Ten Key Findings on What Makes Visionaries Companies Successful
I came across Built to Last: Successful Habits of Visionary Companies, a book that some of you might have read as early as 1994, but that has only just come across my radar.
This book is based on six years’ research on “visionary companies”, corporations that have been successful for a long period of time. The authors went looking for behavioural patterns in the history of companies like Disney, 3M, General Electric, Boeing, Merck, Procter and Gamble and Ford.
Their findings, which in my opinion apply to both corporations, governments and individuals, are extremely straightforward:
“The good news is that one of the key elements of being a visionary company is strikingly simple: Good old-fashioned hard work, dedication to improvement, and continually building for the future will take you a long way. […] The bad news is that creating a visionary company requires huge quantities of good old-fashioned hard work, dedication to improvement, and continually building for the future. There are no shortcuts. There are no magic potions. There are no work-arounds. To build a visionary company, you’ve got to be ready for the long, hard pull. Success is never final.”
Whether you are leading a large company, starting a business, managing a team within a global corporation or investing in emerging entrepreneurs, this book’s insights will be useful and immediately applicable to you.
Here is a summary of the key ideas.
- Purpose ≠ strategy
An organization’s timeless core values and enduring purpose (which should never change) is different from its operating practices and business strategies (which should be evolving constantly in response to a changing world).
“Those who built the visionary companies wisely understood that it is better to understand who you are than where you are going — for where you are going will almost certainly change.”
- Values > brilliant idea
Mythology says that those who launch highly successful companies usually begin with a brilliant idea, but that is not necessarily true.
“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.”
- Telling the time vs building a clock
The founders of visionary companies focus on building the company itself. They are not motivated by making a name for themselves, rather by building a machine that will function and perform its mission well after their death.
“[Walmart founder] Sam Walton was much more of a clock builder — an architect. By his early twenties, Walton had pretty much settled upon his personality style; he spent the bulk of his life in a never-ending quest to build and develop the capabilities of the Wal-Mart organization.”
- Profit as a goal vs profit as a consequence
Visionary companies think profit is necessary, but it is not their goal. Money is a consequence of pursuing a deeper purpose, like “making people happy” (Disney) or “fighting diseases” (Merck). Money is an enabler, not a master.
“Visionary companies pursue a cluster of objectives, of which making money is only one — and not necessarily the primary one. Yes, they seek profits, but they’re equally guided by a core ideology — core values and sense of purpose beyond just making money. Paradoxically, the visionary companies make more money than the more purely profit-driven comparison companies.”
- Preserve the core while moving forward
Visionary companies preserve the core while constantly stimulating progress. They set “Big Hairy Audacious Goals” (e.g. inventing the 747, doing the first full length animated movie) constantly while pursuing a never ending mission: curing diseases, making the best possible planes, creating technologies that make peoples’ lives better. Visionary companies strive for self-improvement day in and day out instead of lying back and remaining conservative.
“If there is any one “secret” to an enduring great company, it is the ability to manage continuity and change — a discipline that must be consciously practiced, even by the most visionary of companies.”
- Cult-like cultures
Visionary companies display cult-like cultures, people either embrace the culture or they get rejected by the structure. These companies rarely go through leadership crises because they grow replacement leaders decades ahead of time and promote from within, which leads to better preservation of core values and purpose. Core ideologies are embedded into every single aspect of the company.
“Visionary companies are so clear about what they stand for and what they’re trying to achieve that they simply don’t have room for those unwilling or unable to fit their exacting standards.”
- Try a lot of stuff
Visionary companies try a lot of stuff and keep what works. Silicon Valley stole that play from companies like 3M that have long given 15% of their time to employees to try their own projects, and have been operating an internal venture capital arm for decades.
“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.” In this sense, visionary companies mimic the biological evolution of species. We found the concepts in Charles Darwin’s Origin of Species to be more helpful for replicating the success of certain visionary companies than any textbook on corporate strategic planning.”
- Long term thinking
Visionary companies think in decades instead of quarters. They will do what is right on a much longer timeframe, even if it means less profit in the short term.
“Almost immediately after his father’s death in 1959, [Motorola’s founder son] Bob Galvin began thinking about management development and succession planning for the next generation — a quarter of a century before he would pass the reins.”
- “And”, not “or”
Visionary companies don’t choose between contradictory things, they do them both. They take care of existing clients while preparing future markets; they ask a lot from their employees while treating them well, they make money without compromising their values.
“Visionary companies do not brutalize themselves with the ‘Tyranny of the OR’ — the purely rational view that says you can have either A OR B, but not both. They reject having to make a choice between stability OR progress; cult-like cultures OR individual autonomy; home-grown managers OR fundamental change; conservative practices OR Big Hairy Audacious Goals; making money OR living according to values and purpose. Instead, they embrace the ‘Genius of the AND’ — the paradoxical view that allows them to pursue both A AND B at the same time.
- Mistakes are OK, not sins
Visionary companies are fine with making mistakes (taking the wrong direction), but they never sin (disrespecting the core values).
“Accept that mistakes will be made. Since you can’t tell ahead of time which variations will prove to be favorable, you have to accept mistakes and failures as an integral part of the evolutionary process.”
A few things worth noting: the book features several companies that have fared quite mediocrely since 1994 (HP, Sony, Ford, Motorola) which leaves the reader wondering if this is because the authors missed something or because crises are part of the life of even the best companies.
A big regret is that the book is totally US centric, with no attention to companies like Nestlé or Rolex (to only take Swiss examples) that have fared well across the ages.
Despite its shortcomings, this book has made a huge impact on me, mostly because it has reinforced my intuition that nothing beats hard work, passion and long term thinking when it comes to succeeding in business (and life).
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