Summary of Built to Last
Built to Last, by Jim Collins and Jerry Porras
(Kintan's rating: 4.0/5.0)
One of the most successful books on contemporary business-thinking, presents the successful habits of 18 visionary companies.
Secret sauce of the book:
Enduring and successful organizations set clear Big Hairy Audacious Goals(BHAG), and they strive to achieve them by sticking to their core values.
Top ten ideas:
10. Be a clock builder, not a time teller
o Take an architectural approach and concentrate on building the organizational traits.
o The organization itself is the ultimate creation. Shift from seeing the organization as a vehicle for the products/features to seeing the products/features as a vehicle for the organization.
o The most important thing needed is a fundamental shift in thinking of very high magnitude, analogous to the shift required to found the United States in 1700s.
9. Have a sense of purpose: a motive for the team
o A key step in building a visionary organization is to articulate a core ideology.
o Core Ideology = core values + purpose
o Core values are the organization's essential and enduring tenets, not to be compromised for financial gain or short-term expediency.
o Purpose is the set of fundamental reasons for a company's existence beyond just making money.
8.Articulate an ideology which is "more than profits"
o Financial gains should NOT be the only motivation for the organization.
o There is NO right ideology. Authenticity of the ideology and the extent to which a company attains consistent alignment with the ideology counts more than the content of the ideology.
o A group's ideology will naturally be constrained by the company's ideology, but it can still have its own flavor of ideology, and can certainly articulate a purpose for its own sub-organization.
o The point is NOT to set out to create a cult of personality. But to build an organization that fervently preserves its core ideology in specific, concrete ways.
o Four common characteristics of cults:
· Fervently held ideology: All members of the team fanatically believe in the ideology
· Indoctrination: Effectively introduce and reinforce the culture by management
· Tightness of fit: All members of the team should believe in the same ideology; those who do not believe should change teams
· Elitism: Make all members realize the sense of responsibility that comes with membership in an elite organization
o Question posed during Disney's new employee orientation
o Q: McDonald's makes hamburgers. What does Disney make?
o A: Disney makes people happy.
o The visionary institutions are more likely to promote insiders to the chief position as compared to other organizations.
o Leadership continuity loop:
o Management development and succession planning > Strong internal candidates > Continuity of leadership excellence from within > Preserve the core and stimulate progress
o There is absolutely no inconsistency between promoting from within and stimulating significant change
5.Try a lot of stuff and keep what works
o Let the team members explore. Find out their strengths and let them bloom, while preserving the core ideology. Let the team members evolve through survival of the fittest.
o Analogy of Darwin's evolutionary process: The process is like "branching and pruning." Add enough branches to a tree (variation) and intelligently prune the deadwood (selection), then a collection of healthy branches are likely to evolve and the tree is well positioned to prosper in an ever-changing environment.
o If well understood and consciously harnessed, this process can powerfully stimulate progress. The failure-tolerant environment at 3M, allowed the invention of Post-It Notes.
· Give it a try and quick
· Accept that mistakes will be made
· Take small steps
· Give people the room they need
4.Good enough never is: force the team members out of their comfort zone
o Be terribly demanding of yourselves. Comfort is not the objective in a visionary organization. Install powerful mechanisms to create discomfort - to obliterate complacency and thereby stimulate change and improvement before the external world demands it. Cultivate a discipline of self-improvement.
o Invest earlier and aggressively in technical know-how, new technologies, new management methods, and innovative industry practices. Take a "Reach out for tomorrow"-approach than "penny-pinch conservatism". The leader should translate his/her personal drive for progress into the very fabric of the institution. Invest in future, while doing well today. Build for long-term even during difficult times. There are no shortcuts to life's greatest achievements.
o Example from martial arts:
· What is the true meaning of black belt?
· The black belt represents the beginning - the start of a never-ending journey of discipline, work, and the pursuit of an ever-higher standard.
3.The end of the beginning: Translate core ideology into the fabric of the organization
o The essence of a visionary organization is to translate its core ideology and its own unique drive for progress into the very fabric of the organization - into goals, strategies, tactics, policies, processes, cultural practices, behaviors, etc.
o All elements of an organization's workings should work in alignment with the core ideology.
o Example: HP adopted an early management method of "provide a well-defined objective, give the person as much freedom as possible in working toward that objective, and finally, provide motivation by seeing that the contribution of the individual is recognized throughout the organization.
· Paint the whole picture for clear and effective communication.
· Sweat the small stuff. Focus on the details, especially when it comes to people.
· Cluster. Put in place pieces that reinforce each other, clustered together to deliver a powerful combined punch.
· Swim in your own current, even if you swim against the tide. Don't ask, "Is this practice good? Instead ask, "Is this practice appropriate for us, does it fit with our ideology and ambitions?"
· Obliterate misalignments
2.Preserve the core, stimulate progress
o Shun the tyranny of "OR", embrace the genius of "AND". Believe in Yin and Yang; co-existence of both.
o Only secret to an enduring organization is the ability to manage both change and continuity
· Core values
· Core purpose
· Cultural and operating practices
· Specific goals and strategies
o F. Scott Fitzgerald said, "The test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function."
o Have ideological control with operational autonomy.
1. Set Big Hairy Audacious Goals(BHAG)
o A true BHAG is clear and compelling. It serves as a unifying focal point of effort, often creating immense team spirit. It has a clear finish line, so the organization can know when it has achieved the goal; people like to shoot for finish lines. It engages people-it reaches out and grabs them in the gut. It is tangible, energizing, highly focused. People "get it" right away, it takes little or no effort.
o BHAGs are seemingly impossible, unreasonable, but the drive for progress says, "We believe we can do it nonetheless." Have self-confidence bordering on hubris (literally "overbearing pride, confidence, or arrogance")
o Use BHAGs as a powerful mechanism to stimulate progress
o A goal cannot be classified as a BHAG without a high level of commitment to the goal. It should be outside the comfort zone. People should have a reason to believe they can pull it off, yet it should require heroic efforts.
o BHAG can only help until it is achieved.
o Cultivate the ability to continually set bold new goals for itself long into the future.
o Preserve the core while pursuing BHAGs.
o Example of a BHAG: Kennedy's "Man on the moon" goal during the 60's.
Tester's take on BHAGs:
First, teams need to find sBUGs - Small Bald Unaudacious Goals and destroy them. Then set the BHAGs and focus on achieving them.
Discussion: Tuesday lunch in 36:
We will discuss the ideas of "Built to last" during lunch (noon) on Tuesday, in building 36 (Redmond)
I would like to thank Joe Schumacher for his inspiration and Andy Tischaefer for his guidance.
All ideas presented in this blog are compiled from the book, "Built to Last" by Jim Collins and Jerry Porras.
Please let me know, which book you'd like me to discuss next week by leaving your feedback.
Choose a book from:
1. Good to great, by Jim Collins and Jerry Porras
2. Execution, by Larry Bossidy and Ram Charan
3. 7 habits of highly effective people, by Stephen Covey