BUILT TO LAST Successful Habits of Visionary Companies James C. Collins and Jerry I. Porras HarperCollins Publishers, 1994

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BUILT TO LASTSuccessful Habits of Visionary
CompaniesJames C. Collins and Jerry I.
PorrasHarperCollins Publishers, 1994

• Vimal Patel
• Jim McCool
• EE686S Technical Entrepreneurship
• Fall, 2003

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Criteria for a Visionary Company

• Premier institution in its industry
• Widely admired by knowledgeable business
• Made an indelible imprint on the world
• Had multiple generations of chief executives
• Been through multiple product life cycles
• Founded before 1950
• It is more than successful, more than
  enduring
• Displays resiliency and ability to bounce back
  from setbacks and mistakes

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Selection Process

• Surveyed 700 CEOs at leading corporations from a
  cross section of industry, size, location and
  type/ownership
• Identified distinguishing essential differences
  (rather than commonalities) with a similar
  Comparison Company
• Examined how they started and evolved (responded
  to historical circumstances)

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Research Results and Comparison Companies

• Visionary Companies
• 3M
• American Express
• Boeing
• Citicorp
• Ford
• General Electric
• Hewlitt-Packard
• IBM
• Johnson Johnson
• Marriott
• Merck
• Motorola
• Nordstrom
• Philip Morris
• Procter Gamble
• Sony
• Wal-Mart
• Walt Disney

• Comparison Companies
• Norton
• Wells Fargo
• McDonnell Douglas
• Chase Manhattan
• GM
• Westinghouse
• Texas Instruments
• Burroughs
• Bristol-Myers Squibb
• Howard Johnson
• Pfizer
• Zenith
• Melville
• RJR Nabisco
• Colgate
• Kenwood
• Ames
• Columbia

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Two Fundamental Principles

• The Company IS the Product
• Not building on a charismatic leader
• Not building on a great idea (product or
  service)
• Focus is on building a responsive organization
  that will survive
• Grounded in Core Values
• More ideologically driven and less profit driven
• Values are not just plaques on the wall
• Institutionalized pride in what they are doing

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Whats NOT Fundamental

• Maximize profitability first and foremost
• Have a correct set of core values
• Constant change and re-engineering
• Conservative goals play safe
• Great place for everyone to work
• Brilliant and complex strategic planning
• Hire top leadership from outside
• Focus on beating the competition

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Differentiator Core Ideology

• Statements of Ideology
• Historical Continuity of Ideology
• Ideology Beyond Profits
• Consistency Between Ideology and Actions
• 17 Visionary Companies rated higher than their
  Comparison Company

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Differentiator BHAGs

• Use of BHAGs (Big Hairy Audacious Goals)
• Audacity of BHAGs
• Historical Pattern of BHAGs
• 14 Visionary Companies rated higher than their
  Comparison Company

9
Differentiator Cultism

• Indoctrination
• Tightness of Fit
• Elitism
• 14 Visionary Companies rated higher than their
  Comparison Company

10
Differentiator Purposeful Evolution

• Conscious Use of Evolutionary Progress
• Operational Autonomy to Stimulate and Enable
  Variation
• Other Methods to Stumulate and Enable Variation
  and Selection
• 15 Visionary Companies rated higher than their
  Comparison Company

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Differentiator Management Continuity

• Internal Versus External Chief Executives
• No Post-Heroic-Leader Vacuum or Savior
  Syndrome
• Formal Management Development Programs and
  Mechanisms
• Careful Succession Planning and CEO Selection
  Mechanisms
• 15 Visionary Companies rated higher than their
  Comparison Company

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Thesis

• Visionary Companies institutionalize the summary
  principle
• Preserve the Core And Stimulate Progress

Questions ?