Built to Last
Built to Last is one of the best business books of all time.
Yes it is 20 years since it came out but it is a classic with timeless
principles that have stood the test of time. Yes some of the 18 companies mentioned as
visionary are no longer at the top but again principles are like gravity they
exist and are true. As Jim Collins says there maybe people who exercise and
maintain fitness but if they stop exercising they no longer maintain fitness
and fall off the wagon. This doesn't mean the principle of exercise changes and
same holds true of the principles outlined in this classic. Here are the
principles I liked and my take on each.
Clock Building vs Time telling: Leaders of visionary companies are more interested in company’s goals than their individual personality. This means they try to build organizations that thrive and succeed long after they are gone. One example is Charles Coffin who was the leader of GE when it started. He built an organization that has stood the test of time and has produced leaders that have thrived throughout the history of its existence.
Purpose beyond profits: This is an excellent principle and shows us that business is about creating an enterprise that exists beyond just profits. For example Merck is more concerned about the patients than profits. As George Merck said “We try never to forget that medicine is for the people. It is not for the profits. The profits follow and if we have remembered that they have never failed to appear. How can we bring the best of medicine to each and every person? We cannot rest until the way has been found with our help to bring our finest achievements to everyone.” Another example is when Jim Burke was heading Johnson and Johnson when the Tylenol scare came in 1982 in the Chicago area. Though it was only in the Chicago area the company decided to take Tylenol of all the shelves across the USA and cost the company millions of losses but they gained the greatest reputation that can come only when a company shows it is more concerned about the customers than profits.
BHAG’s: This is the best principle in my opinion. Big Hairy Audacious Goals stimulate an organization and sets them to scale greater heights than they could ever dream. The best example of a BHAG is John F Kennedy’s mission to the moon. He said the following on May 25th 1961 “I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the earth.” The key to this statement is its simplicity, clear goal with a definite timeline, more importantly it transcended the leader himself. Even after the John F Kennedy’s untimely death the mission lasted beyond his existence. This is the best example of a BHAG. I believe BHAG’s can be set in personal life for example running a marathon would be a BHAG for me. It is something within my capability but it would be a BIG stretch and that is the essence and beauty of BHAG.
Good Enough Never is: All the visionary companies had a program where they continuously innovated and were never satisfied with where they were. More importantly they competed with themselves which is an excellent metaphor. They set higher standards irrespective of competition and ensured they never got complacent with success. So keep raising your standards and celebrate wins but never forgot to keep improving and raising the bar.
Cult Like Culture: An example provided is Nordstorm which has passionate individuals working in the organization. Customer service and going the extra mile is in their DNA. People have to present an unique personality to survive there and those who can’t thrive in the gung ho atmosphere are ejected out.
Try a lot of stuff and keep what works: All visionary companies experiment a lot and keep what works. The best example provided is 3M and one example is the post it note which was developed by accident and was not planned. One way 3M promotes innovation is providing employees 15% time where the employees can work on anything they are interested in. Google is also famous for the 20 percent rule which states that an engineer can spend 20 percent of their time working on anything of their choice.
Home Grown Management: An example provided is GE. Yes we all know that Jack Welch was widely considered as the manager of the 20th century but what is forgotten is that GE throughout its history had Welch like examples of leaders. The authors argue that Welch’s success has more to do with his training, experience within GE that allowed him to be the best he can be. The authors argue that bringing an outside CEO doesn't always work. For example Welch started looking for his replacement in 1991 itself 10 years before he was going to retire. One example of an outside person who turned around a successful enterprise was Louis Vincent Gerstner, Jr who turned around IBM from April 1993 till 2002. He mentioned that "The thing I have learned at IBM is that culture is everything."
Clock Building vs Time telling: Leaders of visionary companies are more interested in company’s goals than their individual personality. This means they try to build organizations that thrive and succeed long after they are gone. One example is Charles Coffin who was the leader of GE when it started. He built an organization that has stood the test of time and has produced leaders that have thrived throughout the history of its existence.
Purpose beyond profits: This is an excellent principle and shows us that business is about creating an enterprise that exists beyond just profits. For example Merck is more concerned about the patients than profits. As George Merck said “We try never to forget that medicine is for the people. It is not for the profits. The profits follow and if we have remembered that they have never failed to appear. How can we bring the best of medicine to each and every person? We cannot rest until the way has been found with our help to bring our finest achievements to everyone.” Another example is when Jim Burke was heading Johnson and Johnson when the Tylenol scare came in 1982 in the Chicago area. Though it was only in the Chicago area the company decided to take Tylenol of all the shelves across the USA and cost the company millions of losses but they gained the greatest reputation that can come only when a company shows it is more concerned about the customers than profits.
BHAG’s: This is the best principle in my opinion. Big Hairy Audacious Goals stimulate an organization and sets them to scale greater heights than they could ever dream. The best example of a BHAG is John F Kennedy’s mission to the moon. He said the following on May 25th 1961 “I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the earth.” The key to this statement is its simplicity, clear goal with a definite timeline, more importantly it transcended the leader himself. Even after the John F Kennedy’s untimely death the mission lasted beyond his existence. This is the best example of a BHAG. I believe BHAG’s can be set in personal life for example running a marathon would be a BHAG for me. It is something within my capability but it would be a BIG stretch and that is the essence and beauty of BHAG.
Good Enough Never is: All the visionary companies had a program where they continuously innovated and were never satisfied with where they were. More importantly they competed with themselves which is an excellent metaphor. They set higher standards irrespective of competition and ensured they never got complacent with success. So keep raising your standards and celebrate wins but never forgot to keep improving and raising the bar.
Cult Like Culture: An example provided is Nordstorm which has passionate individuals working in the organization. Customer service and going the extra mile is in their DNA. People have to present an unique personality to survive there and those who can’t thrive in the gung ho atmosphere are ejected out.
Try a lot of stuff and keep what works: All visionary companies experiment a lot and keep what works. The best example provided is 3M and one example is the post it note which was developed by accident and was not planned. One way 3M promotes innovation is providing employees 15% time where the employees can work on anything they are interested in. Google is also famous for the 20 percent rule which states that an engineer can spend 20 percent of their time working on anything of their choice.
Home Grown Management: An example provided is GE. Yes we all know that Jack Welch was widely considered as the manager of the 20th century but what is forgotten is that GE throughout its history had Welch like examples of leaders. The authors argue that Welch’s success has more to do with his training, experience within GE that allowed him to be the best he can be. The authors argue that bringing an outside CEO doesn't always work. For example Welch started looking for his replacement in 1991 itself 10 years before he was going to retire. One example of an outside person who turned around a successful enterprise was Louis Vincent Gerstner, Jr who turned around IBM from April 1993 till 2002. He mentioned that "The thing I have learned at IBM is that culture is everything."
Finally I want to end with a wonderful parable mentioned in
the book. A karate student goes to a master and is about to get a black belt.
The master tells the student he needs to ask a few questions before giving the
black belt.
Master “What is the meaning of
the black belt”
Student “It is the end of my
journey”
Master “Sorry come back after a
year”
Master “What is the meaning of
the black belt”
Student “A symbol of distinction and
the highest achievement in our art”
Master “Sorry come back after a
year”
Master “What is the true meaning
of Black Belt”
Student “The black belt
represents the beginning – the start of a never ending journey of discipline, work,
and the pursuit of an ever-higher standard”
Master “Yes you are now ready to
receive your black belt”
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