3rd edition, Random House, 2000, ISBN: 0-7126-6968-X
Reviewed by Graeme Codrington
This is the best selling business book of all time. It beats its prequel, “Good to Great” into second place, and Who Moved My Cheese into third. But is it any good? We think not. The problem is that the book, in an attempt to be completely scientific and data-bound, has no choice but to select companies that may not be the best role models for the 21st century. By definition, the companies selected for the research project are all industrial era companies. Some of them are in the process of making a transition to the connection economy, but many of them are struggling. The danger of a book like this is that if you look at the wrong thing and ask the wrong questions, you will get the wrong answer every time. The conclusions and suggestions outlined in this book are valid and useful, and every company should take cognisance of them. However, there is a danger in just blindly following the results of this research project, without considering the culture, context and desired outcome of any intervention. I believe the authors of this book would be the first to agree with this sentiment.
Our own view at TomorrowToday.biz is that the most critical interventions needed in companies at the moment are the development of the ability to see the context, to no one’s own strengths and weaknesses, and for the leadership to become adept at storytelling as a means of holding the vision. Having said that, you need to make your own mind, and so here I offer a very short summary of this bestselling book.
The book is based on a 6 year research project undertaken by the authors, and their grad students from the Stanford School of Business (completed during the mid 1990s). The research looked at 18 successful companies, defined as premier institutions in their industries, widely admired by top business people (they received input from thousands of CEOs in America) and consumers, with multiple generations of chief executives, multiple product/service lifecycles, founded before 1950 and surviving to this day. Each of the 18 selected companies (3M, American Express, Boeing, Citicorp, Ford, General Electric, Hewlett-Packard, IBM, Johnson & Johnson, Marriott, Merck, Motorola, Nordstrom, Philip Morris, Proctor & Gamble, Sony, Wal-Mart and Walt Disney) was also compared to a similar company in the same industry to ensure that the critical success factors identified were unique to the visionary companies.
Initial Findings: 12 Myths Shattered
The authors list 12 myths which they feel are conclusively shattered by their research. They show the following beliefs to be untrue:
- 1. It takes a great idea to start a great company
- 2. Visionary companies require great and charismatic visionary leaders
- 3. The most successful companies exist first and foremost to maximise profits
- 4. Visionary companies share a common sebsuet of correct core values
- 5. The only constant is change
- 6. Blue-chip companies play it safe
- 7. Visionary companies are great places to work, for everyone
- 8. Highly successful companies make their best moves by brilliant and complex strategic planning
- 9. Companies should hire outside CEOs to stimulate change
- 10. The most successful companies focus primarily on beating the competition
- 11. You cant have your cake and eat it too (you have to choose between stability or progress, conservative approach or bold moves into the future, etc)
- 12. Companies become visionary primarily through vision statements.
If these are the myths, then what is the key to growing an organisation? The authors suggest that it is a passion for preserving the core while simultaneously stimulating progress. In order to do this, the book outlines some critical areas of focus for visionary companies, including:
Core Ideology
One of the most profound insights gained from the research into the 18 visionary companies is that each of them had some underlying passion, some value set, some over-arching purpose that has guided (and continues to guide) the companies. This value set is ingrained in the company DNA, influencing staff choice, architecture, ethos, ethics, choice of clients and projects in fact, every part of the organisation is aligned to the core ideology of the company. Core ideology is defined as the combination of core values (the organisations central and enduring tenets, that will never be compromised or changed) and purpose (the organisations fundamental reason for existence a guiding star on the horizon).
BHAGs: Big Hairy Audacious Goals
Visionary companies set themselves clear, compelling and audacious targets, that serve as a unifying focal point of effort and energy. BHAGs have clear finishing lines as audacious as the goals are, they are achievable and measurable. In this way, they are different from the purpose mentioned above. The companys purpose must be such that it will never fully be achieved(like world evangelisation or poverty alleviation). BHAGs are much more focussed and defined goals.
There are six criteria for a good BHAG:
- 1. It should have a medium to long-term time frame, ranging from 10 to 30 years.
- 2. It should fall well outside the comfort zone (although it is likely to seem more audacious to outsiders than insiders it must still be demanding).
- 3. It should be clear, highly focussed, and compelling, and exact a high commitment and should be able to continue to do so, even when the current leadership moves on.
- 4. It should be easily explainable, so that people get it with little or not explanation.
- 5. It should have some measurability, and people should know when it will be attained (i.e. what conditions will apply to call it completed).
- 6. It should be consistent with the company’s values and purpose.
Constant Experimentation
A consistent theme through the research into visionary companies was that they had made some of their best moves not by detailed strategic planning, but rather by experimentation, trial and error, opportunism, and quite literally accident. What these companies have in common is a belief that prediction, control and efficiency are no longer the most important qualities in a fast-changing market. Instead they go for adaptability, participation, effectiveness and learning as the cornerstones of their enterprise.
Good Enough Never Is
Visionary companies create discomfort as a rule, stimulating progress and improvement beforethe market demands it. It is a never ending cycle of self-stimulated improvement and investment for the future. There is no finishing line for a highly visionary company.
Alignment
The essence of the visionary company comes in the translation of 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, management behaviors, building layouts, pay systems, accounting systems, job design into everything that the company does. A visionary company creates a total environment that envelops employees, bombarding them with a set of signals so consistent and mutually reinforcing that its virtually impossible to misunderstand the companys ideology and ambitions.
The Genius of the AND
Throughout the book it is evident that a tension exists between sets of dualities. The key is not to fall for the trap of thinking that a choice must be made. Visionary companies somehow work towards achieving seemingly paradoxical outcomes, such as:
- Enduring purpose and profits
- Fixed core ideology and vigorous change
- Clear vision and experimentation
Managers at visionary companies simply do not accept the proposition that they must choose between short-term performance or long-term success. They build first and foremost for the long term while simultaneously holding themselves to highly demanding short-term standards.
Conclusion
Built to Lastserves as a celebration of the incredible effect that individuals can have and as a practical guide book to identifying the organizations that make this possible for individuals. The key is to apply all areas of this book with equal vigour, and not try to fake it.