Jim Collins — Built To Last Book Review & Key Takeaways
Today I’m reviewing the best-seller book from Jim Collins — Built To Last. What are the key takeaways of the book? Why did Jim Collins commit during 6 years to observe and uncover what makes some companies, stable, visionary, and successful for decades and even centuries?
Jim Collins’ Built to Last is a philosophical blueprint based on research into the development of some of the United States’ most successful corporations.
Recognizing struggling competitors whose businesses disappear after a period of time, Jim Collins focus his research towards 18 visionary companies and analyze them in accordance with guidelines they’ve set on what makes a good company.
Built To Last is not a business book, but a book about building long-lasting human-centric institutions with soul and purpose.
Built to Last provides an in-depth overview of the best practices used by exceptional companies, most of them established more than 100 years ago. The award-winning authors discuss the core values of these organizations and how they’ve managed to survive and thrive for so long.
This book is perfect for anyone running or working in a company.
WarningIt will highlight what it is that makes a company good and will show you ways to make it even better. Built To Last is the result of six years of research. Published in 1994 by Jim Collins, it’s long been a modern classic and has been translated in over 25 languages.
One of the most exciting points of the research is that it destroys many myths associated with success in the corporate world, outlining the winning companies.
The winning companies do have something worth knowing about the key factors necessary to being successful AND staying successful over a long period of time. But how is it done? Let’s find out.
They Are Driven By Their Core
A core ideology consists of two things: a higher purpose and a set of core values. For example, Walmart’s core ideology is to bring people retail products at the lowest prices, with the greatest customer service.
Without a core ideology, your company can’t be visionary. Your core ideology has to live through all products, employees and times.
WarningIt doesn’t matter what it contains, but rather that it exists. If you have no purpose and no principles to hold up high, you’ll never create a vision great enough to attract fellow great minds to help you build it.
The most important factor is to understand the meaning of your core.
Many companies mistake tactics and strategies as being their core, which in turn means that their strategy and tactics aren’t changed enough. This approach also allows drifting from the initial core purpose, which leads to a somewhat rudderless company obsessed with strategies and tactics — which, eventually, will cease working.
There is no ‘right’ set of core values for being a visionary company. The crucial variable is not the content of a company’s ideology, but how deeply it believes its ideology.
One of the key characteristics that sets visionary companies apart from their competition is that they have a core ideology in place that drives almost every decision they make.
You can think of a core ideology like a vision statement except it’s much more actionable. It’s your values and the reasons why you do what you do; it’s what motivates you to keep going in hard times and embodies the factors you think about when making life’s most important decisions.
Don’t worry about making it perfect. Your core ideology is purely for you and can be whatever you want it to be as long as it’s capable of guiding your business.
WarningHaving a clear, written core ideology can help you make decisions and prevent you from doing things you may regret because, whenever you are in a situation where you don’t know what to do, your core ideology is there to guide you. You just have to make the decision that most closely matches your ideals.
They Know Ideas Are Nothing
Few of the visionary companies in the book began with even any specific idea. Visionary companies often get off to a slow start, but set ambitious goals and continue to experiment with ideas that move them towards their vision while sticking to their core values.
The success of visionary companies comes from successful underlying processes and core values, not a special idea, patent, or trade secret.
The authors cite the example of Sony, which began with no thought in mind. The company considered venturing into the sale of food to the final consumer and even sporting goods.
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.
WarningHowever, Collins explains that you need to stop waiting for the one great idea. He believes that in some cases, you can get started on building a company without the so-called great idea.
Hewlett-Packard (HP) also had no specific idea in mind when it was founded. Its founders tried to sell automatic discharges to bathrooms and bowling equipment. Obviously, these were not the ideas that turned this company into the power that it is today.
Focusing too much on the idea means you’re not putting enough time and effort into building a visionary organization.
WarningSo shift your mind away from searching for the perfect idea, and start focusing on building an institution. The reason these companies succeeded is that instead of focusing on one idea or one great leader, they focused on the process of coming up with ideas, and producing leaders, either good, or bad.
The winning companies failed miserably before becoming profitable. They started with an intention to make a dent in the universe, to make a positive change in the world.
The company was created first, the product was second. So, if you have a desire to start a company, think about what kind of change you want to create in the world and then figure out the product.
They Build Clocks
Instead of simply telling the time, you can create a system — built a clock — that can tell the time forever. A simple example, in this case, will be to create a course and teach others your practices, values, and principles.
Visionary companies build clocks, systems, they create an ideology, a premium standard that serves as a guiding force to the folks who’ll inherit the organization.
WarningIt is not their product, it’s the organization itself and what they stand for and why they exist. The true creation of the founders is not a product, but the company itself, which is constantly advancing independently of a person or idea.
Visionary companies do not need visionary and charismatic leaders.
They are focused on architecting an institution built to last. Successful companies have focused much more on architecting a lasting organization than on having a charismatic individual leader.
Unfortunately that’s rarely how folks these days approach things. They invest all of their capital to ship a single product. They neglect the desires of their employees and are careless about the working conditions. They focus on money and telling time once.
Clock building is building a company that can prosper far beyond the presence of any singer leader and through multiple product life cycles.
Jim Collins denounce the idea of charismatic leaders and explain the great idea myth by pointing out Bill Hewlett and Dave Packard’s ventures into non-electronic products and Masaru Ibuka Sony Corporations brainstorming sessions on which products to make after starting the company.
Too many people and companies get caught up in having the perfect, charismatic, inspirational leader.
WarningBut the reality is, that a great leader does not need to be outgoing, high-profile or charismatic. Jim Collins explains that people with outgoing personalities and great charisma can make excellent leaders, but it’s not the only one option to build a great company.
They Are Audacious
Small, pragmatic goals are easy. They’re the types of goals that you know, if you put in the work, you’re going to achieve. People and companies alike love these types of goals because they give you a sense of accomplishment without having to take risks.
Visionary companies don’t like to follow the status quo so, instead of setting practical goals, they set what the authors call “Big Hairy Audacious Goals.”
It’s like having a trusted regular goal compared to the commitment of a daunting and vast challenge. When reading through your BHAG, a small part of you should tell you that the goal set is unreasonable — BUT another part should say, “so what, nothing can stop me anyway!!”
BHAGs are supersize long-term goals that create an internal drive for progress. Jim Collins uses the example of John F. Kennedy’s enormous goal to travel to the moon.
Like the moon mission, a true BHAG is clear and compelling and serves as an underlying 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.
Jim 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.
The lesson here is that powerful goals are the ones you’re not quite 100% sure you can accomplish from the start.
WarningThose outside of your company may think that you’re mad; however, when the goal is set correctly, it will drive your company’s energy towards ensuring that it is achieved. When you live your life this way, you accomplish more than you ever thought you could.
Visionary companies do not opt for safe strategies. They experiment, get it right, fail and learn from their mistakes.
Although people believe that visionary companies are conservative and bureaucratic, they are not afraid of taking risks and are always committed to big, audacious goals.
They Eat The Whole Cake
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.
A visionary company has no finish line or defining moment of ‘having made it’. The reality is that they’ll never ‘make it’ as they are always striving for more.
WarningJim 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.
Visionary Companies do not have a limiting vision of what is possible. They do many things at once and pursue seemingly antagonistic goals.
Visionary companies do not believe in the view that you have to choose rationally between a restrictive option A or B. They think in the paradoxical view that they can pursue multiple goals at the same time and seek A and B at the same time.
Too many people and companies sabotage their own happiness by believing in what Jim Collins calls the “tyranny of the OR.” The tyranny of the OR is the belief that, when given the option of two good things, you must choose one or the other. Instead of being oppressed by the tyranny of the OR, the most visionary companies challenge the status quo by embracing the genius of the AND and so you can you.
It’s important to embrace paradox. Opposites exist together. Stability and change; Profit and idealism. Future plans and the present moment.
Core ideology and the drive for progress exist together in a visionary company like yin and yang of Chinese dualistic philosophy; each element enables, complements, and reinforces the other.
The central value of Boeing is to be a pioneer in the field of commercial aviation, but the construction of jumbo jets is a manifestation that the company can choose more than one way without losing its essence.
This flexibility shows how visionary businesses refuse to adhere to the so-called tyranny of the OR, in which a company must choose to remain faithful to its core values or to stimulate progress.
They Don't Chase Profit
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. Jim 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.
Profit is necessary, but should not be the primary motive for running a business. Visionary Companies do not exist to maximize profits.
WarningThey care first about their core values. They have a set of goals and profitability is just one of them and, in many cases, it is not the main one. They are guided by a fundamental ideology, a set of core values.
The existence of visionary companies is not solely to make money — something which typically doesn’t apply to comparison companies.
Visionary companies have a greater purpose for their existence and have relevant principles that control all their decisions — this purpose forms their ideology: solid principles that guide the company through generations.
Johnson & Johnson, for example, wrote its core values in the 1930s in a document called “Our Beliefs.” The company’s responsibilities were already set there. First, what J & J sought was to serve its customers well. Then its employees. Once these priorities had been met, then the shareholders should receive a return on their investments.
Visionary companies set a target that is about more than profit. Profitability is a necessary condition in any company, but it is not the why and reason for the company to exist.
The organization exists to do something collectively that could not be accomplished separately. Paradoxically, visionary companies make more money than the more purely profit-driven comparison companies.
Basically, a company’s purpose comprises of a set of reasons beyond its existence and mere money making.
WarningThe company’s purpose should be fundamental, broad and enduring, and should be something to pursue continuously and never to achieve. What visionary companies put forward is their dreams and hopes of what achievements the company is capable of other than creating a profit.
They Glorify Cult-Like Cultures
Since their core ideology doesn’t leave much room for compromises, visionary companies will settle only for the best employees, with the same mindset. The core ideology is something that you either share, or you don’t, there’s nothing in between, which is why new employees either thrive or leave very quickly.
Visionary companies as not a great place to work for everyone. All employees must adapt and embrace the core values assigned to them.
WarningVisionary companies are demanding of its employees to seek accomplishment and to follow the core ideology. Jim Collins outlines 4 common characteristics of cults that apply to the visionary organizational philosophy — fervently held ideology, indoctrination, tightness of fit, and elitism.
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. However, it’s quite the opposite for visionary companies. Often they ask more of their employees, they can be seen to be more demanding and from the outside, this may not seem as welcoming.
There is no space in visionary companies for people who do not meet their expectations and rigid standards.
Employees become completely immersed in the core values of the company. There is no middle ground in visionary companies, but because employees are confident and adhere to the core values, they also have the freedom to experiment.
When you know what your values are and where you’re heading, you will usually expect more from your team, which leads people to make the comparison to cults.
If you are fortunate enough to become a permanent team member, then the rewards will be great, because out of your friends, you will feel a sense of elitism, as you will be the one who is working on something more significant than merely earning a cheque.
It turns out, that there is no magic pill. No secret formula. No shortcut. No amazing product that will help you become the next 3M or HP. To succeed, to create a company with traditions, values, loyal employees, have a mob of fans that are always talking about you, and also make a good profit, it turns out, requires only one thing: good old-fashioned hard work.
Visionary companies must create a core set of values and remain faithful to them in all aspects of the business.
If your core ideology is solid enough, to the point that people live daily on these principles and focused on continuous improvement, it may be that you have built a company built to last.
The core values of the company make clear to everyone what the reason the company exists.
Built to Last presents behind the scenes look of some of the oldest organizations that are still crushing today — how they managed to survive for so long and how they’re different from their competition.
Profits are not the most important thing, and before them, one should always focus on the customers and employees of the company.
WarningYour job is to make sure everyone’s happy and that your business is thriving. But while you supervise the day-to-day tasks, you also need to make sure that everyone is working together to reach the long-term vision.
Constantly strive to beat your own records, learn new skills and chase after “big hairy audacious goals.” When you do that, there’s no limit to how visionary you can become.
If you’re running a business, or you’re working in a leading position for a large organization, you should stop reading this and go get your hands on the copy. Please share your comments about these ideas and concepts below.