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BUILT TO LAST (Jim Collins)

WHAT MAKES A VISIONARY COMPANY?

”Visionary companies are premier institutions, they are widely admired by their peers and having a long track record of making a significant impact on the world around them”.

The point that Collins is trying to emphasis that a visionary company is not really a company led by someone visionary nor is it the embodiment of a great product or service. A visionary company is an entire institution, an organization.

Collins explains that it’s not that these companies never make mistakes, release unpopular products, or face times of hardship. What sets them apart from the rest is the way they handle the setbacks. They are well-established and have the ability to learn from mistakes and improve. Their performance over a long period of time is always in the incline.

MYTHS

A lot of people believe that one of the most fundamental elements of a successful company is having a charismatic, visionary leader, or alternatively, selling a revolutionary product or service. However, Collins explains that this is just ‘time telling’.

”Rather than on hitting a market just right with a visionary product idea and riding the growth curve of an attractive product life cycle. Instead of concentrating on acquiring the individual personality traits of visionary leadership, they concentrate on building the organizational traits of visionary companies. Their greatest creation is the company itself and what it stands for”.

The great idea myth.
So many people sit back waiting, waiting for the perfect idea before they take the leap and build a visionary company. Waiting for the perfect idea can take years – if it ever happens.

”Visionary companies are much less likely to begin life with a so-called great idea. Shift from seeing the company as a vehicle for the products to seeing the products as a vehicle for the company”.

NO TYRANNY OF THE OR

Collins calls upon the yin/yang symbol from Chinese philosophy to represent a fundamental component of visionary companies. He explains, that unlike many companies, the visionary ones don’t get caught up with the concept of ‘the tyranny of the or’.

The alternative viewpoint is called ‘the genius of the AND’. Collins believes that this is the best perspective to have and one that visionary companies adopt. It’s the ability to have both A AND B. You really can have the best of both worlds. Visionary companies adopt the mindset that allows them to have both change AND stability.

IS IT ALL ABOUT PROFIT?

”A fundamental element in the ’ticking clock’ of a visionary company is a core ideology—core values and sense of purpose beyond just making money—that guides and inspires people throughout the organization and remains relatively fixed for long periods of time”.

It’s clear that in order to continue and to succeed a company has to be profitable, but it’s not the only goal for a visionary company. Collins uses a nice metaphor to explain the role of profit in a visionary company. He explains that just as in life, oxygen, food, water, and blood are completely necessary, but they are not the point of living. The same goes for profit, it’s necessary, but not the primary motive for running a business.

Core Ideology = Core Values + Purpose

”The essence of a 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 behaviour, building layouts, pay systems, accounting systems, job design – into everything that the company does”.

THE CORE / STIMULATE PROGRESS

“You can’t just keep doing what works one time, because everything around you is always changing. To succeed, you have to stay out in front of that change”.

A core ideology is something that is constant, it should never change. Unlike things like strategy, operations or tactics. The core ideology is part of the identity of the company and is fixed. Things like products, strategies and even goals will change over time.

Drive for progress
Collins explains that as humans, it’s in our nature to have a constant curiosity. We want to discover new things, explore new places, create new things, achieve new goals. Essentially, we are designed to be striving for constant improvement. The drive for change and improvement is almost a primal instinct, and something that Collins believes is carried over into visionary companies. It’s fundamental that companies who want long-term success are constantly striving for progress.

”The drive for progress enables the core ideology, for without continual change and forward movement, the company—the carrier of the core—will fall behind in an ever-changing world and cease to be strong, or perhaps even to exist”.

Confidence and criticism
Collins explains that this constant drive for progress and change comes hand in hand with a combination of self-confidence and self-criticism within an organization. A visionary company requires a certain level of confidence, this will encourage them to set impressive goals and make radical moves when necessary. Without confidence, organizations would not back themselves and often the truly life-changing products and services would never make it to market. So an element of confidence is certainly needed.

However, Collins explains that the confidence is only effective if the organization is also capable of self-criticism. They need to be able to look internally and assess where improvement is necessary. Without this ability to do so, products and services would make it to market before they were fine-tuned. Collins believes that a truly visionary company is actually it’s own most critical critic. This encourages them to push for constant improvement and progress.

”The core ideology enables progress by providing a base of continuity around which a visionary company can evolve, experiment, and change. By being clear about what is core (and therefore relatively fixed), a company can more easily seek variation and movement in all that is not core”.

GOAL SETTING – THE BHAG

Collins uses the acronym BHAG (big hairy audacious goals) to describe the kind go goals that are ambitious, demanding and challenging. These are not the everyday kind of goals that most companies set.

Collins explains that a BHAG is not something easy to achieve. But it is achievable. The end result is so enticing that organizations are incredibly motivated to work hard and reach the end.

BHAG’s need to have specific metrics such as a finish line or end date, and measurable metrics. A BHAG has to be well communicated, anyone in the organization who knows about the goal needs to understand it with little explanation. It’s not meant to be complicated, just ambitious.

CULTURE

People often assume that in order for a company to have a good and welcoming environment, the culture needs to be soft, comfortable and appear easy-going.

“Visionary does not mean soft and undisciplined. Quite the contrary. Because the visionary companies have such clarity about who they are, what they’re all about, and what they’re trying to achieve, they tend to not have much room for people unwilling or unsuited to their demanding standards”.

Collins explains that although the concept of a cult usually gets a bad reputation, cult-like cultures actually encourage companies and employees to work harder towards their BHAG. The feeling of being part of something big and powerful is an excellent motivator.

TRY, TRY, TRY AGAIN

Collins explains that experimenting is absolutely fundamental for visionary companies when coming up with and developing new products and services. It’s easy to assume that their best-performing products are the result of strategic planning, but more often than not they are born out of experimentations, multiple variations and sometimes even accidents. The goal is to keep trying until something works, and then stick with it!

Evolutionary Process
Collins describes the evolutionary process as ‘branching and pruning’. Relating the process back to plants, he explains that by adding branches to trees (variation) and effectively pruning and getting rid of the dead branches and leaves (selection) the end result should be a thriving and healthy plant. This can be applied to visionary companies and their process.

HOME-GROWN MANAGEMENT AND HIRING WITHIN

”In short, it is not the quality of leadership that most separates the visionary companies from the comparison companies. It is the continuity of quality leadership that matters— continuity that preserves the core”.

When building any visionary company, organizations need to look well beyond how well they are currently doing. They need to ask how well they will do in the next generation, and the next, and the next.

Individual leaders will move on eventually. Visionary organizations need to ensure that there are more potential leaders willing to take over and continue the company in the same manner with the core ideology in mind. The departure of a leader should never indicate the end or a decline in operations.

NEVER JUST GOOD ENOUGH

”Don’t get comfortable – visionary companies thrive on discontent. They understand that contentment leads to complacency, which inevitably leads to decline”.

A visionary company is never content with good enough. They are constantly asking themselves how they can do better tomorrow, and the next day, and the next. These questions become the driving force behind the company. Collins explains that execution and performance are never the end goal for a visionary company. They are simply the result of the cycle and drive of constant improvement.

GET BUILDING A VISION

Collins explains that when building a vision, you need two important elements. You need to have a well-established core ideology and a clear envisioned future. Collins explains that these two elements can be considered the yin/yang and are the building blocks for any vision.

”It defines ‘What we stand for and why we exist’ that does not change (the core ideology). It sets forth ‘What we aspire to become, to achieve, to create’ that will require significant change and progress to attain (the envisioned future)”.