This article is an excerpt from the Shortform book guide to "Built to Last" by Jim Collins and Jerry Porras. Shortform has the world's best summaries and analyses of books you should be reading.
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How can you cultivate a growth culture in your organization? How do you give your employees the wings to fly?
A visionary company fosters a growth culture by ensuring that employees support the company’s core philosophy—and then setting them free. This autonomy allows employees to experiment, act boldly, make mistakes, and innovate. All of this pushes the company forward.
Read more to learn how to cultivate a growth culture in your organization.
How Cultish Practices Create a Growth Culture
The workplace culture of a visionary company can best be described as “cult-like.” The word “cult” may have negative connotations, especially when it refers to a cult of personality, or the radical devotion to an individual. But in visionary companies, workers don’t channel their devotion towards a rock-star leader; instead they channel it towards the company and what it stands for.
Efforts to ensure that employees are a good fit might seem too restrictive and controlling. In a sense they are—visionary companies have these measures in place to uphold their fervently held philosophies.
However, with cult-ish practices in place, they are not only able to preserve the core, but are also able to entrust their employees with operational autonomy. Rather than turning employees into unthinking robots, visionary companies empower them to think for themselves, innovate, and make bold moves—all while strongly adhering to the core philosophy. When they see that employees embody what the company is all about, visionary companies give them the wings to fly. This is central to a growth culture.
- For example, Nordstrom’s employee handbook tells employees the core philosophy (“to provide outstanding customer service”) and gives them plenty of leeway to act as they see fit by giving only one rule: “Use your judgment in all situations.”
Darwinism in Visionary Companies
With operational autonomy, employees feel free to explore, experiment, and innovate—within bounds—which sprouts new, sometimes surprising, branches of business for visionary companies. This, along with visionary companies’ willingness to make the most of unexpected opportunities, debunks the myth that visionary companies’ success is wholly a result of deliberate planning.
Visionary companies don’t follow a plan that’s set in stone. Instead, they foster a growth culture—creating the environment for transformation over time in much the same way that species change. The authors liken the process to Charles Darwin’s evolutionary theory, where species evolve over time through a process of “variation,” changing to adapt to their environment, and then “selection,” wherein only the strongest variants survive.
While visionary companies do a fair amount of strategic planning, such as setting BHAGs, they also make use of their own process of variation and selection, keeping the best results of their experiments and making the most of opportunities that come their way.
- For example, in 1937, Marriott found that their restaurant near Hoover Airport had many customers en route to the airport, buying meals and snacks to eat on their flights. J. Willard Marriott immediately set up a meeting with Eastern Air and arranged to deliver packed lunches for their flights. Within a few months, Marriott was catering 22 flights per day on American Airlines, eventually catering to over a hundred airports. Marriott’s experiment as a result of one odd variation opened up an unexpected branch of business for the company.
How to Stimulate Evolutionary Progress
The research suggests that comparison companies tend to tamp down revolutionary progress, while visionary companies actively create a growth culture through the following six methods:
1) Make Room for Unplanned Variation
The research found that 12 out of 18 visionary companies gave their employees more freedom and autonomy—allowing them to experiment with new products, for example—versus the comparison cases. When people have the room to let their creativity run wild, they can come up with the most unexpected variations.
- For example, the first 3M laboratory was small and practically bare, but it provided enough space for employees to experiment. Here, they invented Three-M-Ite, the company’s first profitable product.
2) Act Quickly
They don’t get stuck doing long drawn-out feasibility studies or having endless meetings to decide on the next step. As long as an idea is consistent with the core ideology, visionary companies move full speed ahead. Visionary companies with a growth culture are fast on their feet—when they see an opportunity, they seize it. When they hear of a customer problem, they quickly try to find a solution.
- For example, a 3M employee heard a customer complaining about how adhesive tapes didn’t do a good job of separating the colors to achieve two-tone auto paint jobs. The employee proceeded to invent 3M masking tape. This marked the beginning of 3M’s evolution from being just a sandpaper company.
3) Take Baby Steps
One experiment after another, one step after another, can lead to a game-changer. It can be challenging and risky to make a major shift in the business, so take small steps in the direction you want to go. If management is iffy about backing a big project, they might be more open if you ask for permission to do an experiment to prove its feasibility.
- For example, American Express started out as a freight company that introduced a money order service to meet a growing demand. Then, after company president J. C. Fargo encountered problems encashing letters of credit on his travels, American Express created traveler’s checks. And then, at their Paris office in 1895, an employee surreptitiously opened windows to sell tickets to steamships, addressing a need of American travelers—expanding American Express’s business into travel.
4) Accept That Mistakes Are Part of the Process
Stimulating evolutionary progress is a continuous process of trial and error. Evolution isn’t a perfect process; failed experiments (and there can be many) that don’t result in new business are an inherent part of it, just as some mutations don’t survive as a species evolves.
- For example, Johnson & Johnson had successful experiments like Band-Aids, but also had many experiments that didn’t work: Kola stimulants, ibuprofen pain relievers, and colored casts that stained hospital linens are just some of their failed ventures.
5) Build a Clock
Visionary companies don’t just say that their employees can experiment; their growth culture reinforces the idea by establishing mechanisms to encourage experimentation, product development, internal entrepreneurship, and idea dissemination. These mechanisms come in the form of targets, awards, grants, and open communication channels.
- For example, 3M has the “30 percent rule,” expecting divisions to generate 30 percent of annual sales from new products released within the last four years. The company also gives out the Genesis Grants, which are funds earmarked for developing prototypes and market tests. And they have forums where people can share the latest products and exchange ideas.
6) Maintain the Core
Species have a fixed genetic code. They mutate to adapt to their environments, not to become another species altogether. The same is true for visionary companies: Their core philosophy serves as the genetic code, guiding them, holding them together, and imbuing them with a purpose and spirit as they morph and evolve. While a growth culture allows for variation, a core philosophy leads to selection—visionary companies choose only the things that work and that fit in with their core ideology.
- For example, in keeping with their core philosophy of innovation and problem-solving, 3M only selects ideas that are new, useful, and reliable—solutions to real problems that people have, not just novelty items that meet no real need.
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- The key to longevity and success for your company
- Debunking the twelve myths about what it takes to build a visionary company
- The four key concepts behind enduring greatness
