As someone who is currently working to get my own business off the ground and running, I am constantly seeking the advice and wisdom of those who have spent years in the business world. Men and women who have started and operated successful companies, spent their lives studying and researching businesses around the world, and have been truly immersed in the world of entrepreneurship. Their knowledge is invaluable to me as I begin my journey as a business owner, and James Collins and Jerry Porras' book Built to Last: Successful Habits of Visionary Companies is one of the best business books that I have ever come across.
Built to Last is based off of a multi-year research project headed by Collins and Porras where the analyzed what they deemed "visionary" companies in correlation to a group of "comparison" companies. The visionary companies were ones that performed above their peers in almost every measurable factor, but also possessed a certain standard of quality for themselves and their employees. According to Collins/Porras, truly visionary companies meet these criteria:
1. Premiere institution in its industry
2. Widely admired
3. Made an indelible imprint on the world
4. Has multiple generations of CEO's
5. Been through multiple product or service cycles
What truly separates these visionary companies from their peers is a beautiful ability strive for and achieve the highest levels of success regardless of (#3) who their CEO is at the time and (#5) what the market desires/demands. These companies also have an internal list of what Collins/Porras call "core ideologies", or more simply stated as a list of core beliefs that the business never deviates from. These ideologies are not financially or goal driven. They are the fabric of the company and the "why" of the entire business.
I won't dive into every section of this book that I feel should be mentioned (this post would be 6 pages long), but for those of you that have your own business or are considering starting your own business, I wanted to hit on a few important points. First and foremost, the idea of Clock-Building compared to Time-Telling. When you are the leader of any business, the goal should be to create something that will transcend your leadership. Every new policy, product, service, or idea that you implement should help build the future of your business (your clock) in a way that it will continue to thrive (tick) long after you are gone. With this metaphor, a time-teller is someone who is a great leader and creates results while they are around, but once they leave the company, there is no structure in place to continue that success. They are simply time-tellers. Great leaders realize that their companies are the greatest creation they will ever develop, so the goal here is to be a clock-builder, not simply just a time-teller.
The second lesson that I took from this book was the idea of focusing on more than profits. The visionary companies studied in this book were obviously driven by success (you can't stay in business very long if you don't eventually turn a profit), but there was always an underlying pursuit of something more for these companies. Drug-manufacturer Merck believed in providing quality health products for every human being on the planet, and their actions solidified those beliefs, regardless of their financial returns. To prove this, Merck once gave the Mectizan, which cures river-blindness, to over 1 millions people in 3rd-world countries for free!
I wanted to share a quote regarding the belief in a higher purpose than simply profits. In this book, Collins writes, "Profit is like oxygen, food, water, and blood for the body. They are not the point of life, but without them, there is no life."
Here, we see the visionary companies' theology on profits and pursuing a higher purpose. They, like every other company, strive to be successful and profit as a business, but they do not operate solely for the purpose of profits. If you have your own business, this is a wonderful lesson to take forward as you start your journey.
Finally, I wanted to end my discussion on the topic of Big, Hairy, Audacious Goals, or BHAG's. Built to Last describe BHAG's as monumental objectives that seem nearly impossible from the onset, but create a sense of urgency within the business. To use an example, Boeing relied on the Air Force for 4/5 of its profits in 1952. Early in the company's history, they were solely focused on military aircraft, not commercial flight machinery. Due to the unreliable "hire-and-fire" military contracts, Boeing decided to take a risk and build the 707 aircraft. The cost of designing, building, testing, and manufacturing the 707 accumulated to more than 1/4 of Boeing's total net worth, a risk that in retrospect seems outrageous. As we all know, the 707 helped put Boeing into the world of commercial aircraft, and they haven't looked back since.
BHAG's are a tremendous tool for any business, regardless of size. They should be unattainable at your current state, which means that you and your business will be forced to grow if you hope to achieve your BHAG's. They should install a small amount of fear, but also rally your employees together as you move forward. Continuing off of the previous idea of "clock-building", Collins writes that the goal "should transcend any one leader". The BHAG should stimulates growth for your business for long periods of time (years), and they should also coincide with the core ideologies of your business, which we also discussed earlier.
This amazing lessons provided in this book cannot be condensed down into one blog post, and there are dozens of other wonderful ideas in its pages that I've failed to mention here. But what you should understand about this book whether you decide to read it or not is that becoming a visionary company is not for everyone. The handful of companies that were included in this study are some of the most renown, respected, and successful companies of all time, including the aforementioned Merck and Boeing, as well as Ford, Johnson & Johnson, HP, and more. If you desire to become a visionary company like these, that's great and I wish you nothing but success. But if you have your own business and your goal is to expand, but you don't wish to reach the level of these companies, the lessons in Built to Last as still as applicable to you as they are to these other companies. You can still set BHAG's. You can still focus on building a legacy that is about more than profits. And you can create a company that is driven to reach the highest levels of success.
If you're an entrepreneur, leave a comment below and share your story! I want to hear about your experiences.
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