"Built to last" by Mr.James C.Collins & Mr.Jerry I.Porras

1. BUILT TO LAST
Successful Habits of Visionary Companies
James C. Collins and Jerry I. Porras
(BUSINESS CLASSIC PRESENTATION)
BY

2. TEAM-SOUTHWEST AIRLINES
HARSH DALVI
ABHISHEK VARMA
RAHUL WADHWA
05/02/2012

3. PREFACE
What these companies have to teach?
The average founding date being 1897.
Research Results and Comparison Companies.
Looked as start-ups, midsize and large companies.
Lessons can be learned and applied by the majority of
managers.
Lessons to be learn and apply to build visionary companies.

4. CONTENTS
Chapter 1 – Best of the Best
Chapter 2 – Clock Building, Not Time Telling
Chapter 3- More than Profits
Chapter 4 – Preserve the Core/Stimulate Progress
Chapter 5- Big Hairy Audacious Goals
Chapter 6 – Cult-like Cultures
Learning'sWhat Works
Chapter 7 – Try a Lot of Stuff and Keep
Chapter 8 – Home Grown Management
Chapter 9 – Good Enough Never Is
Chapter 10 –The End of the Beginning
Chapter 11 – Building the Vision

5. INTRODUCTION
 What is VISIONARY COMPANY?
 Criteria for a Visionary Company-
 Premier institution in its industry
 Widely admired by knowledgeable business
 Made an indelible imprint on the world
 Had multiple generations of chief executives
 Been through multiple product life cycles
 Founded before 1950
 Selection Process-
 Surveyed 700 CEO’s from 200 Companies
 The youngest company was founded in the year 1945 and the oldest was founded
in 1812.
 The average founding date of 1897

6. Visionary Companies and Comparison
Companies
Visionary Companies Comparison Companies
1. Norton
1. 3M
2. Wells Fargo
2. American Express 3. McDonnell Douglas
3. Boeing 4. Chase Manhattan
4. Citicorp 5. GM
5. Ford 6. Westinghouse
6. General Electric 7. Texas Instruments
7. Hewlett-Packard 8. Burroughs
8. IBM 9. Bristol-Myers Squibb
10. Howard Johnson
9. Johnson & Johnson 11. Pfizer
10. Marriott 12. Zenith
11. Merck 13. Melville
12. Motorola 14. RJR Nabisco
13. Nordstrom 15. Colgate
14. Philip Morris 16. Kenwood
15. Procter & Gamble 17. Ames
18. Columbia
16. Sony
17. Wal-Mart
18. Walt Disney

7. THE BEST OF THE BEST
 Imagine how different the world would have looked and
felt without the great companies?
 TWELVE SHATTERED MYTHS
 Research Project (Six Steps)-
1) What companies should we study?
2) A comparison Group
3) History and Evolution
4) Collecting the data
5) Harvesting the fruits of our labor
6) Field Testing and Application in real world
LET THE EVIDENCE SPEAK

8. CLOCK BUILDING , NOT TIME TELLING
“The builders of Visionary Companies
tend to be clock builders, not time
tellers.”
 THE MYHT OF THE “GREAT IDEA”-
 TI started with ‘great idea’ HP did not
 Sony had no specific product idea, while Kenwood appeared to have a
specific category of products in mind.
 Negative correlation between early entrepreneurial
success and becoming a highly visionary companies.
 The Company itself is a great creation.
 The Myth of the Great and the Charismatic Leader.
 Clock Builders at Work.

9. NO “TYRANNY OF THE OR”
(EMBRACE THE “GENIUS OF THE
AND”)

10. MORE THAN PROFITS
 CORE IDEOLOGY: EXPLODING THE PROFIT MYTH-
Makes the clearest difference between the Visionary companies and the
Comparison companies. For Example,
 Johnson & Johnson Versus Bristol-Myers ( J&J Credo Vs Bristol Myers Pledge)
 IS THERE A “RIGTH” IDEOLOGY?
 Certain common factors seen in the number of visionary companies.
 Great emphasis on having the core ideology and preserving the core ideology as a
vital shaping force.
Core Ideology= Core Values + Purpose

11. PRESERVE THE CORE/STIMULATE THE PROGRESS
 The essence of the visionary companies is to Preserve the
core ideology of the business while simultaneously
stimulating progress. For example , at 3M, “Respect for
individual initiative” is a part of their core value group.
 This proves the “Genius of the AND” as visionary companies
seeks to be both highly ideological and highly progressive at
the same time.

12. BIG HAIRY AUDACIOUS GOAL
 BHAG (Big Hairy Audacious Goal)
 BHAG should be understandable and clear
 BHAG should not be inside comfort zone
 Progress should be their even if leaders loose their trust
 BHAG should always have consistent growth
 Commitments and risks
 The Hubris Factor
 The Goal, not the Leader
 Preserve the core and stimulate progress
12

13. CULT LIKE CULTURE
13

14. TRY A LOT OF STUFF AND KEEP WHAT WORKS
 Corporations as evolving species
 Darwin’s theory of Evolution Applied to Visionary companies
 Lesson for CEO, Managers and Entrepreneurs
 Stick to the knitting ??? Stick to the core
14

15. Home-Grown Management
 Visionary companies develop, promote and carefully select managerial talent from
inside of the company to greater degree than the comparison company. They do this as
a key step in preserving their core.
 Quality of leadership separates visionary companies from comparison companies.
 It is the continuity of quality leadership that matters – continuity that preserves the
core. Leadership continuity loop.
 As companies like GE, Motorola, P&G, Boeing, Nordstrom, 3M and HP have shown in
time and again, a visionary company absolutely does not need to hire top management
from the outside in order to get change and fresh ideas.
Management
Strong Strong
Development
Internal Internal
& Succession
Candidates Candidates
Planning

16. Message for CEO’s, Managers & Entrepreneurs
 If you’re a CEO or Board Member at a large company, you can directly apply the lesson of this
chapter. Your company should have management development processes and long range
succession planning to ensure smooth transition from one generation to the next.
 If you’re a manager, and building a visionary department, division or group, you can also be
thinking about management development and succession planning, but on a smaller scale.
 Smaller companies and entrepreneurs can be developing managers and planning succession,
not for the current generation, but for the next, so that the company keeps ticking even after
the leaders are gone.
Poor
Leadership
Management
Dearth of Gap
Development
Strong Corporate
&
Internal Stall
Inadequate
Candidates Search for a
Succession
“Savior”
Planning

17. CEO Statistic
1806 - 1992
No. Of No. Of
No. Of Avg. Avg. No. Of
Visionary Company Outside Outside Comparison Company
CEO's Tenure Tenure CEO's
CEO's CEO's
3M 12 7.5 0 1 8.92 12 Norton
Americam Express 9 15.78 0 4 9.33 15 Wells Fargo
Boeing 8 9.63 0 0 14.4 5 McDonnell Douglas
Citicorp 20 9 0 4 11.5 10 Chase Manhattan
Ford 5 17.8 0 2 7 12 GM
General Electric 7 14.29 0 3 8.15 13 Westinghouse
Hewlett-Packard 3 18 0 0 7.75 8 Texas Instrument
IBM 6 13.5 0 1 10 10 Burroughs
J&J 7 15.14 0 0 21 5 Bristol-Myers Squibb
Marriott 2 32.5 0 3 13.4 5 Howard Johnson
Merck 5 20.2 0 0 13 11 Pfizer
Motorola 3 21.33 0 1 11.5 6 Zenith
Nordstorm 3 30.33 0 0 20 5 Melville
Philip Morris 12 12.08 3 3 8.36 14 RJR Nabisco
Procter & Gamble 9 17.22 0 1 16.91 11 Colgate
Sony 2 23.5 0 1 11.5 4 Kenwood
Wal-Mart 2 23.5 0 2 8.5 4 Ames
Walt Disney 6 11.5 1 5 9 8 Columbia
Average Total 6.72 17.38 11.68 8.78
Total 121 4 31 158
% of total No. of external 3.54 22.14

18. Some Key Example in the Chapter

19. Good Enough Never Is
 “How can we do better tomorrow than we
did today?”
 The essence of this chapter lies in the
above question.
 Comfort is not the objective in a visionary
company.
 Create discomfort – to obliterate
complacency
 Stretching ahead to beat themselves.
 Invest more of the profit back into the
company
 Invest more in their people’s training,
spending a significant amount in training
centres.

20. Message for CEO’s, Managers & Entrepreneurs
 If you are involved in building and managing a company, the book urges
you to consider the following questions:
 What mechanisms of discontent can you create that would obliterate
complacency and bring about change and improvement from within, yet
are consistent with your core ideology? How can you give these
mechanism sharp teeth?
 What are you doing to invest for the future while doing well today? Does
your company adopts new technologies and innovative ideas before the
rest of the industry?
 How you respond to downturns? Does your company continue to build for
a the long term even during difficult times?
 Do people in your company understand that comfort is not the objective –
that life at visionary company is not supposed to be easy?
 Does your company reject doing well as an end goal, replacing it with the
never-ending discipline of working to do better tomorrow that it did
today?

21. The End of the Beginning
 It’s become fashionable in recent
decades for companies to spend
countless hours and money drafting
elegant vision, mission, value, purpose
statements.
 But they are not the essence of visionary
companies
 Just because a company has a vision
statement or something like that in no
ways guarantees that it will become a
visionary company
 The essence of a visionary company
comes in the translation of its core
ideology & its unique drive for progress
 Visionary company aligns its core
ideology for future progress

22. The Power of Alignment
 Ford
 Wrote statement of mission, values and guiding principles – MVGP
 It listed people and product ahead of profit
 Emphasized the central importance of quality improvement, employee
involvement and customer satisfaction
 MVGP however, did not bring the turnaround
 It had translated MVGP into reality by aligning its operations, strategies
and tactics consistently with the MVGP
 The real force behind Fords remarkable turnaround was the translation
of MVGP into daily practice and into reality

23. Lesson of Alignment
 Paint the whole picture
 Sweat the small stuff
 Cluster, don’t shotgun
 Swim in your own current, even if you swim against the tide
 Obliterate Misalignment
 Keep the universal requirement while inventing new methods

24. Building The Vision
 Key finding from “Built to
Last”
 Preserve core ideology and
stimulate progress
 Understand the difference
 Two major components of
well conceived vision

25. Examples of Complete Vision
Merck, 1930s
Core Ideology
Core Values:
 Corporate Social Responsibility
 Unequivocal excellence in all aspects of the company
 Science-based innovation
 Honesty and integrity
 Profit, but profit from work that benefits humanity
Purpose: To preserve and improve human life
Envisioned Future
BHAG: To transform this company from a chemical manufacturer into one of
the preeminent drug-making companies in the world, with a research capability
that rivals any major university
Vivid Description: With the tools we have supplied, science will be advanced,
knowledge increased, and human life win ever a greater freedom from
suffering and disease....we pledge our every aid that this enterprise shall merit
the faith we have in it. Let your light so shine – that those who seek the Truth,
that those who toil that this world may be a better place to live in, that those
who hold aloft that torch of science and knowledge through these social and
economic dark ages, shall take new courage and feel their hands supported.

26. Which Company had greater initial
Founding Root Summary Founded with a Great Idea
success? Visionary or Comparison?
Visionary Comparison
3M vs. Norton No Yes Comparison Company
Amex vs. Wells Fargo No No Visionary company
Boieng vs. McDonnell No Yes Comparison Company
Citicorp vs. Chase No No Indistinguishable
Ford vs. GM Yes No Visionary company
GE vs. Westinghouse Yes Yes Indistinguishable
HP vs. TI No Yes Comparison Company
IBM vs. Burroughs No Yes Comparison Company
J&J vs. Bristol Myers Yes No Visionary company
Marriott vs. Howard Johnson No No Indistinguishable
Merck vs. Pfizer No Yes Indistinguishable
Motorola vs. Zenith No Yes Comparison Company
Nordstrom vs. Melville No No Comparison Company
P&G vs. Colgate No Yes Indistinguishable
Philip Morris Vs. R.J.Reynolds No Yes Comparison Company
Sony vs. Kenwood No Yes Comparison Company
Wal-Mart vs. Ames No Yes Comparison Company
Walt Disney vs. Columbia No No Comparison Company
Overall 3 Yes 11 Yes 3 Visionary Company
15 No 7 No 5 Indistinguishable
10 Comparison Company

27. Conclusion
 Instead of telling time, built a clock that could tell the time
forever, even when you are dead or gone.
 Find the purpose and not profits.
 Preserve the core and stimulate progress.
 Develop and promote insiders who are highly capable of
stimulating healthy change and progress, while preserving the
core.
 Compete with yourself.
 Seek consistent alignment.
 Build the core purpose, vision and
value for your organization.