- 1. BUILT TO LASTSuccessful Habits of Visionary Companies James
C. Collins and Jerry I. Porras(BUSINESS CLASSIC PRESENTATION)
BY
2. TEAM-SOUTHWEST AIRLINESHARSH DALVIABHISHEK VARMARAHUL WADHWA
05/02/2012 3. PREFACEWhat 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 ofmanagers.Lessons to be
learn and apply to build visionary companies. 4. CONTENTSChapter 1
Best of the BestChapter 2 Clock Building, Not Time TellingChapter
3- More than ProfitsChapter 4 Preserve the Core/Stimulate
ProgressChapter 5- Big Hairy Audacious GoalsChapter 6 Cult-like
CulturesLearningsWhat WorksChapter 7 Try a Lot of Stuff and
KeepChapter 8 Home Grown ManagementChapter 9 Good Enough Never
IsChapter 10 The End of the BeginningChapter 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 CEOs 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
ComparisonCompaniesVisionary Companies Comparison
Companies1.Norton1.3M2.Wells Fargo2.American Express3.McDonnell
Douglas3.Boeing4.Chase
Manhattan4.Citicorp5.GM5.Ford6.Westinghouse6.General
Electric7.Texas Instruments7.Hewlett-Packard 8.Burroughs8.IBM
9.Bristol-Myers Squibb10. Howard Johnson9.Johnson & Johnson 11.
Pfizer10. Marriott12. Zenith11. Merck 13. Melville12. Motorola14.
RJR Nabisco13. Nordstrom 15. Colgate14. Philip Morris 16.
Kenwood15. Procter & Gamble17. Ames18. Columbia16. Sony17.
Wal-Mart18. Walt Disney 7. THE BEST OF THE BEST Imagine how
different the world would have looked andfelt without the great
companies? TWELVE SHATTERED MYTHS Research Project (Six Steps)-1)
What companies should we study?2) A comparison Group3) History and
Evolution4) Collecting the data5) Harvesting the fruits of our
labor6) Field Testing and Application in real world LET THE
EVIDENCE SPEAK 8. CLOCK BUILDING , NOT TIME TELLINGThe builders of
Visionary Companiestend to be clock builders, not timetellers. 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
aspecific category of products in mind. Negative correlation
between early entrepreneurialsuccess 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
theComparison 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 avital shaping force. Core
Ideology= Core Values + Purpose 11. PRESERVE THE CORE/STIMULATE THE
PROGRESS The essence of the visionary companies is to Preserve
thecore ideology of the business while simultaneouslystimulating
progress. For example , at 3M, Respect forindividual initiative is
a part of their core value group. This proves the Genius of the AND
as visionary companiesseeks to be both highly ideological and
highly progressive atthe 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 progress12 13. CULT
LIKE CULTURE13 14. TRY A LOT OF STUFF AND KEEP WHAT WORKS
Corporations as evolving species Darwins 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.ManagementStrong StrongDevelopment Internal Internal&
SuccessionCandidates CandidatesPlanning 16. Message for CEOs,
Managers & Entrepreneurs If youre 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 youre 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. PoorLeadershipManagement Dearth
ofGapDevelopment StrongCorporate&InternalStall
InadequateCandidatesSearch for aSuccessionSavior Planning 17. CEO
Statistic 1806 - 1992 No. Of No. Of No. OfAvg.Avg.No. OfVisionary
CompanyOutsideOutside Comparison Company CEOsTenureTenure
CEOsCEOsCEOs 3M 12 7.501 8.92 12Norton Americam Express915.78 04
9.33 15 Wells FargoBoeing 8 9.63 00 14.45 McDonnell
DouglasCiticorp209 04 11.5 10 Chase ManhattanFord 5 17.8 02 712
GMGeneral Electric 714.29 03 8.15
13WestinghouseHewlett-Packard31800 7.758Texas InstrumentIBM6 13.5
011010Burroughs J&J 715.14 0021 5Bristol-Myers Squibb Marriott2
32.5 03 13.45Howard Johnson Merck 5 20.2 001311Pfizer
Motorola321.33 01 11.56ZenithNordstorm330.33 0020 5 Melville Philip
Morris1212.08 33 8.36 14 RJR Nabisco Procter & Gamble917.22
0116.91 11 ColgateSony 2 23.5 01 11.54Kenwood Wal-Mart2 23.5 02 8.5
4AmesWalt Disney6 11.5 15 9 8Columbia Average Total6.7217.38 11.68
8.78 Total121 4 31158% of total No. of external3.54 22.14 18. Some
Key Example in the Chapter 19. Good Enough Never Is How can we do
better tomorrow than wedid today? The essence of this chapter lies
in theabove question. Comfort is not the objective in a
visionarycompany. Create discomfort to obliteratecomplacency
Stretching ahead to beat themselves. Invest more of the profit back
into thecompany Invest more in their peoples training,spending a
significant amount in trainingcentres. 20. Message for CEOs,
Managers & Entrepreneurs If you are involved in building and
managing a company, the book urgesyou to consider the following
questions: What mechanisms of discontent can you create that would
obliteratecomplacency and bring about change and improvement from
within, yetare consistent with your core ideology? How can you give
thesemechanism sharp teeth? What are you doing to invest for the
future while doing well today? Doesyour company adopts new
technologies and innovative ideas before therest of the industry?
How you respond to downturns? Does your company continue to build
fora 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 thenever-ending
discipline of working to do better tomorrow that it didtoday? 21.
The End of the Beginning Its become fashionable in recentdecades
for companies to spendcountless hours and money draftingelegant
vision, mission, value, purposestatements. But they are not the
essence of visionarycompanies Just because a company has a
visionstatement or something like that in noways guarantees that it
will become avisionary company The essence of a visionary
companycomes in the translation of its coreideology & its
unique drive for progress Visionary company aligns its coreideology
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, employeeinvolvement and customer satisfaction
MVGP however, did not bring the turnaround It had translated MVGP
into reality by aligning its operations, strategiesand tactics
consistently with the MVGP The real force behind Fords remarkable
turnaround was the translationof MVGP into daily practice and into
reality 23. Lesson of Alignment Paint the whole picture Sweat the
small stuff Cluster, dont 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 toLast Preserve core ideology
andstimulate progress Understand the difference Two major
components ofwell conceived vision 25. Examples of Complete
VisionMerck, 1930sCore IdeologyCore 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 humanityPurpose: To preserve and improve
human lifeEnvisioned FutureBHAG: To transform this company from a
chemical manufacturer into one ofthe preeminent drug-making
companies in the world, with a research capabilitythat rivals any
major universityVivid Description: With the tools we have supplied,
science will be advanced,knowledge increased, and human life win
ever a greater freedom fromsuffering and disease....we pledge our
every aid that this enterprise shall meritthe 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
thosewho hold aloft that torch of science and knowledge through
these social andeconomic dark ages, shall take new courage and feel
their hands supported. 26. Which Company had greater
initialFounding Root SummaryFounded with a Great Idea success?
Visionary or Comparison? VisionaryComparison3M vs. NortonNo
YesComparison CompanyAmex vs. Wells Fargo No No Visionary
companyBoieng vs. McDonnell No YesComparison CompanyCiticorp vs.
Chase No No IndistinguishableFord vs. GMYesNo Visionary companyGE
vs. WestinghouseYesYesIndistinguishableHP vs. TINo YesComparison
CompanyIBM vs. BurroughsNo YesComparison CompanyJ&J vs. Bristol
MyersYesNo Visionary companyMarriott vs. Howard JohnsonNo No
IndistinguishableMerck vs. Pfizer No YesIndistinguishableMotorola
vs. ZenithNo YesComparison CompanyNordstrom vs. Melville No No
Comparison CompanyP&G vs. ColgateNo YesIndistinguishablePhilip
Morris Vs. R.J.Reynolds No YesComparison CompanySony vs. Kenwood No
YesComparison CompanyWal-Mart vs. AmesNo YesComparison CompanyWalt
Disney vs. Columbia No No Comparison CompanyOverall3 Yes11 Yes 3
Visionary Company 15 No7 No 5 Indistinguishable 10 Comparison
Company 27. Conclusion Instead of telling time, built a clock that
could tell the timeforever, 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
ofstimulating healthy change and progress, while preserving
thecore. Compete with yourself. Seek consistent alignment. Build
the core purpose, vision and value for your organization.
