Built to Last: Successful Habits of Visionary Companies

by Jim Collins, Jerry I Porras

Overview

Drawing upon a six-year research project at the Stanford University Graduate School of Business, James C. Collins and Jerry I. Porras took eighteen truly exceptional and long-lasting companies and studied each in direct comparison to one of its top competitors. They examined the companies from their very beginnings to the present day — as start-ups, as midsize companies, and as large corporations. Throughout, the authors asked: "What makes the truly exceptional companies different from the comparison companies and what were the common practices these enduringly great companies followed throughout their history?"

Filled with hundreds of specific examples and organized into a coherent framework of practical concepts that can be applied by managers and entrepreneurs at all levels, Built to Last provides a master blueprint for building organizations that will prosper long into the 21st century and beyond.

Product Details

ISBN-13:	9780060516406
Publisher:	HarperCollins
Publication date:	06/24/2004
Series:	Good to Great , #2
Edition description:	3rd ed.
Pages:	368
Product dimensions:	5.20(w) x 8.00(h) x 1.00(d)

About the Author

Jim Collins is a student and teacher of what makes great companies tick, and a Socratic advisor to leaders in the business and social sectors. Having invested more than a quarter century in rigorous research, he has authored or coauthored a series of books that have sold in total more than 10 million copies worldwide. They include Good to Great, the #1 bestseller, which examines why some companies make the leap and others don’t; the enduring classic Built to Last, which discovers why some companies remain visionary for generations; How the Mighty Fall, which delves into how once-great companies can self-destruct; and Great by Choice, which uncovers the leadership behaviors for thriving in chaos and uncertainty. Jim has also published two monographs that extend the ideas in his primary books: Good to Great and the Social Sectors and Turning the Flywheel.

His most recent publication is BE 2.0 (Beyond Entrepreneurship 2.0), an ambitious upgrade of his very first book; it returns Jim to his original focus on small, entrepreneurial companies and honors his coauthor and mentor Bill Lazier.

Driven by a relentless curiosity, Jim began his research and teaching career on the faculty at the Stanford Graduate School of Business, where he received the Distinguished Teaching Award in 1992. In 1995, he founded a management laboratory in Boulder, Colorado, where he conducts research and engages with CEOs and senior-leadership teams.

In addition to his work in the business sector, Jim has a passion for learning and teaching in the social sectors, including education, healthcare, government, faith-based organizations, social ventures, and cause-driven nonprofits. In 2012 and 2013, he had the honor to serve a two-year appointment as the Class of 1951 Chair for the Study of Leadership at the United States Military Academy at West Point.

Jim holds a bachelor's degree in mathematical sciences and an MBA from Stanford University, and honorary doctoral degrees from the University of Colorado and the Peter F. Drucker Graduate School of Management at Claremont Graduate University. In 2017, Forbes selected Jim as one of the 100 Greatest Living Business Minds.

Jerry I. Porras is the Lane Professor of Organizational Behavior and Change, Emeritus, at the Stanford University Graduate School of Business where he served as an Associate Dean for Academic Affairs and frequent executive education teacher. He studies ways of aligning companies around their purpose and core values to produce lasting high performance.

Hometown:

Boulder, Colorado

Date of Birth:

January 25, 1958

Place of Birth:

Aurora, Colorado

Education:

B.S. in mathematical sciences, Stanford University, 1980; M.B.A., Stanford University, 1983

Website:

http://www.jimcollins.com

Read an Excerpt

Chapter One

This is not a book about charismatic visionary leaders. It is not about visionary product concepts or visionary market insights. Nor even is it about just having a corporate vision.

This is a book about something far more important, enduring, and substantial. This is a book about visionary companies.

What is a visionary company? Visionary companies are premier institutions-the crown jewels - in their industries, widely admired by their peers and having a long track record of making a significant impact on the world around them. The key point is that a visionary company is an organization - an institution. All individual leaders, no matter how charismatic or visionary, eventually die; and all visionary products and services-all "great ideas" - eventually become obsolete. Indeed, entire markets can become obsolete and disappear. Yet visionary companies prosper over long periods of time, through multiple product life cycles and multiple generations of active leaders.

Pause for a moment and compose your own mental list of visionary companies; try to think of five to ten organizations that meet the following criteria:

• Premier institution in its industry
• Widely admired by knowledgeable businesspeople
• Made an indelible imprint on the world in which we live
• Had multiple generations of chief executives
• Been through multiple product (or service) life cycles
• Founded before 1950

Examine your list of companies. What about them particularly impresses you? Notice any common themes? What might explain their enduring quality and prosperity. How might they be different from other companiesthat had the same opportunities in life, but didn't attain the same stature?

In a six-year research project, we set out to identify and systematically research the historical development of a set of visionary companies, to examine how they differed from a carefully selected control set of comparison companies, and to thereby discover the underlying factors that account for their extraordinary long-term position. This book presents the findings of our research project and their practical implications.

We wish to be clear right up front: The "comparison companies" in our study are not dog companies, nor are they entirely unvisionary. Indeed, they are good companies, having survived in most cases as long as the visionary companies and, as you'll see, having outperformed the general stock market. But they don't quite match up to the overall stature of the visionary com- panies in our study. In most cases, you can think of the visionary company as the gold medalist and the comparison company as the silver or bronze medalist. We chose the term "visionary" companies, rather than just "successful" or "enduring" companies, to reflect the fact that they have distinguished themselves as a very special and elite breed of institutions. They are morethan successful. They are more than enduring. In most cases, they are the best of the best in thdir industries, and have been that way for decades. Many of them have served as role models -icons, really - for the practice of management around the world. (Table 1. 1 shows the companies in our study. We wish to be clear that the companies in our study are not the only visionary companies in existence. We will explain in a few pages how we came up with these particular companies.)

Yet as extraordinary as they are, the visionary companies do not have perfect, unblemished records. (Examine your own list of visionary companies. We suspect that most if not all of them have taken a serious tumble at least once during their history, probably multiple times.) Walt Disney faced a serious cash flow crisis in 1939 which forced it to go public; later, in the early 1980s, the company nearly ceased to exist as an independent entity as corporate raiders eyed its depressed stock price. Boeing had serious diffi-culties in the,mid-1930s, the late 1940s, and again in the early 1970s when it laid off over sixty thousand employees. 3M began life as a failed mine and almost went out of business in the early 1900s. Hewlett-Packard faced severe cutbacks in 1945; in 1990, it watched its stock drop to a price below book value. Sony had repeated product failures during its first five years of life (1945-1950), and in the 1970s saw its Beta format lose to VHS in the battle for market dominance in VCRs. Ford posted one of the largest annual losses in American business history ($3.3 billion in three years) in the early 1980s before it began an impressive turnaround and long-needed revitalization. Citicorp (founded in 1812, the same year Napoleon marched to Moscow) languished in the late 1800s, during the 1930s Depression, and again in the late 1980s when it struggled with its global loan portfolio. IBM was nearly bankrupt in 1914, then again in 1921, and is having trouble again in the early 1990s.

Table 1.1

The companies in our Research Study

Visionary Company 3M American Express Boeing Citicorp Ford General Electric Hewlett-Packard IBM Johnson & Johnson Marriott Merck Motorola Nordstrom Philip Morris Procter & Gamble Sony Wal-Mart Walt Disney

Comparision Company Norton Wells Fargo McDonnell Douglas Chase Manhattan GM Westinghouse Texas Instruments Burroughs Bristol-Myers Squibb Howard Johnson Pfizer Zenith Melville RJR Nabisco Colgate Kenwood Ames Columbia

Built to Last. Copyright © by James C. Collins. Reprinted by permission of HarperCollins Publishers, Inc. All rights reserved. Available now wherever books are sold.

Table of Contents

Acknowledgements ..... ix
Introduction to the Paperback Edition ..... xiii
Preface ..... xxiii
Chapter 1: The Best of the Best ..... 1
Chapter 2: Clock Building, Not Time Telling ..... 22
Interlude: No "Tyranny of the OR" ..... 43
Chapter 3: More Than Profits ..... 46
Chapter 4: Preserve the Core/Stimulate Progress ..... 80
Chapter 5: Big Hairy Audacious Goals ..... 91
Chapter 6: Cult-Like Cultures ..... 115
Chapter 7: Try a Lot of Stuff and Keep What Works ..... 140
Chapter 8: Home-Grown Management ..... 169
Chapter 9: Good Enough Never Is ..... 185
Chapter 10: The End of the Beginning ..... 201
Chapter 11: Building the Vision ..... 219
Epilogue: Frequently Asked Questions ..... 241
Appendix 1: Research Issues ..... 249
Appendix 2: Founding Roots of Visionary Companies and Comparison Companies ..... 256
Appendix 3: Tables ..... 277
Appendix 4: chapter Notes ..... 305
Index ..... 334

Reading Group Guide

"In an ironic twist, I now see Good to Great not as a sequel to Built to Last, but more of a prequel. Good to Great is about how to turn a good organization into one that produces sustained great results. Built to Last is about how you take a company with great results and turn it into an enduring great company of iconic stature." --Jim Collins

An Introduction

What distinguishes a successful company from the kind of company whose very name becomes a cultural icon, whose place is fixed in the public consciousness? An innovative and inspiring study of the culture and longevity of some of America's most successful organizations, Built to Last is a blueprint for building organizations that will endure long into the twenty-first century.

In Built to Last, James C. Collins and Jerry I. Porras identify the unique characteristics of visionary companies and show how any business can cultivate them. From Merck to Philip Morris, from General Electric to Nordstrom, from Ford to Sony, visionary companies display an amazing resilience and an unshakable commitment to their core ideology that allows them to surpass even their more temporarily successful competitors and achieve a lasting place in the cultural landscape.

By examining the founding and history of these companies, the ways in which they have handled both adversity and success, and their continued commitment to their corporate identity, Collins and Porras reveal the unique characteristics of these visionary companies and show what actions other companies may take to achieve the same level of long-lastingperformance.

Questions for Discussion of Built to Last

Why do you think the authors chose to use the term "visionary" to describe the companies profiled in the book rather than "successful" or "great"?

The authors state that "as extraordinary as they are, the visionary companies do not have perfect, unblemished records" and then cite specific examples: Walt Disney faced a serious cash flow crisis in 1939 which forced it to go public. Boeing had serious difficulties in the mid-1930s, the late 1940s, and again in the 1970s when it laid off over sixty thousand employees. What allowed these two and the other visionary companies to bounce back from severe adversity?

Myth number one debunked in the book is that "it takes a great idea to start a great company." Do you agree that this is a myth? Cite some examples of visionary companies that did not start with a great idea. Discuss the other myths that the authors "shatter."

The authors quote Bill Hewlett of Hewlett-Packard as saying, "When I talk to business schools occasionally, the professor of management is devastated when I say that we didn't have any plans when we started-we were just opportunistic. We did anything that would bring in a nickel." Why do you think this is a disconcerting notion to many people, in this particular case to management professors? What is that they want to hear?

Which of the visionary companies do you think is the most successful, and why? How do its business practices differ from its "comparison" company?

The authors believe their findings "will apply more in the twenty-first century than in the twentieth. In particular, the essential ideas to come from our work…will continue to be key concepts long into the future." Do you agree that their findings will endure well into the future? Are any of the "visionary" companies, in your opinion, not as successful today as they were when the authors first wrote about them in 1995?

Questions for Discussion about both Built to Last and Good to Great

The catalyst for Good to Great came about in part because a McKinsey partner remarked to Jim Collins that the companies written about in Built to Last "were, for the most part, always great. They never had to turn themselves from good companies into great companies… But what about the vast majority of companies that wake up and part way through life and realize that they're good, but not great?" What do you think of this statement? What is there to be learned from each of the books?

Jim Collins said that Good to Great is a prequel to Built to Last. Do you see it this way? Do the two books work in tandem with one another?

In Good to Great, Wells Fargo is profiled as one of the "good-to-great" companies. In Built to Last, Wells Fargo is not one of the visionary companies but rather the comparison for visionary company American Express. Discuss the implications of this.

Collins states, "We believe that almost any organization can substantially improve its stature and performance, perhaps even become great, if it conscientiously applies the framework of ideas we've uncovered." Do you agree with this statement? Why or why not? In what instances do you think the concepts set forth in Good to Great and Built to Last would work best? In what instance do you think they would not be successful? Do you think the theories laid out in each of the books can be applied to any industry?

Which of the company success stories did you find the most surprising, and why?

Editorial Reviews

The Barnes & Noble Review
Jim Collins and Jerry Porras begin their groundbreaking analysis of "visionary companies" with the following bold statement: "We believe every CEO, manager, and entrepreneur should read this book." Although their language may sound slightly hubristic, the authors actually deliver the promised goods: Written in eloquent and accessible language, Built to Last, the result of an extensive six-year research study conducted at Stanford University, is a classic business book that surely deserves the accolades critics, readers, and its creators have heaped upon it.

Collins and Porras begin by defining the type of organizations they intend to examine. American Express, Ford, GE, Nordstrom, and Walt Disney are some of the 18 visionary companies -- widely admired, crown-jewel institutions that were founded before 1950 and have left "an indelible imprint on the world in which we live" -- to fall into the purview of their study. The authors then proceed to offer 12 management myths shattered by their research into these companies. Perhaps the most significant of these debunked pieces of conventional wisdom is the idea that change is the sole constant in the business world. Instead, Collins and Porras argue, "a visionary company almost religiously preserves its core ideology -- changing it seldom, if ever." From this adherence to a fundamental set of beliefs or a deeply held sense of self-identity comes the discipline and drive that enables a company to succeed in rapidly changing, volatile environments.

One of the enjoyable things about reading Built to Last is that its authors consciously chose to avoid the trendy phrases that sometimes make business books seem no more weighty or enduring than magazine articles. Instead, Collins and Porras have written a book that is meaningful, passionate, based on careful study, and, in its own way, built to last. (Sunil Sharma)

bn.com

What makes some companies truly exceptional? This insightful narration takes a close look at America's corporate success stories. It explores 18 visionary corporations that have succeeded over the long haul, including Wal Mart, Walt Disney, 3M, Boeing, Hewlett-Packard and Sony. With examples and coherent organization, the authors investigate and compare these companies. The narration begins with an explanation of visionaries: "Visionary companies prosper over long periods of time, through multiple product life cycles and generations of active leaders." With this in mind, the authors compare Walt Disney with Columbia Pictures, Walt Mart with Ames and Citicorp with Chase. They called them "clock builders." Clock Builders have great ideas that endure. They build companies that can prosper far beyond the presence of any single leader and through multiple product cycles. The chapter titled, "cult-like cultures," explains why salespeople earn more money at Nordstrom than at other department stores. It also explores IBM's rise to greatness and the magic behind Walt Disney. In a FAQ chapter, the authors address questions such as:"Is there hope for old, large non-visionary corporations?" "What guidance would you give to a visionary company that seems to be losing its visionary status--like, say, IBM?" The book concludes with a blueprint for building organizations that will prosper into the 21st century.

Built to Last...is one of the most eye-opening business studies since In Search of Excellence.
—USA Today

Kevin Maney

A 'must read' for any CEO who aspires to create a great company.

T.J. Rodgers

Two management professors read their spirited analysis of why some companies become great and others don’t. Using the “twin” method of selecting two similar companies and following them through time, they track what each did on the way to success or oblivion. Reading chapters alternately, the authors sound enthusiastic about their book, which in this abridgment is fast-moving. Though their material could be a colossal bore in other hands, you can “see” their eyes twinkle as they debunk myths and share stunning insights. Even their research methods are exciting and yet still have bread-and-butter practicality. The many fascinating historical vignettes make this smartly written business audio as good as it gets in this genre. T.W. Winner of AudioFile Earphones Award © AudioFile 2005, Portland, Maine

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