Leadership - Built to Last - Book review

The book 'Built to Last' shatters many of the conventions surrounding business development by reviewing some of the company success stories that are today household names around the world. What made them successful and what can we learn from their experiences?

Are there many common themes to help us explain their enduring quality and prosperity?

There are 12 myths that are shattered by this study:

(a) It takes a great idea to start a great company
(b) Visionary Companies require great and charismatic visionary leaders
(c) Successful companies exist first and foremost to make profits
(d) The only constant is change
(e) Blue chip Companies play it safe
(f) Visionary companies are great places to work for everyone
(g) Highly successful companies make their best moves by brilliant and complex strategic planning
(h) Companies should hire outside CEO's to stimulate fundamental change
(i) The most successful companies focus primarily on beating the competition
(j) You can't have your cake and eat it too
(k) Companies become Visionary through Vision statements.

Some of the Findings

Build a clock - don't just tell the time!
The company itself is the ultimate creation - not the product. Bill Hewlett and Dave Packard's greatest creation was not a pocket calculator, it was the HP company - the HP way. The same goes for Disney, Sony and so on.

These companies were constructed in an organised way from the start, with the infrastructure for future expansions and visions being put in place at an early stage.

More than Profits
Profit is necessary to survive, however, HP would not enter into markets for cheap simple products - although these may have created high profits - as this did not fit their purpose and core values.

In the companies studied, profit was almost always a given. From 1926 to 1990, the investment returns of these 18 companies outperformed the general stock market by a factor of over 15.

Core Ideology

What is a visionary company?

It is a premier institution in its industry. Widely admired. It is an organisation, which is sustainable, and consistently prospers through fluctuations in markets, and the arrival and departure of both products and leaders, however charismatic.

Think of some companies which meet the following criteria:

• Premier institution in its industry
• Widely admired
• Have made an indelible print on the world in which we live
• Multiple generations of Chief Executives
• Has been through multiple product./service life cycles

Core ideology = Core values + purpose

Core values

Definition: the organisation's essential and enduring tenets - the general guiding principles

Purpose: the fundamental reason for existing beyond just making money - a perpetual guiding star on the horizon.

Some examples of core ideology:
(these companies usually have several, apart from those quoted)

Proctor & Gamble - Product Excellence, Continuous self improvement
Sony - To elevate the Japanese culture and status 
Wal-Mart - Be in partnership with employees
Walt Disney - No cynicism allowed
Boeing - Product safety and quality

To review Partnercorp's purpose, Values and Drivers - Click Here

The visionary companies more thoroughly indoctrinate employees into core ideologies, creating cultures so strong that they are almost cult-like around the ideology.

The core values need no justification. They do not shift in response to changing market conditions.

They are not planned - they are believed, deep down.

Purpose is broad, fundamental and enduring

How do you establish purpose? One way is to ask the question - why does this company exist?

There is no reason why this principle should not apply to divisions, departments or smaller organisations.

Many of the visionary companies took time to work out purpose - they often settled upon their purpose at some point after the company had passed the start up phase and was solid.

What are the important factors for your business? What factors hit directly at your purpose in serving the client and the community? Use the following table to begin your list. Rate your factors out of 10 with 10 being very important and high value.

How did you go? Which factors rated 8 or greater in both columns? How well does your organisation reflect these factors?

These core factors are always preserved while the way they manifest can constantly change and progress.

What other elements make up great corporations?

Build Cult-like Cultures

(a) Wal-Mart company rules: "The customer is always right" (End of company rules).
If you're not willing to adopt the company culture, then you probably shouldn't be there.

(b) The McDonalds School of Hamburgers is a good example of one approach to creating culture.

(c) Disneyland terminology:

Employees are "Cast members", Customers are "Guests",
A crowd is "An audience", A work shift is "A performance"…(and so on).

Measure
Use measures to ensure strategic thinking and actions occur.

In 3M, there are numerous examples of mechanisms put it place in order to stimulate the evolutionary progress:

15% rule:

encouraging technical staff to spend 15% of their time on projects of their own choosing and initiative. New product forums in which all divisions share their latest products and ideas.

'although the invention of the Post-it note might have been somewhat accidental, the creation of the 3M environment that allowed it was anything but an accident'.

30% rule:

each division is expected to generate 30% of annual sales from products introduced in the past four years.

What are some measures you could introduce to ensure your people are innovating?

"Don't bother just to be better than your contemporaries or predecessors, try to be better than yourself".

Visionary companies create mechanisms to create discomfort, to constantly raise expectations, to obliterate complacency. They therefore stimulate change and improvement before the external world demands it of them.

Managers at visionary companies simply do not accept the proposition that they must choose between short term performance or long term success. They build first and foremost for the long term whilst at the same time maintain highly demanding standards.

Consider the following questions:

• What mechanisms of discontent could you build into your organisation?
• What are you doing to invest for the future whilst working for today?
• When you meet a downturn, do you stop investing for the future?
• Does your company reject that doing well is the end goal and replace it with the never ending
• discipline of working to do better tomorrow than was done today?

Sweat the small stuff
People don't work day to day in the "big picture". Little things matter. Take care of them.

A visionary company is like a great work of art. Think of Michelangelo's scenes from Genesis on the ceiling of the Sistine chapel, Beethoven's Ninth Symphony. It is not any one point which, makes them great, it is the whole work. The small detail is so important.

Cluster - don't shotgun
Search for synergy and linkages. One area reinforces another which in turn reinforces another. And so on.

Obliterate misalignments
Prune dead branches. Waste no time. It's not the mistake that will necessarily hurt your business, it's taking too long to correct it that often does the real damage.

Remember: What is sacred is the core ideology (core values + purpose). Anything else can be changed or removed.

This is a brief summary of what is a powerful and comprehensive study. It cannot replace the text itself, but does provide a flavour and some of the strong messages.

Built to Last
By J C Collins & J I Porras