2. The Best of the Best
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.
3. Clock Building,
NotTimeTelling
“I have concentrated all along on building the finest retailing
company that we possibly could. Period. Creating a huge personal
fortune was never particularly a goal of mine”- SAM WALTON,
FOUNDER, WAL-MART
4. Building a company that can prosper far beyond the presence of any single
leader and through multiple product life cycles is “clock building.” In the Artist
pillar of our Ending sand the subject of this chapter we demonstrate how the
builders of visionary companies tend to be clock builders, not time tellers. They
concentrate primarily on building an organization building a ticking clock rather
than on hitting a market just right with a visionary product idea and riding the
growth curve of an attractive product life cycle. And instead of concentrating on
acquiring the individual personality traits of visionary leadership, they take an
architectural approach and concentrate on building the organizational traits of
visionary companies. building the organizational traits of visionary companies.
The primary output of their efforts is not the tangible implementation of a great
idea, the expression of a charismatic personality, the gratification of their ego, or
the accumulation of personal wealth. Their greatest creation is the company
itself and what it stands for.
Sony 1st Electrical rice cooker Boeing 1st Water plane
5. Never, never, never give up. But what to persist with?
The company. Be prepared to kill, revise, or evolve an idea, but never give up on the company. If you equate
the success of your company with the success of a specific idea as many businesspeople do then you’re more
likely to give up on the company if that idea fails; and if that idea happens to succeed, you’re more likely to
have an emotional love, Adore, with that idea and stick with it too long, when the company should be moving
vigorously on to other things. But if you see the ultimate creation as the company, not the execution of a
specific idea or capitalizing on a timely market opportunity, then you can persist beyond any specific idea good
or bad and move toward becoming an enduring great institution.
BILL Hewlett and Dave Packard’s ultimate creation
wasn’t the audio oscilloscope or the pocket
calculator. It was the Hewlett-Packard Company
and the HP Way.
These companies don’t exist just to “be a company”; they exist to do something useful. But we suggest
that the continual stream of great products and services from highly visionary companies stems from
them being outstanding organizations, not the other way around. Keep in mind that all products, services,
and great ideas, no matter how visionary, eventually become obsolete. But a visionary company does not
necessarily become obsolete, not if it has the organizational ability to continually change and evolve
beyond existing product life cycles.
6. we found no evidence to support the hypothesis that great
leadership is the distinguishing variable during the critical,
formative stages of the visionary companies. Thus, as our
study progressed, we had to reject the great-leader theory; it
simply did not adequately explain the differences between
the visionary and comparison companies.
“What nobody realized, including a few of my own managers at the time, was that we were really trying from the
beginning to become the very best operators the most professional managers that we could. There’s no question
that I have the personality of a promoter... But underneath that personality, I have always had the soul of an
operator, somebody who wants to make things work well, then better, then the best they possibly can... I was
never in anything for the short-haul; I always wanted to build as a retailing organization as I could.” -Sam Walton
visionary companies did a better job than the
comparison companies at developing and promoting
highly competent managerial talent from inside the
company and they thereby attained greater continuity of
excellence at the top through multiple generations. But,
as with great products, perhaps the continuity of superb
individuals atop visionary companies stem from the
companies being outstanding organizations, not the other
way around.
7. And that brings us to the second pillar of our Findings:
It’s not just building any random clock; it’s building a
clock. Although the shapes, sizes,
mechanisms, styles, ages, and other attributes of the
ticking clocks vary across visionary companies, we found
that they share an underlying set of fundamental
characteristics. In the chapters that follow, we describe
these characteristics.
For now, the important thing to keep
in mind is that once you make the shift from time
telling clock building, most of what’s required to build
a visionary company can be learned. You don’t have to
sit around waiting until you’re lucky enough to have a
great idea. You don’t have to accept the false view that
until your company has a charismatic visionary leader, it
cannot become a visionary company. There is no
mysterious quality or elusive magic. Indeed, once you
learn the essentials, you and all those around you can
just get down to the hard work of making your company
a visionary company.
It’s not a cold, mechanistic Newtonian or Darwinian
clock. It’s a clock based on human ideals and values. It’s a
clock built on human needs and aspirations. It’s a clock
with a spirit.
8. More Than Profits
We are in the business of preserving and improving human life. All
our actions must be measured by our success in achieving this
goal. -MERCK & COMPANY, INTERNAL MANAGEMENT GUIDE,
9. (NO “TYRANNY OF THE OR”)
There was a great deal of talk about the sequence of the three P’s—people, products, and
profits. It was decided that people should absolutely come First
I don’t believe we should make such an awful Profit on our cars. A reasonable Profit is
right, but not too much. I hold that it is better to sell many cars at a reasonably small
Profit... I hold this because it enables a larger number of people to buy and enjoy the use
of a car and because it gives a larger number of men employment at good wages. Those
are the two aims I have in life.
I Think many people assume, wrongly, that a company exists simply to make money. While
this is an important result of a company’s existence, we have to go deeper and the real
reasons for our being. As we investigate this, we inevitably come to the conclusion that a
group of people get together and exist as an institution that we call a company so they
exist as an institution that we call a company so they are able to accomplish something
collectively that they could not accomplish separately they make a contribution to society,
a phrase which sounds trite but is fundamental...
10. Core Ideology = Core Values + Purpose
Core Values = The organization’s essential and enduring tenets are a small set of general
guiding principles; not to be confused with specific cultural or operating practices; not to
be compromised financial gain or short-term expediency.
Purpose = The organization’s fundamental reasons for existence beyond just making
money a perpetual guiding star on the horizon; not to be confused with specific goals or
business strategies.
The real difference between success and failure in a corporation can very often be
traced to the question of how well the organization brings out the great energies
and talents of its people. What does it do to help these people and common cause
with each other? ... And how can it sustain this common cause and sense of
direction through the many changes which take place from one generation to
another?
Any organization, in order to survive and achieve success, must have a sound set
of beliefs on which it premises all its policies and actions. Next, I believe that the
most important single factor in corporate success is faithful adherence to those
beliefs...Beliefs must always come before policies, practices, and goals. The latter
must always be altered if they are seen to violate fundamental beliefs.
12. Drive For Progress
Through the drive for progress, a highly visionary company displays a
powerful mix of self-confidence combined with self-criticism. Self-confidence
allows a visionary company to set audacious goals and make bold and daring
moves, sometimes Playing in the face of industry conventional wisdom or
strategic prudence; it simply never occurs to a highly visionary company that it
can’t beat the odds, achieve great things, and become something truly
extraordinary.
“We don’t want to talk about our service. We’re not as good as
our reputation. It is a very fragile thing. You just have to do it
every time, every day.”- Hewlett-Packard
• 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, a
company can more easily seek variation and movement in all that is not core.
• 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.
13. Organizations often have great intentions and inspiring visions for
themselves, but they don’t take the crucial step of translating their
intentions into concrete items. Even worse, they often tolerate
organizational characteristics, strategies, and tactics that are
misaligned with their admirable intentions, which creates confusion
and cynicism.
Overall framework as a guide for diagnosing your own organization: • Has it made the shift in perspective
from time telling clock building?
• Does, it reject the “Tyranny of the OR” and embrace the “Genius of the AND”?
• Does it have a core ideology—core values and purpose beyond just making money?
• Does it have a drive for progress—an almost primal urge for change and forward movement in all that is
not part of the core ideology?
• Does it preserve the core and stimulate progress through tangible practices, such as Big Hairy Audacious
Goals, home-grown management, and the others described throughout the remainder of this book?
• Is the organization in alignment, so that people receive a consistent set of signals to reinforce behavior that
supports the core ideology and achieves desired progress?
14. Difference between Comparison companies and visionary companies the five categories they fall into
• Big Hairy Audacious Goals (BHAGs)
• Cult-like Cultures
• Try a Lot of Stuff and Keep What Works
• Home-grown Management
• Good Enough Never Is
Preserve the core
Stimulate the progress
15. Big Hairy Audacious Goals (BHAGs)
Far better to dare mighty things, to win glorious triumphs, even though
checkered by failure, then to take rank with those poor spirits who neither
enjoy much nor suffer much, because they live in the gray twilight that knows
not victory, nor defeat. -THEODORE ROOSEVELT
The essential point of a BHAG is better captured in such questions as:
“Does it stimulate forward progress?
Does it create momentum? Does it get people going?
Does it get people’s juices Knowing?
Do they and it stimulate, exciting, adventurous?
Are they willing to throw their creative talents and human energies into it?”
THE GOAL, NOT THE LEADER
(CLOCKBUILDING, NOT TIME TELLING)
Is that your organization depend on
The BHAG OR Leader?
• Choose wisely?
• Stay
• Involve everyone
• Share with everyone
16. Cult-like Cultures
From this day forward, I solemnly promise and declare that
every time a customer comes within ten feet of me, I will smile,
look him in the eye, and greet him. So, help me -Sam Walton
• Fervently held ideology (discussed earlier in our chapter on
core ideology)
• Indoctrination
• Tightness of fit
• Elitism
TRAINER: What business are we in? Everybody knows McDonald’s makes hamburgers. What does Disney
make?
NEW HIRE: It makes people happy.
TRAINER: Yes, exactly! It makes people happy. It doesn’t matter who they are, what language they speak,
what they do, where they come from, what color they where they come from, what color they are, or
anything else. We’re here to make ’em happy. . . . Nobody’s been hired for a job. Everybody’s been cast for
a role in our show.
It is important to understand that, unlike many religious sects or social movements which often revolve
around a charismatic cult leader (a “cult of personality”), visionary companies tend to be cult-like around
their ideologies.
17. Try a Lot of Stuff and Keep What Works
To my imagination, it is far more satisfactory to look at not as specially endowed or
created instincts, but as small consequences of one general law leading to the
advancement of all organic beings namely, multiply, vary, let the strongest life and the
weakest die. –Charles Darwin
AmEx traveler’s checks: all you need to know
- Wise, formerly TransferWise
CORPORATIONS AS EVOLVING SPECIES
“Listen to anyone with an original idea, no matter
how absurd it might sound at first.”
“Encourage; don’t nitpick. Let people run with an
“Encourage; don’t nitpick. Let people run with an
idea.”
“Hire good people and leave them alone.”
“If you put fences around people, you get sheep. Give
people the room they need.”
“Encourage experimental doodling.”
“Give it a try—and quick!”
• “Give it a try—and quick!”
• “Accept that mistakes will be made.”
• “Take small steps.”
• “Give people the room they need.”
• Mechanisms—build that ticking clock!
STICKTO THE KNITTING? STICK TO THE CORE!
18. Home-Grown Management
Visionary companies develop, promote, and carefully select managerial talent has grown from inside
the company to a greater degree than the comparison companies.
The perspective of building a visionary company, the issue is not only how well the company will do
during the current generation. The crucial question is, how well will the company perform in the next
generation, and the next generation after that, and the next generation after that? All individual leaders
eventually die. But a visionary company can tick along for centuries, pursuing its purpose and expressing
its core values long beyond the tenure of any individual leader
AS companies like GE, Motorola, P&G, Boeing, Nordstrom, 3M, and HP have shown
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.
19. Good Enough Never Is
People would always say to my father, “Gee whiz, you’ve done really well. Now you can rest.” And he would
reply, “Oh, no. Got to keep going and do it better.” J. WILLARD MARRIOTT, JR., CHAIRMAN, MARRIOTT
The critical question asked by a visionary company is not “How well are we doing?” or “How can
we do well?” or “How well do we have to perform in order to meet the competition?” For these
companies, the critical question is “How can we do better tomorrow than we did today?” They
institutionalize this question as way of life a habit of mind and action.
COMFORT is not the objective in a visionary company. Indeed, visionary companies install powerful mechanisms to create
discomfort to obliterate complacency and thereby stimulate change and improvement before the external world demands it.
• The visionary companies also invested much more aggressively in human capital via
extensive recruiting, employee training, and professional development programs.
• MANAGERS at visionary companies simply do not accept the proposition that they
must choose between short-term performance or long-term success. They build
first and foremost for the long term while simultaneously holding themselves to
highly demanding short-term standards.
• The visionary companies invest earlier and more aggressively than the comparison
companies in such aspects as technical knowhow, new technologies, new
management methods, and innovative industry practices. Instead of waiting for the
world to impose the practices. Instead of waiting for the world to impose the need
for change, they’re likely to be earlier adopters than the comparison companies.
“What is the true meaning of the black belt?”
“The black belt represents the
beginning the start of a never-ending
journey of discipline, work, and the
pursuit of an ever-higher standard,”
20. Building the
Vision
“We shall not cease from
exploration And the end of
all our exploring Will be to
arrive where we started
And know the place for the
first time.” -T.S.ELIOT, FOUR
QUARTETS
21. Core Ideology
core value
core purpose Envisioned future
10 to 30 years BHAG
Vivid descriptions
To pursue the vision means to create organizational To
pursue the vision means to create organizational and strategic
alignment to preserve the core ideology and stimulate progress
toward the envisioned future. Alignment brings the vision to
life, translating it from good intentions to concrete reality.
Core Ideology:
You do not “create” or “set” core ideology. You discover core ideology. It is not
derived by looking to the external environment; you get at it by looking inside. It has to
be authentic. You can’t fake an ideology. Nor can you just “intellectualize” it. Do not
ask, “What core values should we hold?” Ask instead: “What core values do we actually
hold?” Core values and purpose must be passionately-held on a gut level or they are
not core.
The effect your core ideology has on people outside the organization is less
important and should not be the determining factor in identifying the core
ideology. Core ideology therefore plays an essential role in determining who’s
inside and who’s outside the organization. A clear and well articulated ideology
attracts people to the company whose personal values are compatible with the
company’s core values and, conversely, repels those whose personal values are
contradictory.
22. ENVISIONED FUTURE Did Shakespeare create the “right” Hamlet?
Not the right question
CORE IDEOLOGY
Core Values
• Elevation of the Japanese national culture and status
•Being a pioneer not following others, but doing the impossible
•Respect and encouragement of individual ability and creativity
Purpose
To experience the sheer joy of innovation and the application of technology for the benefit unpleasure the general
public.
ENVISIONED FUTURE BHAG
Become the company most known for changing the worldwide image of Japanese products as being of poor quality.
Vivid Descriptions
We will create products that be come pervasive around the world. . . . We will be the first Japanese company to go
into the American market and distribute directly. . . . We will succeed with innovations like the transistor radio that
American companies have failed at. . . . Fifty years from now, our brand-name will be as well known as any on Earth.
. . and will signify innovation and quality that rivals the most innovative companies anywhere. . . . “Made in Japan”
will mean something fine, not shoddy.
1950 S
23. Visionary Companies, Requires Two Key Processes:
1) Developing New Alignments To Preserve The Core And Stimulate Progress,
And
2) Eliminating Misalignments
The First process is a creative process, requiring the invention of new mechanisms, processes, and strategies
to bring the core values and purpose to life and to stimulate progress toward the envisioned future.
The second part of alignment is an analytic process, requiring a disciplined analysis of the organization its
processes, structures, and strategies to uncover misalignments that promote behavior inconsistent with the
core ideology or that impede progress.
This is not the end. It is not even the beginning of the end. But it is, perhaps,
the end of the beginning. - WINSTON S.CHURCHILL