IF ONE IS GOING TO CHANGE AN ORGANIZATION, ONE NEEDS TO KNOW WHAT TO CHANGE TOWARDS.

Jim Collins’s Top 10 Rules For Success

 

This book Built To Last by James Collins & Jerry Porras is one of the best pieces of research done on why certain organizations are more successful over time than others.


The book makes a comparison of Visionary Companies to a comparison group of good companies. The lessons of the Visionary Companies can be learned and practiced at all levels of the organization.

What is a Visionary Company?

For the purpose of this study they:

  1. were the premier leader in their industry, widely admired
  2. made an indelible mark on the world
  3. have multiple products and have had multiple CEO’s
  4. 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.

Most of the Visionary Companies have had problems, but have displayed a remarkable resiliency in overcoming business challenges.


Collins and Porras in Built to Last’ explain  what great companies do to maintain their cultures, which they describe as cult-like.
The cultures in visionary companies are not soft or undisciplined:

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

Visionary companies are not great places to work, at least not for everyone.

If you can’t embrace their ideology, they expel you like a virus. If you do not fit their practices, they will weed you out in the hiring process or shortly thereafter.

Cult-like cultures are key to preserving the core ideology of a company.

Visionary companies have these characteristics about their culture that are cult-like:

  • Fervently held ideology
  • Indoctrination
  • Tightness of fit
  • Elitism

Visionary companies create these cultures through practical, concrete things:

  • Orientation and training programs
  • Internal universities
  • On-the-job socialization with peers and immediate supervisors
  • Rigorous up-through-the-ranks policies such as promoting from within, and hiring young people and shaping their minds from the start.
  • Exposure to pervasive myths of heroic deeds
  • Corporate songs, cheers, etc.
  • Tight screening practices; hiring and removal in first few years
  • Incentives and advancement are closely linked to core ideology
  • Awards, contests and public recognition are closely linked to core ideology
  • Tolerance for honest mistakes, but severe penalties or termination for breaching core ideology

These cult-like cultures succeed because they are balanced by mechanisms to stimulate progress, e.g., taking on challenging tasks (Big Hairy Audacious Goals or BHAGs).

Adhering to a small set of core beliefs allows these companies to grant a good deal of operational autonomy.

 

The authors conclude:

“It means that companies seeking an ’empowered’ or decentralized work environment should first and foremost impose a tight ideology screen and indoctrinate people into that ideology, eject the viruses, and give those that remain the tremendous sense of responsibility that comes with being a member of an elite organization.

It means getting the right actors on the stage, putting them in the right frame of mind, and then giving them the freedom to ad lib as they see fit.”

 

Jerry Porras on Vision


Built To Last

A Visionary Company knows what to change towards to
(Diagnostic tool)

 

How Do You Compare to Visionary Companies?

Diagnostic tool

  1. In a change effort, the exercise can be used to stimulate discussion.
  2. In management development programs, this is a good exercise to use to get people thinking about what constitutes organizational excellence.
  3. Compare your company on each of the key concepts of the Built to Last diagnostic tool.

 
 Individually rate your company and write out key reasons for your ratings.  
 
Take 10 minutes for this. 
Then try to develop a consensus on the ratings and agreement on the reasoning behind the ratings. If you can not reach consensus, then report split ratings and the thinking of the different groups. You have about 50 minutes for this. 
Come back to the main room prepared to discuss your ratings.
 
 
Ratings:
1 = a lot like visionary company
2 = somewhat like visionary company
3 = can’t tell what we are like
4 = somewhat like comparison companies
5 = a lot like comparison companies.

Ratings
Visionary Companies 1 2 3 4 5 Comparison Companies
1. “Architects’ approach” -Leaders try to build the company, so that the company lasts long beyond the current set of leaders. 1. Founded around a great idea, concept, invention, etc. Top leadership much more focused on the day-to-day activities and developing new ideas themselves.
2. Do not accept that you have to chose between things. They embrace the genius of “the and,” finding a way to do both. 2. Much more willing to accept you have to make trade-offs. Don’t push the envelope enough in trying to achieve seemingly important but opposed goals.
3. Have a purpose that goes beyond making money. Stands for something and has core values it really believes. 3. Much more likely to focus solely on profitability as the reason for existing. Much less value driven.
4. Preserve the core/stimulate progress. The only thing scared is the philosophy of doing business. Change is stimulated, but everything is aligned to the core. 4. Alignment is less strong. Frequently tolerate strategies, behavior and attitudes that are not in alignment. Complacency with status quo more often tolerated.
5. Use BHAG’s (Big Hairy Audacious Goals) to challenge and motivate the company. Building true commitment to the goal. 5. Do very little that is bold, visionary or risky. Tend to be cautious when approaching innovation. Stick to the knitting.
6. Demanding of people for both accomplishment and adherence to core ideology. Indoctrinate people more, greater elitism. 6. Not very strict about adhering to core ideology,
7. Move forward by trying a lot stuff, keeping what works and getting rid of what does not. Manage failure. 7. Do not encourage a lot of experimentation and thinking out the box. Not as good at getting rid of what does not work.
8. Grow their own leaders and managers. Strive for continuity of leadership to preserve core values. 8. Much more likely to go outside for key managers. Not very conscious of core values and ideology in selecting leaders.
9. Very demanding of themselves have very high standards. Stimulate change before external environment demands it. Worry about becoming complacent. 9. Standards tend to be average. Tend to become complacent and unconcerned with complacency. Chance is often driven by problems/pain.