Built To Last - Summary of Key Points
Written by James Collins & Jerry Porras
both are associated with Stanford
About this book:
This summary of Built to Last is included because if one is going to change an organization, one needs to know what to change towards. This book is one of the best we know of that answers that question. It is one of the best pieces of research done on why certain organizations are more successful over time than others. Because its time horizon is a minimum of 50 years, its lessons are enduring. We highly recommend either the book or the audio taped version. We originally wrote this summary to accompany the audio taped version, which is required listening in our Leading Change Program, the students love this book. Introduction:
The book makes a comparison of Visionary Companies to a comparison group of good companies. The Visionary Companies engaged in management practices that we would consider cutting edge long ago. The lessons of the Visionary Companies can be learned and practiced at all levels of the organization. The authors found that charismatic leadership was not a differentiating variable. The Visionary Companies survive, visionary leaders come and go and so do visionary products. What is a Visionary Company?
For the purpose of this study they:
a. were the premier leader in their industry, widely admired b. made an indelible mark on the world
c. have multiple products and have had multiple CEO's
d. are at least 50 years old
The authors compared 18 Visionary Companies to 18 comparison companies. The comparison companies have done more than twice as well as the stock market since 1926, while the Visionary Companies have done 15 times as well as the stock market. The comparison is through the end of 1990. Think of the comparison companies as the bronze medalists. Most of the Visionary Companies have had problems, but have displayed a remarkable resiliency in coping with their problems. A dozen common myths were shattered:
1. It takes a great idea to start a great company. In fact, having a great idea to begin with is negatively correlated with becoming a great company. 2. Great companies require charismatic leaders. In fact, charismatic leaders can be detrimental to the long term health of the organization. The leaders of Visionary Companies sought to be clock builders not time tellers. 3. The most successful companies exist to maximize profits. In fact, maximizing profits has not been the dominate theme in the Visionary Companies. They pursue a number of objectives, sort of like the balanced scorecard. Clearly, profit is one of their objectives. 4. They share a common ("right") set of core values. The core values don't have to even be enlightened (Philip Morris), though they often are enlightened. What's most important about core ideology is how deeply the company believes in its ideology and to what extend it is aligned with it. 5. The only constant is change. The Visionary Companies have maintained their core values for many years. But they are adaptive, everything but the core values is subject to change. 6. The companies are conservative. In fact, they are not. They are willing to engage in BHAG's (big hairy audacious goals). 7. These companies are comfortable places to work. In fact, only those comfortable with the core ideology are comfortable working there. 8. Visionary Companies make their best moves by high level successful strategic planning. In fact, they progress by trying a lot of stuff and keeping what works. 9. Companies should hire outsiders as CEO's to breath new life into the organization. The authors found that only 4 of 113 CEO's in Visionary Companies came from the outside. The comparison companies go to the outside 6 times more frequently. 10. Visionary Companies focus on beating the competition. In fact, they focus on beating themselves. Always striving to be the best. 11. You can't have your cake and eat it to. The Visionary Companies...
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