Introduction
“Built to Last: Successful Habits of Visionary Companies” by Jim Collins and Jerry I. Porras is a seminal work that explores what makes certain companies enduringly great. The authors conducted a six-year research project comparing 18 visionary companies to a set of comparison companies. The book outlines the habits, practices, and ideologies that set these companies apart and have enabled their long-term success.
Chapter 1: The Best of the Best
Collins and Porras start by defining what they mean by “visionary companies.” These are organizations that are widely admired by their peers and have had a significant impact on the world. The companies studied include giants like General Electric, Hewlett-Packard, 3M, and Procter & Gamble. The authors stress that visionary companies do not rely on charismatic leaders or brilliant business strategies alone; rather, they embed core values and purpose into their organizational fabric, ensuring longevity and consistent performance.
Chapter 2: Clock Building, Not Time Telling
One of the key principles introduced is “clock building, not time telling.” This metaphor means that visionary companies focus on building systems and processes that can endure beyond the tenure of any single leader or market cycle. A vivid example is the comparison between Walt Disney and 20th Century Fox. While Disney created an enduring institution with a strong set of values and principles, 20th Century Fox relied heavily on its founder, leaving it vulnerable after his departure.
Hewlett-Packard (HP) is highlighted for its “HP Way,” a set of core values that included a deep respect for individuals, a dedication to affordable quality and reliability, and a commitment to community responsibility. These principles helped HP thrive long after its founders were gone.
Chapter 3: More Than Profits
Visionary companies, according to Collins and Porras, pursue a purpose beyond just making money. Profit is a means to an end, not the end itself. This higher purpose drives the company’s strategic decisions and fosters a culture of excellence. An example is Merck, which prioritized its mission to alleviate human suffering over short-term profits. This commitment led Merck to donate millions of doses of its drug Mectizan to combat river blindness in developing countries.
Johnson & Johnson’s handling of the Tylenol crisis is another example. When faced with a situation where its product was tampered with, resulting in several deaths, the company chose to recall all Tylenol products at great financial cost. This decision, aligned with its credo of putting customers first, ultimately strengthened the company’s reputation and trust with consumers.
Chapter 4: Preserve the Core/Stimulate Progress
Collins and Porras emphasize the importance of balancing a strong adherence to core values with a willingness to stimulate progress and adapt. Visionary companies preserve their core ideology while continually changing their strategies, structures, and practices. For example, IBM’s core value of customer service has remained unchanged since its inception, even as the company has radically transformed its product lines from tabulating machines to computers to IT services.
3M is renowned for its 15% rule, which allows employees to spend up to 15% of their time on projects of their choosing. This policy fosters innovation and progress while staying true to the company’s core value of fostering innovation and creativity.
Chapter 5: Big Hairy Audacious Goals (BHAGs)
Visionary companies set ambitious, even audacious goals that galvanize people and create a sense of urgency and focus. Collins and Porras term these objectives “Big Hairy Audacious Goals” (BHAGs). One striking example is Boeing’s goal in the 1950s to become the dominant player in commercial aviation, which led to the development of the iconic 707 jetliner. This BHAG required massive commitment and resources but ultimately transformed the aviation industry and established Boeing’s leadership.
Sony’s early BHAG was to change the worldwide perception of Japanese products as being of poor quality. This ambitious goal drove Sony to innovate and produce high-quality electronics, significantly improving Japan’s reputation in the global market.
Chapter 6: Cult-Like Cultures
Visionary companies often possess cult-like cultures that are deeply embedded with their core ideologies. These cultures create a strong sense of identity and commitment among employees. The authors describe how Nordstrom’s rigorous hiring process and extensive training programs instill its customer-service ethos in every employee. New recruits are indoctrinated into a culture that values exceptional service, and those who do not align with this culture tend to leave quickly.
Walmart’s “10-foot rule,” where employees are expected to greet customers within ten feet, exemplifies its commitment to friendly, personal service. This rule is part of a broader culture that emphasizes customer focus and cost efficiency.
Chapter 7: Try a Lot of Stuff and Keep What Works
Visionary companies often engage in an iterative process of experimentation, learning, and adaptation. This trial-and-error approach allows them to innovate continuously. Collins and Porras highlight 3M’s history of encouraging employees to try new ideas, resulting in groundbreaking products like Post-it Notes and Scotchgard.
Similarly, Hewlett-Packard’s decentralized management style encourages innovation and experimentation within its business units. This approach has led to numerous successful products and technological advancements.
Chapter 8: Home-Grown Management
Visionary companies tend to develop their leaders from within, fostering a deep alignment with the company’s core values and culture. Procter & Gamble’s practice of promoting from within ensures that its leaders are steeped in the company’s principles and practices. This approach contrasts with many companies that hire outside executives who may not fully understand or embody the company’s culture.
General Electric’s famous leadership development programs and succession planning have produced a continuous stream of capable leaders who understand and perpetuate the company’s core values and strategic direction.
Chapter 9: Good Enough Never Is
The authors stress the importance of continuous improvement and the relentless pursuit of excellence. Visionary companies never rest on their laurels but continually seek ways to improve and innovate. An example is Toyota’s commitment to kaizen, or continuous improvement, which has made it a leader in quality and efficiency in the automotive industry.
Walt Disney’s constant push for perfection in its theme parks and films exemplifies this principle. Disney’s commitment to enhancing the guest experience has led to the creation of magical, immersive environments that set the standard in the entertainment industry.
Chapter 10: The End of the Beginning
In the final chapter, Collins and Porras summarize the key takeaways and reiterate that visionary companies are built to last. They emphasize that these companies succeed because they adhere to their core values while simultaneously embracing change and innovation. The authors also highlight that building such companies requires deliberate effort and discipline, but the rewards are enduring success and resilience.
Conclusion
“Built to Last: Successful Habits of Visionary Companies” by Jim Collins and Jerry I. Porras provides a roadmap for building enduringly successful organizations. By examining the habits and practices of visionary companies, the authors distill essential principles such as preserving core values, fostering innovation, setting ambitious goals, and cultivating strong cultures. The numerous examples, from Merck’s commitment to humanitarian efforts to 3M’s innovation-friendly policies, illustrate how these principles can be effectively implemented. The book serves as a valuable guide for leaders and organizations striving to achieve long-term success and impact.