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Adapted with permission from
Built to Last: Successful Habits of Visionary Companies
by James C. Collins and Jerry I. Porras
(HarperCollins, 1994) © James C. Collins
& Jerry I. Porras
By James C. Collins, MBA '83, and Jerry I. Porras
In 1988, we began to wrestle with the question of corporate vision. The subject had received much attention in the press and among management thinkers, yet we felt unsatisfied by what we read. For one thing, the term "vision" had been tossed around by so many people and used in so many different ways that it created more confusion than clarification. Some viewed vision as a crystal ball picture of the future marketplace. Others thought in terms of a technology or product vision, such as the Macintosh computer. Still others emphasized a vision of the organization - values, purpose, mission, goals, images of an idealized workplace.
Furthermore - and what bothered us most - the image of something called a visionary leader (often charismatic and high profile) lurked in the background of nearly all discussions and writings about vision. But, we asked ourselves, if visionary leadership is so crucial to the development of extraordinary organizations, then who is the charismatic visionary leader of 3M?
We didn't know. Do you? 3M is a company that many would describe as visionary, yet it doesn't seem to have (or have had in its past) an archetypal high-profile, charismatic leader. As we checked into the history of 3M, it also became clear that 3M could not trace its success primarily to a visionary product concept, market insight, or lucky break; no such product or lucky break could create nearly 100 years of corporate performance. It occurred to us that 3M represented something beyond visionary leadership, visionary products, visionary market insights, or inspiring vision statements. 3M, we decided, could best be described as a visionary company.
We chose the term visionary, rather than "successful" or "enduring," to reflect the fact that companies like 3M have distinguished themselves as a very special and elite breed of institution. They are more than successful. They are more than enduring. In most cases, they are the best of the best in their industries, and have been that way for decades. Many of them have served as role models - icons, really - for the practice of management around the world.
And thus we began the extensive research project on which our book is based. We did something that, to our knowledge, has never been done before. We took a set of truly exceptional companies that have stood the test of time - the average founding date being 1897 - and studied them from their very beginnings, through all phases of their development to the present day; and we studied them in comparison to another set of good companies that had the same shot in life, but didn't attain quite the same stature.
We looked at them as startups, as midsized companies, as large companies. We looked at them as they negotiated dramatic changes in the world around them - world wars, depressions, revolutionary technologies, cultural upheavals, and so on. And, throughout, we kept asking, "What makes the truly exceptional companies different from the other companies?"
We wanted to go beyond the incessant barrage of management buzzwords and fads of the day. We set out to discover the timeless management principles that have consistently distinguished outstanding companies. Along the way, we found that many of today's "new" or "innovative" management methods really aren't new at all. Many of today's buzzwords - employee ownership, empowerment, continuous improvement, TQM, common vision, shared values, and others - are repackaged and updated versions of practices that date back, in some cases, to the 1800s.
Much of what we found surprised us. Widely held myths fell by the dozen. Traditional frameworks buckled and cracked. Evidence flew in the face of many of our preconceptions. We had to unlearn before we could learn. We had to toss out old frameworks and build new ones, sometimes from the ground up. It took six years. But it was worth every minute. Here are a dozen common myths that were shattered during the course of our research.
Myth 1: It takes a great idea to start a great company.
Reality: Starting a company with a Great Idea might be a Bad Idea. Few of the visionary companies began life with a great idea. In fact, some began life without any specific idea, and a few even began with outright failures. Furthermore, regardless of the founding concept, the visionary companies were significantly less likely to have had early entrepreneurial success than the comparison companies in our study. Like the tortoise and the hare, visionary companies often get off to a slow start, but win the long race.
Myth 2: Visionary companies require great and charismatic visionary leaders.
Reality: A charismatic visionary leader is absolutely not required for a visionary company and, in fact, can be detrimental to a company's long-term prospects. Some of the most significant CEOs in the history of visionary companies did not fit the model of the high-profile, charismatic leader - indeed, some explicitly shied away from that model. Like the founders of the United States at the Constitutional Convention, they concentrated more on designing enduring institutions than on being great individual leaders.
Myth 3: The most successful companies exist first and foremost to maximize profits.
Reality: Maximizing shareholder wealth has not been the dominant driving force or primary objective through the history of the visionary companies. They have pursued a cluster of objectives, of which making money is only one - and not necessarily the primary one. Yes, they seek profits, but they're also guided by a core ideology: core values and a sense of purpose beyond just making money. Yet, paradoxically, we found that the visionary companies make more money than the more purely profit-driven comparison companies. (See chart, page 16.)
Myth 4: Visionary companies share a common subset of "correct" core values.
Reality: There is no right set of core values for a visionary company. Indeed, two companies can have radically different ideologies, yet both be visionary. Core values in a visionary company don't even have to be "enlightened" or humanistic (although they often are). The crucial variable is not the content of a company's ideology, but how deeply it believes in its ideology and how consistently it lives, breathes, and expresses it in all that it does. Visionary companies do not ask, "What should we value?" They ask, "What do we actually value deep down to our toes?"
Myth 5: The only constant is change.
Reality: A visionary company almost religiously preserves its core ideology, changing it seldom, if ever. Core values in a visionary company form a rock-solid foundation and do not drift with the trends and fashions of the day; in some cases, the core values have remained intact for well over one hundred years. And the basic purpose of a visionary company - its reason for being - can serve as a guiding beacon for centuries, like an enduring star on the horizon. Yet, while keeping their core ideologies tightly fixed, visionary companies display a powerful drive for progress that enables them to change and adapt without compromising their cherished core ideals.
Myth 6: Blue chip companies play it safe.
Reality: Visionary companies may appear straitlaced and conservative to outsiders, but they're not afraid to make bold commitments to Big Hairy Audacious Goals (BHAGs). Like climbing a big mountain or going to the moon, a BHAG may be daunting and perhaps risky, but the adventure, excitement, and challenge of it grabs people in the gut, gets their juices flowing, and creates immense forward momentum. Visionary companies have judiciously used BHAGs to stimulate progress and blast past the comparison companies at crucial points in history.
Myth 7: Visionary companies are great places to work, for everyone.
Reality: Only those who fit extremely well with the core ideology and demanding standards of a visionary company will find it a great place to work. If you go to work at a visionary company, you will either fit and flourish or you will likely be expunged like an antibody. There's no middle ground. Visionary companies are so clear about what they stand for and what they're trying to achieve that they simply don't have room for those unwilling or unable to fit their exacting standards.
Myth 8: Highly successful companies make their best moves by brilliant and complex strategic planning.
Reality: Visionary companies make some of their best moves by experimentation, trial and error, opportunism, and - quite literally - accident. What looks in retrospect like brilliant foresight and planning was often the result of "Let's just try a lot of stuff and keep what works." In this sense, visionary companies mimic the biological evolution of species. We found the concepts in Charles Darwin's Origin of Species to be more helpful for replicating the success of certain visionary companies than any textbook on corporate strategic planning.
Myth 9: Companies should hire outside CEOs to stimulate fundamental change.
Reality: In 1,700 years of combined lifespans across the visionary companies, we found only four individual incidents of going outside for a CEO - and those in only two companies. Homegrown management rules at the visionary companies to a far greater degree than at the comparison companies. Time and again, they have dashed to bits the conventional wisdom that significant change and fresh ideas cannot come from insiders.
Myth 10: The most successful companies focus primarily on beating the competition.
Reality: Visionary companies focus primarily on beating themselves. Beating competitors comes to the visionary companies not so much as the end goal, but as a residual result of relentlessly asking the question "How can we improve ourselves and do better tomorrow than we did today?" In some cases they have asked this question day in and day out for more than 150 years. No matter how much they achieve - no matter how far in front of their competitors they pull - good is not good enough.
Myth 11: You can't have your cake and eat it too.
Reality: Visionary companies do not brutalize themselves with the "tyranny of the or ": the purely rational view that says you can have either A or B, but not both. They reject having to choose stability or progress; cult-like cultures or individual autonomy; homegrown managers or fundamental change; conservative practices or Big Hairy Audacious Goals; making money or living with values and purpose; and so on. Instead, they embrace the genius of the and - the paradoxical view that allows them to pursue both A and B at the same time.
Myth 12: Companies become visionary primarily through vision statements.
Reality: The visionary companies attained their stature not so much because they made visionary pronouncements (although they often did make such pronouncements). Nor did they rise to greatness because they wrote one of the vision, values, purpose, mission, or aspiration statements that have become popular in management today (although they wrote such statements more frequently than the comparison companies and decades before it became fashionable). Creating a statement can be a helpful step in building a visionary company, but it is only one of thousands of steps in a never-ending process of expressing the fundamental characteristics we identified across the visionary companies.
As we look back on our findings, one giant realization towers above all the others: Just about anyone can be a key protagonist in building an extraordinary business institution. The lessons of these companies can be learned and applied by the vast majority of managers at all levels. Gone forever - at least in our eyes - is the debilitating perspective that the trajectory of a company depends on whether it is led by people ordained with rare and mysterious qualities that cannot be learned by others.
When you read our book - and we hope you do - we hope the hundreds of specific examples will stimulate you to take action in your own organization. We hope the concepts and frameworks will embed themselves in your mind and help guide your thinking. We hope you take away pearls of wisdom that you can pass along to others. But, above all, we hope you take away confidence and inspiration that the lessons therein do not apply only to other people. You can learn them. You can apply them. You can build a visionary company.
Visionary Companies
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