In Built to Last author Jim Collins presents his research on what differentiates visionary companies, such as companies with a long track record of superior performance, from average or “just good” companies.

Bullet Summary

• Visionary companies have purpose, values, and culture handed down from generation to generation
• They attract and retain people who believe in the same values and thrive within the ranks
• They allow their employees to experiment and try out new things

Full Summary

The so-called “visionaries companies” surveyed in Built to Last include Walt Disney Company, Marriott Hotels, Merck, Sony, HP, and Johnson & Johnson.

The top companies often described as “visionaries” were then compared to companies in the same industries and with similar products which were described far more infrequently as “visionaries”.

The authors then analyzed both groups to find out what the differences were.
Built to Last is the product of that research.

It’s Not About Great Ideas & Top Leader

Companies that last are not based on ideas.
Ideas come and go. Some that seem good will work great and some that seem OK will work great. But few of them will ever keep delivering big profits for decades.

Sony indeed not only wasn’t born with any good idea, but it had no great idea.
The founder started a brainstorming session after launching the company to evaluate possible business ideas.

HP also had no specific idea but experimented with lots of stuff that today would sound farcical.

It’s not even about great charismatic leaders at the top. The top leaders are very often modest and down to earth.

Great companies are great organizations that churn out great leaders and great ideas continuously.
The great product of these companies is the product itself, the organization that allows them to keep producing great ideas, great products, and great people.

The Immutable Core of Lasting Companies

Lasting companies are built around an immutable core.
What’s the core?

• Core = Values & Purpose

Purpose.
The purpose is the main reason why a company exists.
Disney’s purpose for example is to bring happiness to millions.
The purpose is a guiding star, it’s not ever something you’re done with and gets done with. You always strive and keep producing towards that purpose.

Values.
Values are company specific and they are all about who you are.

Culture.
Values shape the culture of a company, and companies that are built to last have a very strong culture. Even a cult-like culture.

Purpose & Ideologies
Great companies have a great purpose than simply producing a product. Great companies put that purpose and vision before the bottom-line profits (also read Start With WHY).
They form ideologies that go from generation to generation so that retiring leaders don’t take their culture with them.

Continuous Improvement
While the ideologies stay the same, the manifestations of those ideologies always change. Great companies always strive to come up with new ways of fulfilling their purposes.

Continuous Experimentation
Visionary companies allow their employees to experiment. This isn’t indeed just Google. 3M for example does the same, and the Post-It, a blockbuster for the company, was the result of an employee’s pet project.
Compare it to Norton, a similar company in the same industry, which actively discourages employees to pursue interests outside its traditional product line.

The Changing Parts

The core stays the same in great companies, while other elements change over time.

Goals
Collins uses the acronym BHAG, which stands for “big hairy audacious goals”. The concept is similar to Bold and The Magic of Thinking Big, such as designing big goals that motivate people who are 100% committed to realizing them.

One example, which is a very popular one in management textbooks, is the moon landing -albeit many believe it never actually happened-.
But also the 747 plane from Boeing is an example of a BHAG.

Never Good Enough
Comfort is never the goal for companies and people who want to achieve great goals and accomplish great things. Great companies always have a hunger for more and more.

Recruits Stay Only if They Fit
Since the culture is somewhat cult-like new recruits either fit in and thrive or leave soon.
Walt Disney was a particularly severe example of cult-like culture. To fit in with the culture of family fun they would not hire men with facial air for their parks and anyone cursing in the presence of the founder would be fired on the spot.

CEOs Are Bred and Groomed
Companies are built to last groom their leaders internally. They always have a lot of talent to choose from because employees are highly engaged and are given a lot of free reins to experiment and learn.
They also tend to plan in advance their new CEOs, with GE choosing Jack Welch’s successor seven years before Welch retired.
Jack Welch was only the most famous BTW, but GE enjoyed a century of Welch-caliber CEOs.
In contrast, non-visionary CEOs are often hired externally, don’t groom the next leader, and sometimes, Collins & Porras say, even hinder any possible competition (also read Snakes in Suits).

Visionaries Companies Walk the Talk

While most companies boast and brag about big values, visionaries companies actually take steps to live those values.

Real-Life Applications

Work For Visionaries Companies
Why would you work for a company that doesn’t allow you to go beyond your role description? If you are reading here and trying to become a better man, you also deserve a better boss.

Envision a Company, Not a Great Product/Idea
Instead of focusing so much on an idea or a product, focus on building a great conduit for great ideas and products.

CONS

Unscientific 
This is a study of correlation. They take one successful company and then look for the differences with less successful companies and say “oh, here is what’s different, here is why visionary companies are better”.
I believe that’s unscientific and prone to all kinds of errors and biases.

Long and Repetitive
The wisdom is great and valid. But it could have been delivered in a shorter format.

PROS

Good Wisdom
It all makes sense and many a board member and CEO would gain reading these pages.

Review

The theory is there and even though I said it’s not highly scientific, I also believe that pretty much everything Built to Last says makes sense.

However, few companies are actually willing and able to walk the talk.
Up to you if you want to beat an awesome company that lasts, delivers, and adds more value than any other company in your industry.

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