In Built to Last, Jim Collins examines a selection of ‘Visionary Companies’. He compares these to other companies and identifies what it takes to run a visionary company. Collins book is well researched, he debunks myths and examines key ideologies. It's an excellent guide to creating a successful business or organization that will prosper over a long period of time.
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Who is this summary for?
This book is perfect for anyone running or working in a company. It will highlight what it is that makes a company good and will show you ways to make it even better. In Built to Last, Jim Collins examines a selection of ‘Visionary Companies’. He compares these to other companies and identifies what it takes to run a visionary company. Collins book is well researched, he debunks myths and examines key ideologies. It's an excellent guide to creating a successful business or organisation that will prosper over a long period of time.
About the author
Jim Collins, author of Built to Last considers himself both a student and teacher of leadership. He has performed endless hours of research into companies and leaders aiming to understand exactly what separates the best from the rest. With 6 books under his belt he has sold more than 10 million copies worldwide, this book, Build to Last became a #1 bestseller.
In this summary
First, we’ll explain what Collins means when he talks about ‘visionary companies’ before diving into discussing a few business myths. We’ll summarise some of Collin’s key guidelines and talk about goal setting, business cultures and the ‘keep trying’ method. Finally, we’ll discuss how Collins believes that good enough never really is good enough and conclude with a summary of Collins thoughts on building a vision.
WHAT MAKES A VISIONARY COMPANY?
”Visionary companies are premier institutions, they are widely admired by their peers and having a long track record of making a significant impact on the world around them.”
The point that Collins is trying to emphasis that a visionary company isn’t really a company, led by someone visionary, nor is it the embodiment of a great product or service. A visionary company is an entire institution, an organisation. A visionary company is so much more than the the leader themselves, as leaders will move on eventually. It’s also more than a product or service, because these too will come and go, get outdated and remodelled. Collins points out that entire markets can disappear altogether, or be so amended that they are unrecognisable. And this is why you cannot attribute a visionary company to any of these factors.
A visionary company has usually been around for decades, and they are consistently successful. Collins explains that they are often the best of the best within their industry, and this doesn’t fluctuate. They are known for their enduring nature and continued service to the market. And this is the kind of company that everyone should look up to.
Collins explains that it’s not that these companies never make mistakes, release unpopular products, or face times of hardship. What sets them apart from the rest is the way they handle the setbacks. They are well-established and have the ability to learn from mistakes and improve. Their performance over a long-period of time is always in the incline.
The time telling myth
A lot of people believe that one of the most fundamental elements of a successful company is having a charismatic, visionary leader, or alternatively, selling a revolutionary product or service. However, Collins explains that this is just ‘time telling’. What a visionary company needs to do is ‘clock building’. Companies need to learn how to manage, adapt and continuously grow regardless of who is running them and regardless of what the product or service they are selling is.
If you can adjust your mindset to clock building, and move away from focusing on time telling, you’ll find yourself in a better position to build a visionary company. You’ve got to focus on building an organisation from the ground up, build the ticking clock, don’t simply read the time. It’s always got to be about the organisation as a whole, never about an individual person or product.
”Rather than on hitting a market just right with a visionary product idea and riding the growth curve of an attractive product life cycle. Instead of concentrating on acquiring the individual personality traits of visionary leadership, they concentrate on building the organizational traits of visionary companies. Their greatest creation is the company itself and what it stands for.”
The great idea myth
So many people sit back waiting, waiting for the perfect idea before they take the leap and build a visionary company. Waiting for the perfect idea can take years – if it ever happens. However, Collins explains that you need to stop waiting for the one great idea. He believes that in some cases, you can get started on building a company without the so-called great idea. This brings us back to our discussion of visionary companies, they are so much more than just a good idea. And focusing too much on the idea means you’re not putting enough time and effort into building a visionary organisation. So shift your mind away from searching for the perfect idea, and start focusing on building an institution.
”Visionary companies are much less likely to begin life with a so-called great idea. Shift from seeing the company as a vehicle for the products to seeing the products as a vehicle for the company.”Click To Tweet
The charismatic leader myth
Too many people and companies get caught up in having the perfect, charismatic, inspirational leader. But the reality is, that a great leader does not need to be out-going, high-profile or charismatic. Collins explains that people with outgoing personalities and great charisma can make excellent leaders, but it’s not the only option. Using companies like 3M, P&G, Sony, Boeing, and HP as examples, Collins points out that visionary companies can be built without charismatic leaders.
NO “TYRANNY OF THE OR”
Collins calls upon the yin/yang symbol from Chinese philosophy to represent a fundamental component of visionary companies. He explains, that unlike many companies, the visionary ones don’t get caught up with the concept of ‘the tyranny of the or’. This concept expresses the perspective that when two things are slightly contradictory, they cannot both exist at the same time. The idea that you can only have A OR B, never both. Collins uses a common assumption as an example: “you can only have change OR stability, not both.”
However, the alternative viewpoint is called ‘the genius of the AND’. Collins believes that this is the best perspective to have and one that visionary companies adopt. It’s the ability to have both A AND B. You really can have the best of both worlds. Visionary companies adopt the mindset that allows them to have both change AND stability.
IS IT ALL ABOUT PROFIT?
”A fundamental element in the “ticking clock” of a visionary company is a core ideology—core values and sense of purpose beyond just making money—that guides and inspires people throughout the organization and remains relatively fixed for long periods of time.”
Collins points out that obviously, a visionary company has to keep profit in mind, they have to pursue this. But they also chase meaningful ideas, the bigger-picture, things that are inspirational and influential. They are not ruled by making money. Profit is not the be-all and the end-all for visionary companies. They manage to do both.
It’s clear that in order to continue and to succeed a company has to be profitable, but it’s not the only goal for a visionary company. Collins uses a nice metaphor to explain the role of profit in a visionary company, he explains that just as in life, oxygen, food, water, and blood are completely necessary, but they are not the point of living. The same goes for profit, it’s necessary, but not the primary motive for running a business.
”One of Walt Disney’s ideologies for the company was to bring happiness to millions’, and celebrate, nurture and promulgate ’wholesome American values’. It wasn’t to be profitable.”
Collins’ guidelines for core ideologies
Core Ideology = Core Values + Purpose
Collins explains that core values are the fundamental beliefs of any organisation. These principles should be what guide them and their business regardless of profit and financial gain. These beliefs are the backbone of the company and should be considered always.
An organisation’s purpose goes way beyond profits and financial gain. The purpose is an organisation’s big ‘why’. Collins points out that a purpose is not a business strategy or goal, it is the driving reason behind the companies existence.
”The essence of a visionary company comes in the translation of its core ideology and its own unique drive for progress into the very fabric of the organization—into goals, strategies, tactics, policies, processes, cultural practices, management behaviours, building layouts, pay systems, accounting systems, job design—into everything that the company does.”
THE CORE/STIMULATE PROGRESS
As important as a core ideology is, it’s not the only factor when it comes to building a visionary company. Collins explains that a visionary company has to be able to change and adapt, and if it refuses, it will simply cease to exist.
“You can’t just keep doing what works one time, because everything around you is always changing. To succeed, you have to stay out in front of that change.”Click To Tweet
A core ideology is something that is constant, it should never change. Unlike things like strategy, operations or tactics. The core ideology is part of the identity of the company and is fixed. Things like products, strategies and even goals will change over time.
Drive for progress
Collins explains that as humans, it’s in our nature to have a constant curiosity. We want to discover new things, explore new places, create new things, achieve new goals. Essentially, we are designed to be striving for constant improvement. The drive for change and improvement is almost a primal instinct, and something that Collins believes is carried over into visionary companies. It’s fundamental that companies who want long-term success are constantly striving for progress.
”The drive for progress enables the core ideology, for without continual change and forward movement, the company—the carrier of the core—will fall behind in an ever-changing world and cease to be strong, or perhaps even to exist.”
Confidence and criticism
Collins explains that this constant drive for progress and change comes hand in hand with a combination of self-confidence and self-criticism within an organisation. A visionary company requires a certain level of confidence, this will encourage them to set impressive goals and make radical moves when necessary. Without confidence, organisations wouldn’t back themselves and often the truly life-changing products and services would never make it to market. So an element of confidence is certainly needed.
However, Collins explains that the confidence is only effective if the organisation is also capable of self-criticism. They need to be able to look internally and assess where improvement is necessary. Without this ability to do so, products and services would make it to market before they were fine-tuned. Collins believes that a truly visionary company is actually it’s own most critical critic. This encourages them to push for constant improvement and progress.
”The core ideology enables progress by providing a base of continuity around which a visionary company can evolve, experiment, and change. By being clear about what is core (and therefore relatively fixed), a company can more easily seek variation and movement in all that is not core.”
GOAL SETTING – THE BHAG
Collins uses the acronym BHAG (big hairy audacious goals) to describe the kind go goals that are ambitious, demanding and challenging. These are not the everyday kind of goals that most companies set.
Collins explains that a BHAG is not something easy to achieve. But it is achievable. The end result is so enticing that organisations are incredibly motivated to work hard and reach the end. BHAG’s need to have specific metrics such as a finish line or end date, and measurable metrics. A BHAG has to be well communicated, anyone in the organisation who knows about the goal needs to understand it with little explanation. It’s not meant to be complicated, just ambitious. Collins uses the example of General Electric and their BHAG to become #1 or #2 in every single market that they serve. It was clear, specific and easy to understand. It would also be clear when they reached the destination.
People often assume that in order for a company to have a good and welcoming environment, the culture needs to be soft, comfortable and appear easy-going. However, Collins explains that it’s quite the opposite for visionary companies. Often they ask more of their employees, they can be seen to be more demanding and from the outside, this may not seem as welcoming. However, the discipline that visionary companies demand can be fundamental to their success and the loyalty of their team members.
“Visionary does not mean soft and undisciplined. Quite the contrary. Because the visionary companies have such clarity about who they are, what they’re all about, and what they’re trying to achieve, they tend to not have much room for people unwilling or unsuited to their demanding standards.”
Collins explains that although the concept of a cult usually gets a bad reputation, cult-like cultures actually encourage companies and employees to work harder towards their BHAG. The feeling of being part of something big and powerful is an excellent motivator.
TRY, TRY, TRY AGAIN
Collins explains that experimenting is absolutely fundamental for visionary companies when coming up with and developing new products and services. It’s easy to assume that their best-performing products are the result of strategic planning, but more often than not they are born out of experimentations, multiple variations and sometimes even accidents. The goal is to keep trying until something works, and then stick with it!
Collins describes the evolutionary process as ‘branching and pruning’. Relating the process back to plants, he explains that by adding branches to trees (variation) and effectively pruning and getting rid of the dead branches and leaves (selection) the end result should be a thriving and healthy plant. This can be applied to visionary companies and their process.
- Give it a try – and quick
- Accept that mistakes will be made
- Take small steps
- Give people the room they need
- Mechanisms – build that ticking clock!
HOME-GROWN MANAGEMENT AND HIRING WITHIN
Collins explains that when a visionary company is looking to hire, the first place they look is within the organisation. They dedicate a lot of time to developing their team members and are therefore able to promote within a lot more than other companies. This is considered a fundamental part of ‘preserving their core’.
”In short, it is not the quality of leadership that most separates the visionary companies from the comparison companies. It is the continuity of quality leadership that matters— continuity that preserves the core.”
When building any visionary company, organisations need to look well beyond how well they are currently doing. They need to ask how well they will do in the next generation, and the next, and the next. As we mentioned earlier, individual leaders will move on eventually. Visionary organisations need to ensure that there are more potential leaders willing to take over and continue the company in the same manner with the core ideology in mind. The departure of a leader should never indicate the end or a decline in operations.
NEVER JUST GOOD ENOUGH
A visionary company is never content with good enough. They are constantly asking themselves how they can do better tomorrow, and the next day, and the next. These questions become the driving force behind the company. Collins explains that execution and performance are never the end goal for a visionary company. They are simply the result of the cycle and drive of constant improvement. Collins points out that a visionary company has no finish line or defining moment of ‘having made it’. The reality is that they’ll never ‘make it’ as they are always striving for more.
”Don’t get comfortable – visionary companies thrive on discontent. They understand that contentment leads to complacency, which inevitably leads to decline.”Click To Tweet
Collins explains that when building a vision, you need two important elements. You need to have a well-established core ideology and a clear envisioned future. Collins explains that these two elements can be considered the yin/yang and are the building blocks for any vision.
” It defines “what we stand for and why we exist” that does not change (the core ideology). It sets forth “what we aspire to become, to achieve, to create” that will require significant change and progress to attain (the envisioned future).”
- A visionary company isn’t really a company, led by someone visionary, nor is it the embodiment of a great product or service.
- A visionary company is an entire institution, an organisation.
- Companies need to learn how to manage, adapt and continuously grow regardless of who is running them and regardless of what the product or service they are selling is.
- A visionary company has usually been around for decades, and they are consistently successful.
- Shift your mind away from searching for the perfect idea, and start focusing on building an institution.
- Visionary companies can be built without charismatic leaders.
- Profit is not the be-all and the end-all for visionary companies. They are not ruled by making money.
- Core Ideology = Core Values + Purpose
- A core ideology is something that is constant, it should never change.
- It’s fundamental that companies who want long-term success are constantly striving for progress.
- A visionary company requires a certain level of confidence and the ability to be self-critical.
- BHAG (big hairy audacious goals) are the kind go goals that are ambitious, demanding and challenging.
- A cult-like culture can be effective for visionary companies.
- Visionary companies need to be constantly experimenting.
- A visionary company is never content with good enough. They are constantly asking themselves how they can do better tomorrow, and the next day, and the next.
By the same author, Good to Great identifies companies that went from “good to great” and compares this to what Collins considers to be ‘mediocre’ companies. This helps to identify what separates the elite from the rest. If you enjoyed Built to Last you need to check this out.
If you’re a leader and enjoyed Jim Collin’s take on leadership, it’s worth checking out Leaders Eat Last by Simon Sinek. This book is ideal for anyone who leads, whether it be a small team, an entire organisation, a community or a family. As a leader, it’s important to create a culture that leaves everyone happy and fulfilled, and this is exactly what Simon describes. Simon emphasises that when an environment is built on trust, teams will work together, have each other’s backs, survive and thrive.
Execution: The Discipline of Getting Things Done by Larry Bossidy is another similar read. A 3-part examination of what it takes for companies to succeed through strategy, process, leadership and ultimately; execution. What sets the successful companies apart form those that fail.
Guidelines is my eBook that summarises the main lessons from 33 of the best-selling self-help books in one place. It is the ultimate book summary; Available as a 80-page ebook and 115-minute audio book. Guidelines lists 31 rules (or guidelines) that you should follow to improve your productivity, become a better leader, do better in business, improve your health, succeed in life and become a happier person.
- Identify a few visionary companies that you are aware of. What do you think is their core ideology, what sets them apart from the rest?
- Take a look at the company you work for (or the company you own) and try to see what concepts you can take away from this book to make it more visionary.
- Download the complete book on Amazon.
This summary is not intended as a replacement for the original book and all quotes are credited to the above-mentioned author and publisher.