Building To Last

Sunday July 27, 2008

During a recent two-week vacation I had the pleasure of reading “Built To Last: Successful Habits of Visionary Companies” by James C. Collins and Jerry I. Porras. Although you’ll likely find it under the Business section of any bookstore or library, the book is academically well researched and provides good nuggets for introspection and personal development. I won’t give an in-depth book review, but I did want to share some thoughts and open-up our thinking as we continue to grow Majides, Inc.

Brief Book Background
“Built To Last” (BTL) compiles a list of 18 companies they classify as “Visionary Companies” and compares them with another 18 “Comparison Companies”. The authors share their research analysis behind each of these companies and attempts to articulate the similar key factors that led to each visionary company’s success. Through a variety of research and industry feedback, the visionary companies they selected and their comparison companies are:
Visionary Company : Comparison Company

• 3M : Norton
• American Express : Wells Fargo
• Boeing : McDonnell Douglas
• Citicorp : Chase Manhattan
• Ford : GM
• General Electric : Westinghouse
• Hewlett-Packard : Texas Instruments
• IBM : Burroughs
• Johnson & Johnson : Bristol-Myers Squibb
• Marriott : Howard Johnson
• Merck : Pfizer
• Motorola : Zenith
• Nordstrom : Melville
• Philip Morris : RJR Nabisco
• Procter & Gamble : Colgate
• Sony : Kenwood
• Wal-Mart : Ames
• Walt Disney : Columbia

(You may notice that all companies are at least 50 years old, which was a requirement to make this list.)

Keep in mind, the book is not about the 18 companies considered visionary; rather, BTL uses these companies to try and distill the essential principles that made them visionary and that set them apart from average companies.
Along the way they shatter twelve myths about successful companies, which I’ll share as teasers:

 
1. It takes a great idea to start a great company.
 
2. Visionary companies require great and charismatic visionary leaders.
 
3. The most successful companies exist first and foremost to maximize profits.
 
4. Visionary companies share a common subset of “correct” core values.
 
5. The only constant is change.
 
6. Blue-chip companies play it safe.
 
7. Visionary companies are great places to work, for everyone.
 
8. Highly successful companies make their best moves by brilliant and complex strategic planning.
 
9. Companies should hire outside CEOs to stimulate fundamental change.
 
10. The most successful companies focus primarily on beating the competition.
 
11. You can’t have your cake and eat it too.
 
12. Companies become visionary primarily through “vision statements”.

If you’ve ever thought any one of these myths to be true, or if you’ve ever been curious to learn how any of the companies under the authors’ visionary list became house-hold names, I highly recommend reading BTL.

Knowing Your Values and Defining a Purpose
One tenet stressed throughout “Built To Last” is the idea of Core Ideology. The authors define Core Ideology as

Core Ideology = Core Values + Purpose

where

Core Values = [An] organization’s essential and enduring tenets - a small set of general guiding principles; not to be confused with specific cultural or operating practices; not to be compromised for financial or short-term expediency. [emphasis mine]
Purpose = The organization’s fundamental reasons for existence beyond just making money - a perpetual guiding star on the horizon; not to be confused with specific goals or business strategies. [emphasis mine]

As I thought about these concepts, it seemed pretty obvious to me that they might as well apply to more than just “corporate vision.” Having values and defining a purpose could just as easily apply to an individual, and indeed companies are often researched akin to living organisms. By defining core values, which should never waver nor change, it becomes easier to assess compatibility. For individuals, this can mean anything from finding friends to discovering interest-groups. For companies, articulating core values attracts potential team members who share the same values and therefore more efficiently contribute to progress. It also efficiently weeds out the incompatible people. No workplace will ever make everyone happy all the time, but to create a harmonious and enriching environment it’s best to know who “fits” and who doesn’t as early as possible. (Incidentally this amusing post by a former Disney Jack Sparrow, while with an unfortunate conclusion, makes a lot of sense in light of Disney’s Core Ideology as defined by BTL.)
Core values are like a building’s foundation - the sturdier it is, the more confidently one can build a large structure on top of it. Most important, core values should never change, and should affirmatively answer the question “If the circumstances changed and penalized us for holding this core value, would we still keep it?” In fact, from a business point of view, core values should be consistent regardless of industry.
But core values are not enough, and that’s where purpose comes in. Purpose provides the reason, a focus. It aligns the diverse backgrounds of team members involved and gets everyone marching in the same direction. The authors like to say “Purpose ... should last at least 100 years,” which is interesting because for many a purpose defines a goal, and 100 years into the future essentially puts any goal out-of-reach for an individual lifetime. Instead, the authors say:

Purpose ... is like a guiding star on the horizon—forever pursued, but never reached. Yet while purpose itself does not change, it does inspire change. The very fact that purpose can never be fully realized means that an organization can never stop stimulating change and progress in order to live more fully to its purpose.

One way to help articulate a team’s purpose would be to ask “What would be lost if the team ceased to exist?” The better defined this fundamental reason for being, the better oiled and more sharply focused an organization will be.

Making the Move
So Core Values create the foundation, and Purpose sets the direction. What’s missing is propulsion, and that’s where Big Hairy Audacious Goals (BHAGs) come in. BHAGs effectively stimulate progress; they create movement. In the authors’ words,

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 or no explanation.

BHAGs are clear and compelling and require a high level of commitment and risk. In fact, they may even have only a 50-60% chance of success. A BHAG should be outside the comfort zone, and require heroic effort (maybe even a little luck!) to pull it off. BHAGs provide that “dream” objective which do put a goal within reach of an individual lifetime. But the most important part of setting a BHAG is that it must “preserve the core” - the Core Ideology.
From BTL, some examples of a visionary company’s BHAG and the preserved core are,

 
• Company: Core to Preserve <—> BHAG(s) to Stimulate Progress
 
• Boeing: Being on the leading edge of aviation; being pioneers; risk-taking <—> Bet the pot on the B-17, 707, 747
 
• IBM: Seek superiority in all we undertake; Spend a lot of time making customers happy. <—> Commit to a $5 billion gamble on the 360; meet the emerging needs of our customers.
 
• Sony: Elevation of the Japanese culture and national status; being a pioneer, doing the impossible <—> Change the worldwide image of Japanese products as poor quality; create a pocketable transistor radio.

Enter Majides Using some of the tools discussed in BTL while thinking about what Majides means for us, I’ve taken a first-pass at defining our Core Ideology. Part of this was done by reflecting on our prior projects and thinking about what we enjoyed and valued in each one. For the first half - Core Values - the following were distilled:

 
• Inquisitiveness and innovation
 
• Encourage risk taking and thinking openly
 
• Appreciate diversity
 
• Fun and educational

As the authors point out, there should be no more than 6 Core Values, with an average of 4. Remember also that while Majides currently works on Internet-related projects, core values should be transferrable across industries. I think these are. These values may seem “generic” or “broad”, but in fact they establish a foundation upon which many, if not all, decisions will be based. I may elaborate why I chose these in a later post, but if you look at our projects and better yet - have met us and know who we are - then I think (hope!) these aren’t too surprising.
For Purpose, which gives us a direction, I’ve decided to articulate it as:

Contribute to the fusion of technology and design and make both more accessible for communities.

This time, I’m actually thinking this statement is a little broad. But reviewing other examples and not wanting to specifically define which communities (yet), I will leave this as is.
Finally, our BHAG. I actually have two in mind, and both will definitely take at least 5-8 years. I want to let them soak in a bit before I start sharing with others. Hey, Disney’s BHAG to build Disneyland wasn’t decided in just a few weeks!

Concluding the Prelude
I’ve written this post to serve three purposes: a) to share my enthusiasm for “Built To Last” with you, b) to help me better articulate to myself what Majides, Inc. means, and c) to give you a peek into what one can expect from us going forward. In fact, I “look forward to looking back” to this post in due time to see how we’ve progressed. If any of what I’ve shared so far from a company-building aspect is of interest, you owe it to yourself to read this book. A business book that can ring true almost 15 years after publication[1] is definitely one for the personal library.

Choice Quotes
While you really should read the book for the full context, I wanted to compile and share some personal favorite snippets.

The critical question asked by a visionary company is not “How well are we doing?” or “How can we do well?” or “How well do we have to perform in order to meet the competition?” For these companies, the critical question is “How can we do better tomorrow that we did today?”

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?”

 

“... it is far more important to know who you are than where you are going, for where you are going will certainly change as the world about you changes.”

As we move into the 21st century, companies will need to draw on the full creative energy and talent of their people. But why should people give this level of commitment and devotion? 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.

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[1] Incidentally, I found a FastCompany article from 2004 (“Was ‘Built to Last’ built to last?”), 10 years after BTL first hit bookshelves. They follow-up on the 18 visionary companies to see if the principles still hold. Most do, but a few - by their calculations - aren’t so visionary any more (in 2004). But I think the editors missed a key point - every company will have its troughs; the real answer will be revealed in due time - if the company has been true to itself.