If you find this kind of thing interesting, I’ve put together the notes I took from “Build To Last”. These are the points that jumped out at me while I was reading.
If you are in business and haven’t read it yet, run right over here and get it:
When you go to a business meeting and people rattle off book names, this one is usually on the list. Now you can be in the know.
Built to Last
James C. Collins
Jerry I. Porras
These notes are from the 2002 BUILT TO LAST soft cover book put out by
HarperCollins Publishers Inc.
Pg 28
If you haven?t created your company because you haven?t come across your
?great idea?, you are encouraged not to obsess on finding a great idea
before launching a company. The great idea approach shifts your attention away
from seeing the company as your ultimate creation.
pg 30
See the company as the ultimate creation? not the product. Bill Hewlett and
Dave Packard?s ultimate creation wasn?t the audio oscilloscope or the pocket
calculator. It was the Hewlett-Packard Company and the HP Way.
Pg. 56
Dave Packard discusses the real reason for his existence. They provide
something that is unique. (It?s a good speech on why companies exist).
Packard: ?Profit is not the proper end and aim of management ? it is what
makes all of the proper ends and aims possible.?
Pg. 57
HP should be managed first and foremost to make a contribution to society.
Pg. 60
Johnson & Johnson Chief Executive, Jim Burke in the early ?80s
estimated that he spent fully 40 percent of his time as CEO communicating the
credo throughout the company.
Pg. 61
Boeing has been about pioneering aviation ? about building big, fast,
advanced, better-performing aircraft; about pushing the envelope of aviation
technology; about adventure, challenge, achievement, and contribution; about
having the Right Stuff. Boeing can?t pursue these purposes without profits;
but profit is not the ?why? of it all.
Pg 62
Motorola founder Paul Galvin viewed profitability as a necessary means to
pursue the company?s objectives, but not the ultimate aim.
Pg 67
Companies such as HP and Marriot made concern for their employees central to
their ideologies; others such as Nordstrom and Disney did not.
We did not find any specific ideological content essential to being a
visionary company. Authenticity of the ideology counts more than the content of
the ideology.
Pg. 68
We concluded that the critical issue is not whether a company has the ?right?
core ideology or a ?likable? core ideology but rather whether is has
a core ideology ? likeable or not ? that gives guidance and inspiration to
people inside that company.
Pg. 68 This has the Core Ideologies in Each Visionary Company.
Pg 72
Numbers and values? People who make the numbers and share our values go
onward and upward. People who miss the numbers and share our values get a second
chance. People with no values and no numbers ? easy call. The problem is with
people who make the numbers but don?t share the values. We agonize over these
people.
Pg 73
From Thomas J. Watson Jr., former IBM chief executive 1963 booklet ?A
Business and Its Beliefs?:
?I believe the real difference between success and failure in a corporation
can very often be traced to the question of how well the organization brings out
the great energies and talents of its people. [I think the answer lies] in the
power of what we call beliefs and the appeal these beliefs have for its people.
Beliefs must always come before policies, practices, and goals. The latter must
always be altered if they are seen to violate fundamental beliefs.?
Pg. 74
?The HP Way basically means respect and concern for the individual?
Visionary companies tend to have only a few core values.
Pg 75
In a visionary company, the core values need no rational or external
justification. Nor do they sway with the trends and fads of the day. Nor even do
they shift in response to changing market conditions.
Pg 82
It is absolutely essential to not confuse core ideology with culture,
strategy, tactics, operations, policies, or other non core practices. Over time,
all of these things must change. Ultimately, the only thing a company should not
change over time is its core ideology ? that is if it wants to be a visionary
company.
THE ESSENSE OF A VISIONARY COMPANY: PRESERVE THE CORE AND STIMULATE
PROGRESS
Pg 89
To become a visionary company requires translating these intangibles down
into the second layer of the framework, and this is where most companies just
fail to make the grade.
A visionary company is:
? Premier Institution
? Widely admired
? Indelible imprint on the world
? 50+ year track record
? Multiple generations of CEOs
? Multiple product/service cycles
Pg 90
Diagnosing the overall framework of your own organization:
? Has it shifted from time telling to clock building
? Does is reject the ?Tyranny of the OR? and embrace the ?Genius
of the AND??
? Does it have a core ideology
? Does it have a drive for progress
? Does it preserve the core and stimulate progress
? Is the organization in alignment so that people receive a
consistent set of signals to reinforce behavior that supports the core
ideology and achieves desired progress?
Pg 94
A true BHAG is clear and compelling and serves as a unifying focal point of
the effort ? often creating immense team spirit.
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 to no explanation.
Pg 95
We encourage you to think beyond the traditional corporate statement and
consider the powerful mechanism of a BHAG.
Pg 111-112
Guidelines for CEOs, managers and entrepreneurs
? 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 the moon ? not a ?statement.? If it doesn?t get
people?s juices going, then it?s just not a BHAG.
? A BHAG should fall well outside the comfort zone. People in the
organization should have reason to believe they can pull it off, yet it should
require heroic effort and perhaps even a little luck ? as with IBM 360 and
Boeing 747.
? A BHAG should be so bold and exciting in its own right
that it would continue to stimulate progress even if the organization?s
leaders disappeared before it had been accomplished ? as happened at
Citibank and Wal-Mart.
? A BHAG has the inherent danger that, once achieved, an
organization can stall and drift in the ?we?ve arrived? syndrome, as
happened at Ford in the 1920s. A company should be prepared to prevent this by
having follow-on BHAGs. It should also compliment BHAGs with the other methods
of stimulating progress.
? Finally, and most importantly of all, a BHAG should be consistent
with a company?s core idealogy.
PRESERVE THE CORE AND STIMULATE PROGRESS
Pg 123
An analysis of the visionary versus the comparison companies revealed the
following:
? In eleven out of eighteen pairs, there was stronger
indoctrination into a core ideology through the history of the visionary
company. Visionary companies put more emphasis on employee sills and
professional development training.
? In 13/18 there was greater tightness of fit – people tend to
fit well with the company and the ideology or tend to not fit at all.
? in 13/18 there was greater elitism ? a sense of belonging to
something special and superior.
? They showed a greater cultism.
Pg 131
Proctor and Gamble has preserved its core ideology through extensive use of
? indoctrination
? tightness of fit
? elitism
Pg 135-136
Rather than build an organization these companies preserves its core ideology
in specific, concrete ways:
? Orientation and ongoing training, teaching such things as
values, norms history, and tradition.
? Internal ?universities? and training centers
? On-the-job socialization by peers and immediate supervisors.
? Rigorous up-through-the-ranks policies ? hiring young,
promoting from within and shaping the employee?s mind-set from a young
age.
? Exposure to a pervasive mythology of ?heroic deeds? and
corporate exemplars.
? Unique language and terminology the reinforce belonging to a
special, elite group.
? Corporate songs, cheers, affirmations that reinforce
psychological commitment.
? Tight screening process
? Incentive and advancement criteria explicitly linked to fit
with the corporate ideology.
? Awards, contests and public recognition that reward those who
display great effort consistent with the ideology.
? Tolerance for honest mistakes that do not breach the company?s
ideology (?non sins?); severe penalties or termination for breaching the
ideology (?sins?)
? ?Buy-in? mechanisms (financial, time investment)
? Celebrations that reinforce successes, belonging and
specialness
? Plant and office layout that reinforces norms and ideals.
? Constant verbal and written emphasis on corporate values,
heritage, and the sense of being part of something special.
Page 145
The second type of progress is ?evolutionary progress? compared with BHAG
progress. Evolutionary progress involves ambiguity (?By trying lots of
different approaches, we?re bound to stumble onto something that works; we
just don?t know ahead of time what it will be?). This usually starts with
small, incremental steps or mutations, often in the form of quickly seizing
unexpected opportunities that eventually grow into major ? and often
unanticipated ? strategic shifts.
Pg 184
The entrepreneurial model of building a company around a great idea, growing
quickly, cashing out, and passing the company off to outside professional
managers will probably not produce the next Hewlett-Packard, Motorola, General
Electric, or Merck.
Pg 185
Don?t bother just to be better than your contemporaries or predecessors.
Try to be better than yourself.
William Faulkner
Pg 198
The discipline of self-improvement stands out as one of the most clear
differences between the visionary and comparison companies? we found that the
visionary companies have driven themselves harder for self-improvement in 16/18
cases.
Pg 213
It would be a mistake to conclude that you could implement any single chapter
of this book in isolation and have a visionary company
? Core ideology alone cannot do it.
? The drive for progress alone cannot do it.
? A BHAG alone cannot do it.
? Evolution through autonomy and entrepreneurship alone cannot do
it.
? Home-grown management alone cannot do it.
? A cult-like culture alone cannot do it.
? Living the concept that good is never enough alone cannot do
it.
A visionary company is like a great work of art.
?God is in the details.? ? Mies van der Rohe
Pg 215
The real question to ask is not ?Is this practice good?? but ?Is this
practice appropriate for us ? does it fit with our ideology and
ambitions.
Pg 217
4 key concepts to guide your thinking for the rest of your managerial career:
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.
Pg 228
As Peter Drucker has pointed out, the best and most dedicated people are
ultimately volunteers, for they have the opportunity to do something else with
their lives. With an increasingly mobile society, cynicism about corporate life,
and an expanding entrepreneurial segment of the economy, companies need more
than ever to have a clear understanding of their purpose in order to make work
meaningful and thereby attract, retain, and motivate outstanding people.
Pg 232
Envisioned future? consists of two parts: a ten-to thirty-year ?Big Hairy
Audacious Goal? and vivid descriptions of what it will be like when the
organization achieves the BHAG.
Pg 233
Vivid Descriptions
?recall how Henry Ford brought to life the BHAG to democratize the
automobile with the vivid description: ?I will build a motor car for the great
multitude? It will be so low in price that no man making a good salary will be
unable to own one ? and enjoy with his family the blessing of hours of
pleasure in God?s great open spaces? When I?m through everybody will be
able to afford one, and everyone will have one. The horse will have disappeared
from our highways, the automobile will be taken for granted? [and we will]
give a large number of men employment at good wages.?
Pg 235
The essential questions about the envisioned future involve such questions
as: ?Does it get our juices flowing? Do we find it stimulating? Does it
stimulate forward momentum? Does it get people going?? The envisioned future
must be truly exciting to those inside the organization, otherwise it?s just
not a full-fledged BHAG.