Build to Last

“Built to Last: Successful Habits of Visionary Companies” can be regarded as the most important book written in the field of business management.

The authors’, James C. Collins and Jerry I. Porras, survey on visionary companies helped them learn the fundamental principles of permanent success. They evaluated 36 companies and selected 18 as visionary companies. The companies were selected based on their stock exchange performance since 1950.
The list of 18 companies identified as visionary include 3M, American Express, Boeing, Citicorp (now Citigroup), Disney, Ford, General Electric, HP, IBM, Johnson & Johnson, Marriott, Merck, Motorola, Nordstrom, Philip Morris, Procter & Gamble, Sony and Wal-Mart.
The authors tried to find the common principles behind the success of these companies. The first principle they came up with is “Be Clock Builders, Not Time-Tellers.” In the business world we are familiar with charismatic leaders. Usually, charismatic leaders come to the stage in times of crisis and when without them others are simply unable to find their directions. Collins and Porras mention that system architects are much better leaders than charismatic leaders because while the latter group tells the time, system architects build clocks.
The second principle that authors suggest is: “Embrace the And, Reject the Or.” Winning companies seek to do very well in both the short and the long term. There is, however, a conflict between short-term and long-term objectives. To increase sales in short term, companies like to provide discounts; however, to protect a brand for a long time, prices should be stable. Smarter companies will find solutions to fulfill short- and long-term requirements.
The business management textbooks start with a definition: The aim of the corporation is profit. However, in this book there is a controversial claim. Visionary companies are more than profits. In other words, their fundamental aim is to serve society, not to make profit. If you serve society, the profit comes consequently. Focusing on profit drives the management of companies to think short-range. However, focusing on serving provides bigger profits in the long-term.
In the dynamic and fast changing environment of the business world, the detailed management procedures and the tight rules are not useful. The companies need a direction more than a handbook about how to drive a car. This direction is provided by a core ideology, a set of core values and a sense of purpose. The companies should be prepared to change everything about itself except its core ideology.
One of the most interesting points in the book is summarized as BHAG (Big, hairy, audacious goal). Without having a big goal, it is impossible to reach a big end. According to authors, the companies should develop a clear and compelling BHAG that requires little or no explanation.
Another interesting point that the authors points out is creating cult-like cultures. Not the procedures, but the culture is very important in a company. Like a religion and its believers, a company should have a culture like a sect, and employees should be like sect members. With strong loyalty to the company, every employee should dedicate himself/herself to the company.
One of the findings of the authors in these visionary companies is what they call the Darwinian approach — natural selection and the survival of the fittest. Some of the employees will not adapt to the culture and they will leave the company and the ones who fit in the company will survive with the company. Not only the people, but methods and strategies will also remain in the company that fits the environment and produce wanted results.
One of the thought-provoking quotes is, “When the CEO retires, we employ a new doorkeeper.” This means instead of transferring new managers to the company, these visionary companies promote somebody who is successful from the staff. The visionary companies’ management teams are homegrown.
The book ends with a chapter about how to build a vision because without a vision, there is no compass that can guide you while you are trying to walk towards the future. Throughout the book you can read extraordinary stories of companies like Sony, 3M, HP, Wal-Mart, Merck and others. It is a must read for everybody in the field of management.
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