rather than for pleasure - I occasionally find a good and (fairly) interesting one. This is one of those books I would recommend. Instead of overflowing with ridiculously florid rhetoric about recycled banalities and excitement that is simply not justified, this book is based on solid research and is not afraid to offer un-spectacular advice.
It is about what the authors call "visionary companies," which stand for something beyond just making money and yet are profitable. They do well, and they do good. There is no doubt that such companies exist, which I admit in spite of my boredom and cynicism regarding most of the businessmen and "business intellectuals" that I deal with as a writer.
Set up like an academic study, the book is a synthesis of the authors' findings while taking a long historical view of consistently excellent (i.e. "visionary") companies like H-P, Merck, and P&G.
Not surprisingly, these companies do similar things: 1) they have visions and value that they try to uphold consistently throughout the company and to which they stay true over decades; 2) the set incredibly ambitious (and in retrospect realistic) goals that inspire their employees ("big hairy ambitious goals"); 3) they are cult-like in their beliefs in themselves; 4) they allow for trial and error, which lead to "evolutionary progress"; 5) they hire leadership from within; 6) they cultivate keeping their employees a bit off-balance ("uncomfortable") as a way of getting them to perform at their best; 7) they make sure that all elements work in concert and are internally consistent and self-reinforcing ("alignment").
That is it for the ideas, which are far more nuanced than the above paragraph. They could be summarized in one chapter, and the rest of the book is repetition and analysis by example. The examples are interesting and informative and the ideas, which have all been said before, are good to review in a systematic way. Very good.
These are good and useful ideas, if somewhat banal. But then, doing business is rather dull for the most part - there are very few exciting companies out there, but most of them are like horribly dysfunctional families. This is the authors' bid to explain the good few.
The tone of the book is rather modest, but the authors do get a bit too wordy and chummy in many instances. While I liked the modesty, I got bored with the chumminess.
on 30 November 2002
James Collins is a management researcher from Boulder (Colorado, USA) and Jerry Porras is a professor of organizational behavior and change at the Stanford Graduate School of Business. This book is really split up into three parts: (1) An introduction into the research.; (2) The core ideology of visionary companies.; (3) The habits of visionary companies; (4) Methods for implementation.
The authors explain their research methods of this six-year research project into visionary companies. "Visionary companies are premier institutions - the crown jewels - in their industries, widely admired by their peers and having a long track record of making a significant impact on the world around them." The authors used the term 'visionary', rather than just 'successful' or 'enduring', to reflect the fact they have distinguished themselves as a very special and elite breed of institutions. In order to compose these visionary companies the authors started with a set of criteria which those companies had to meet: (1) Premier institution in its industry; (2) widely admired by knowledgeable businesspeople; (3) made an indelible imprint on the world in which we live; (4) had multiple generations of chief executives; (5) been through multiple product (or service) life cycles; (6) founded before 1950. With these criteria in mind the authors select 18 visionary companies from a wide range of industries, plus 18 comparison companies (which are not weak or bad companies either).
So what do these visionary companies have in common? They have core ideologies consisting of more than a bunch of nice-sounding platitudes. A visionary company's core ideology consists of core values ("The organization's essential and enduring tenets") and purpose ("The organization's fundamental reasons for existence beyond just making money"). But the authors comment that ocre ideology alone cannot make a visionary company. Ultimately, a visionary company is build up from a core ideology complemented with a drive for progress and a preservation of the core complemented with a stimulation for progress.
The authors then turn their attention to the specific methods of preserving the core and stimulating progress that distinguishes visionary companies from the comparison companies. They split these methods up into: (1) Big hairy audaciou goals (BHAGs) ("Commitment to challenging, audicious goals and projects toward which a visionary company channels its efforts."); (2) Cult-like cultures ("Great places to work only for those who buy in to the core ideology; those who don't fit the ideology are ejected like a virus (preserves the core)."); (3)Try a lot of stuff and keep what works ("High levels of action and experimentation that produce new and unexpected paths of progress and enables visionary companies to mimic the biological evolution of specias (stimulates progress)."); (4) Home-grown management ("Promotion from within, bringing to senior levels only those who've spent significant time steeped in the coe ideology of the company (preserves the core)."); and (5) Good enough never is ("A continual process of relentless self-improvement with the aim of doing better and better, forever into the future (stimulate progress).")
In the final chapters the authors provide a summary of the book, which they refer to as the vision framework: Articulating a vision = core ideology (core values and core purpose) + envisioned future (10 to 30 year BHAG and vivid descriptions). There are also some tools to create all these items in this framework. In this 3rd edition there is also 'a message for the new economy' in which the authors conclude that the dot-com craze is based on 'Built to Flip' and not 'Built to Last' ideas. They provide some questions for to check whether your organization is built to last or built to flip. This chapter is a waste paper.
I honestly cannot believe that I read this book just a month after I read Tom Peters and Robert H. Waterman's 'In Search of Excellence' (1982). They have so much in common, it is uncanny - habits, example companies, research methods, etc. I must admit that I prefer Peters and Waterman's book better, but I can understand if readers do not feel that way. Nevertheless, this is a good book into the habits of successful companies, although the habits are somewhat 'soft', and difficult to implement in existing companies. The biggest criticism McKinsey & Co had on this book: "We really love 'Built to Last' here, but unfortunately it's useless. ... all the companies in 'Built to Last' were always great. They were never average. But that's most of the world." As an reply to this criticism Collins has recently written 'Good to Great: Why Some Companies Make the Leap ... and Others Don't' (2001). My greatest criticism on this book is the amount of repetition and therefore I recommend others to go for the e-articles 'Build Your Company's Vision' and 'Turning Goals into Results', both by the authors of this book. I also recommend Jim Collins' latest article 'Level 5 Leadership' (2001) which is based on his latest book 'Good to Great'. This book is written in simple US-English.
on 23 July 2003
This is a business book that has "legs". Contains some classic concepts (BHAGs...) and explodes some great myths. A book to return to over time, that is well researched and based on something a lot more more solid that the authors egos. Recommended for even the most jaded biz book reader.
I read the original of this book many years ago. It had a profound effect on me. How could two sets of seemingly similar organisations fair so differently when it came to brand, market share and above all sales and profit? What was it about the great companies that stood them aside from the merely good?
In this book the myths are unravelled and the truth is laid bare. The great companies have something deep inside them, their vision and values and perhaps their corporate soul.
Bu then all companies these days have visions and values. The difference with the great companies is that they really live these values, everyday and in everything they do. When Johnson & Johnson were faced with a potentially crippling product recall that was not of their doing they had a very simple decision to make. It cost them hundreds of millions of dollars but it was right and the customer trust of the brand increased. Remember Perrier? Few people do. Once the leading bottled water, where is it now? The reason; because Perrier decided NOT to act on a potentially crippling product recall that WAS it's fault. The result people deserted the brand in droves.
This is just one example but a real world one that illustrates why these great companies have stood out and flourished. This book gives dozens of examples which are well worth a second and third read.
It looks easy on paper but as anyone in business knows, doing the right thing at all times is NEVER easy.
A timeless book which delivers so much. If I had one criticism it's that the companies are just too US centric.
on 9 January 2006
This is an inspiring book, and informative. It answers the "what" question convincingly. I missed answers to the "why" questions. Why, for example, are successful visionary companies characterized by their emphasis on ethical standards? There are many possible explanations: the staff of the company are inspired by the ideals and give more to their employer; the companies reap payoffs in the long term from grateful recipients of their honorable deeds; the companies acquire a good reputation which increases sales and hence profits. More interesting, is the question of the logic of ethics in the business game - not even touched by these authors.
According to Jim Collins and Jerry Porras, it does not matter what the company ideology is, as long as it is passionately believed by the management and employees. I find this a dubious claim, and not supported by the data. The ideological frameworks of the companies that were studied are not interchangeable, not for the trivial reason that the ideology of another company happens not to be the one believed by each of them. Boeing is unlikely to spend money on a program to cure river blindness in Africa. Why does Merck do this? Clearly, a pharmaceutical firm does well to invest in a reputation for medical generosity that flows from a passion for making people well? Merck is purchasing precisely the trust that pays-off in the medical market place. Trust reduces transaction costs, and in some cases is almost as good as a monopoly. Boeing, on the other hand, must buy a brand name attached to their dedication to engineering excellence. It does matter what companies are passionate about.
My company operates on the Internet. Our pledge includes the words: "The tragedy of the commons is the propensity of users to take more from the commons than they give. We undertake to contribute more to the commons than we take. Our presence shall make the Internet safer, more useful and greater fun." Why is this a suitable ideology for our company? The answer is not that this is one we happen to believe in, and feel passionate about - although we do. Rather, this ideology is strategically fitting. We enhance to our brand name, and therefore the value of our software, by adding our reputation to the web applications we write.
In one of our daughter businesses we are a broker of information from merchants to consumer (information about products that are available) and from consumer to merchant (we generate real time demand curves for a large range of commodities). We have pledged not to become a trader. Why? In ethical terms, we should not be a trader because our insider information would give rise to conflict of interest. The trust that we gain by not being a trader, and hence remaining a disinterested supplier of market information, enables us to broker Coasian agreements with reduced transaction costs between the parties on the Internet. The advantage is large. It is on the Internet commons that trust is scarce. We are able to purchase this by foregoing some potentially profitable trades, and that pays us more in the long term in our role as an information service provider.
Our ideology was designed to give us the greatest possible strategic advantage in our markets. That is not to say we do not believe in our ideals, but that the nature of our ideology is important. It does matter what we believe. It matters what you believe, and it matters that you understand that it matters.
I strongly recommend "The Modern Firm" by Roberts. Read this alongside "Built to Last". Roberts is a harder read, but he gets under the logic of corporate dynamics better than Collins and Porras. Because "Built to Last" is characterized by an ubiquitous analytical paucity, Jim Collins and Jerry Porras' interpretations of their data are not always correct. That is a pity. Their findings are exciting, inspiring even, and the book despite its limitations is a good read.
The concept behind this book is brilliant: Find out what makes companies that outperform their peers for decades enjoy that success.
The most important lesson of this book is to create lasting ways of managing your business successfully that will outlive the skills and perspective of any one person, no matter how talented.
The book is fun to read. I liked the way the ideas were described: "Big, hairy, audacious goals" is a fun concept just from the title.
One of the most useful ideas is that we need to hold conflicting ideas in our minds, such as "do more" and "spend less". English often suggests that conflicts exist in what can be done that do not really exist in practice.
This book is outstanding for "telling it like it is". Of particular interest to investors will be the stock-price charts showing how valuable these lessons are for public companies and their shareholders.
The work is a little dated in that it is looking at lessons that were the causes of success decades ago. Also, the book is most relevant to new companies rather than established ones.
None of the companies profiled here ended up being an important source of busines model innovation in the 21st century, so you'll have to find that information from more recent research.
on 3 June 2009
I was very excited to get this book and read during a timespan of 2 weeks (hoping the surprise was on the next page). The ideas presented are not novel; things like "the company should have a vision" are obvious. I liked most the chapter on trying out a few things and seeing what succeeds (rather than being scared of failures and trying nothing). Even that is something one needs to 'remember' every now and then; it's not a concept I first learned in this book.
Authors of Good to Great and this book certainly are making lots of money from charging so much for rather uninspiring (and overly repetitive) books.
on 31 March 2004
Collins J & Porras J, (1997), Built to Last
The book is very much a research book with a view to capture why these visionary organisations are successful. At least 114 pages are devoted to research information or methodology, pages 1 - 21 and 240 - 333.
Page 19 - This must be one of the very first books to examine the entire organisations history for all 36 organisations. The average life span being 96 years, over 60,000 - 100,000 pages of documents examined, over 100 books read and so much more were taken into account when researching Built to Last during a 6-year period.
Page 3 - The book examines the 18 most successful / visionary organisations that have been identified through fellow CEO / executives from research undertaken based on the: Fortune 500 industrial companies, Fortune 500 service companies, Inc. 500 private companies and Inc. 100 public companies - Page 13.
Page 13 - The next stage was to find organisations within the same industry to compare on a like for like basis, to help understand why these visionary organisations are what they have become today, a "super organisation". In total, the book examines 36 organisations.
Page 27 - Not all the visionary organisation were initially successful during their entrepreneur period (results on page 274), in fact out of the 18 visionary organisations only 3 were more successful than their comparisons; Johnson & Johnson, Ford, GE (Page 22). This means 10 comparisons organisations were more successful than the visionary organisation. Leaving 5 organisations being indistinguishable - probably due to lack of information, see page 254.
Page 91 - Big Hairy Audacious Goals (BHAG) - To have audacious goals (clearly understood by all) that seem beyond achievement, but these should correspond with the organisations core purpose - examples can be viewed on Page 113. The BHAG are used to stimulate progress, i.e. GE - To become #1 or #2 in every market we serve.....", Sony - "To change the image around the world of Japanese products as poor in quality"
Page 140 - Try A lot of Stuff & Keep What Works - Johnson & Johnson were originally selling medical plasters until a complaint was received when the plasters being used caused irritation. Research was done by J & J and the baby talc was born as a separate product. But 3M is the really example of the visionary organisation in this chapter.
Page 140 - The use of Darwin theory of evolution has been applied as a way to describe these visionary organisations. The 3M evolutionary tree as seen on page 154 is an example. 3M started as a mining company than went into sandpaper / grinding wheels. From here set up a research lab to experiment and test new ideas / products.
Page 169 - Home Grown Management - Visionary organisations promote within the organisation into management positions. Only two visionary organisations (Philip Morris and Walt Disney) compared with 13 comparison organisations have used outsiders in a CEO role in a period between 1808 to 1992 - Page 174
Interesting Quotes -
Don Petersen, Former CEO, Ford, 1994 - "Putting profits after people and products was magical at Ford" - Page 46.
John Young, HP Chief executive 1976 - 1992 -"Maximising shareholder wealth has always been way down the list...........There is a symmetry of logic in this. If we provide real satisfaction to real customers - we will be profitable" - Page 57
The Book in General
The core aspect of the book is to understand the core values and core purposes, the combination of these two factors suggest how these visionary organisations have become successful. These visionary organisations share the same common thoughts / concepts throughout their history, a good example of this is Merick's - they first coined the term core value in 1935 (Page 47) and in 1991 the present managers are still singing the same tune 65 years later. Marriott can be seen as an example of consistency, J Marriott Snr. in 1965 stated three statements, in 1984 J Marriott Jnr. also stated three statements not too dissimilar to those 19 years earlier.
Page 254 - One negative aspect of the books is the biased towards US orientated organisations, out of the 36 organisations only two were non-US, Sony & Kenwood. The authors do acknowledge the quality and quantity of the information gained could distort the over results which the book is based upon.
I would conclude this book is certainly interesting and could foresee further research undertaken on this subject area. I would like to see what the difference is between these 18 visionary organisations compared with 18 "modern-day equivalent" visionary organisations from the same industries using global organisations (not just the US orientated organisations), such as Microsoft, Virgin, Easy Jet or Tesco.
The authors could test their evidence / views gained from the research of the 18 visionary organisations and determine if the "modern-day equivalents" will still be existing 96 yrs later and be able to call themselves a "super company" as demonstrated by these 18 organisations.
Overall, An excellent book. A recommended read if you want to know if your organisation shares similar characteristics to these 18 visionary organisations.
on 24 November 2009
I've read an awful lot of 'management' books, and I have to say most of them are forgettable rubbish, stating the obvious, trite nonsense etc etc. This book, however, is completely different. I bought this over a decade ago, and just re-read it. Unusually, it stands the test of time. And then some. What's interesting (apart from the many fascinating and revealing case stories) is that it reveals some underlying 'truths' about strategic business development in a way that most books do not. If you're building a business of your own, or senior enough in a large organisation to its influence direction, then read this. Do it now. Although some of the illustrative examples are oldish, the insight is very fresh and very up to date. More to the point, the lessons striking and yet highly practical. I am trying with my own organisation, for example, to "build a clock" (trust me, it will make sense if you read the book!) In fact, I've found practical ways to use the lessons in the book in all kinds of ways, and it's been really easy to do. Highly recommended.
on 1 July 2013
Nearly 20 years ago this book has been written, and it is still so applicable !
Based on scientific research on “visionary” companies, a lot of interesting findings are formulated. I several times felt like reading thoughts which I have been (subconsciously) thinking for years, and applied professionally. What a relief the see them so nicely formulated ! Why haven’t I read this book before?
Ideas I liked most:
- Preserve the Core and Stimulate Progress: you should separate the Core Ideology (which shouldn’t change) from the drive for Progress (which can change and should never be satisfied)
- No tyranny of the OR: instead of having to choose between Continuity OR Change (for example), you should choose Continuity AND Change. The authors put it like this: “The ability to hold two opposed ideas in the mind at the same time, and still retain ability to function”
- Good enough never is: visionary companies always go for better, good enough (or the 80/20 rule) is not enough.