Book SummaryBuilt to Last, by Jim Collins and Jerry Porras

1-Page Summary1-Page Book Summary of Built to Last

Many enterprises come and go, but visionary companies endure for generations. These companies are the gold standard in their respective industries, remaining prosperous throughout many decades and at the hands of many different leaders. Beyond attaining financial success, they’ve also become household names—it’s hard to imagine a world without them or their products, from Band-Aids to Post-it Notes to Mickey Mouse.

But what is the key to these companies’ longevity and tremendous success? Bestselling author Jim Collins and Stanford professor Jerry I. Porras embarked on a six-year research project to answer this question and give practical advice for those who want to build a company that lasts.

After an exhaustive survey, the authors came up with a list of visionary companies with long life spans and unparalleled success. The authors then identified a comparison company for each visionary company—one that was founded at around the same time, that had the same founding products and markets, and that were also highly successful, but not to the degree that the visionary companies were. The 18 visionary companies (and their comparison companies in parentheses) are:

• 3M (Norton) - consumer products
• American Express (Wells Fargo) - financial and travel services
• Boeing (McDonnell Douglas) - aviation
• Citicorp (Chase Manhattan) - banking
• Ford (GM) - automotive
• General Electric (Westinghouse) - conglomerate (power, energy, aviation, health care)
• Hewlett-Packard (Texas Instruments) - technology
• IBM (Burroughs) - technology
• Johnson & Johnson (Bristol-Myers Squibb) - pharmaceuticals, medical devices, consumer health care
• Marriott (Howard Johnson) - hospitality
• Merck (Pfizer) - chemicals, pharmaceuticals
• Motorola (Zenith) - telecommunications
• Nordstrom (Melville) - retail
• Philip Morris (RJR Nabisco) - tobacco
• Procter & Gamble (Colgate) - consumer goods
• Sony (Kenwood) - conglomerate (electronics, gaming consoles, media)
• Walmart (Ames) - retail and wholesale
• Walt Disney (Columbia) - entertainment

Once the research team had their list, they closely examined the companies’ history and evolution, conducted a comparative analysis to find principles and patterns of success, and came up with key concepts that may be useful to those building companies in the present day. These concepts debunked twelve myths about what it takes to build a visionary company.

Myth 1: A Great Company Starts From a Great Idea

Business schools espouse that you need a great idea backed by a solid marketing plan before starting a company, but visionary companies show that this simply isn’t true. Out of the 18 visionary companies, only three had a specific product or service in mind when they began: Johnson & Johnson, General Electric, and Ford. All the others tried one thing after another, stumbling before finding their footing and eventually becoming a great success.

• For example, Hewlett-Packard (HP) began in 1937 without a product. Bill Hewlett and David Packard used their engineering backgrounds to create various contraptions, from bowling lanes to telescopes to urinals, many of which didn’t produce great results. They didn’t let their failures dissuade them—they kept creating and experimenting until they acquired profitable war contracts in the 1940s.

A great idea shouldn’t be the be-all and end-all of a company. Every product, no matter how innovative, will eventually become obsolete. If you pin organizational success to that one great idea, then you won’t have what it takes to find lasting success.

This means that when building a visionary company, the product isn’t the point—the company is. You can only build an enduring company if you never give up, even if your products keep failing. Instead of focusing all your attention on designing a great product, shift your focus to designing a great organization.

Myth 2: Behind Every Visionary Company Is a Larger-Than-Life Leader

A high-profile leader who fits the mold of the superstar CEO isn’t necessary to build a visionary company—but good leadership is. A company won’t last long with one mediocre head after another.

Though their personalities vary from larger-than-life and charismatic to quiet and unassuming, visionary leaders are driven by a common purpose: They recognize that their job is to build something that will endure even after they’re gone. They know that, just as one great idea and one great product can become obsolete, so too can a great leader. Rather than being driven by making one product successful or building their own personal brand, they focus on building an organization that lasts.

What These Two Myths Tell Us

These first two debunked myths—that one great idea and a charismatic leader are required to build a great company—reveal a distinguishing characteristic of visionary companies: They are clock builders, not time tellers:

• Time tellers have the amazing ability to tell the exact time by looking up at the sky.
• Clock builders make a clock that can tell everyone the time, even after they’re gone.

Once you shift your focus from time telling to clock building, you’ll be better able to understand that putting systems in place that create repeated, enduring success is one of the key concepts behind building a company that lasts.

Myth 3: You Can’t Have It All

Visionary companies don’t allow themselves to be ruled by or—the view that you must choose between seemingly contradictory choices A or B (for example, change or stability, low cost or high quality, investment in the long-term or success in the short-term). Instead, they debunk the myth that you can’t have it all by believing in and—they figure out a way to have both A and B. It’s like the Chinese yin-yang symbol, where black and white don’t blend into gray but come together in perfect harmony. ...

Built to Last Summary Shortform Introduction

In Built to Last, bestselling author Jim Collins and Stanford professor Jerry I. Porras embarked on a six-year research project to 1) identify the characteristics that distinguished the very best companies, and 2) use these insights to create a framework for those who want to build visionary companies of their own. To this end, the authors identified and analyzed 18 visionary companies that performed exceptionally well over a long period of time.

The book became...

Built to Last Summary Chapter 1: What Makes a Company “Visionary”?

Many enterprises come and go, but visionary companies endure for generations. These companies are the gold standard in their respective industries because they’ve prospered for decades and at the hands of many different leaders. They’ve become household names, ingraining themselves into our collective psyche—it’s hard to imagine a world without their products, from Band-Aids to Post-it Notes to Mickey Mouse.

But what is the key to these companies’ longevity and tremendous success? Bestselling author Jim Collins and Stanford professor Jerry I. Porras embarked on a six-year research project to answer this question and give practical advice for those who want to build a company that lasts.

Narrowing Down the List of Companies

The authors’ primary objectives for the research project were 1) to identify the characteristics that distinguished the very best companies, and 2) to use these insights to create a framework for those who want to build visionary companies of their own.

The authors came up with their list by surveying CEOs across numerous enterprises of various sizes, industries, and geographic locations, asking them to identify the companies they considered...

Built to Last Summary Chapter 2: A Change in Focus

In this chapter, we’ll examine two myths of visionary companies. First, we’ll discuss and debunk the myth that a company requires one great idea to get started. Then, we’ll look at why visionary companies don’t need a high-profile, charismatic leader to achieve enduring greatness.

A Big Idea Isn’t Everything

Business schools espouse that you need a great idea backed by a solid marketing plan before starting a company. But visionary companies show that this simply isn’t true.

Out of the 18 visionary companies, only three had a specific product or service in mind when they began: Johnson & Johnson, General Electric, and Ford. All the others tried one thing after another, getting both hits and misses and refining their offerings along the way. Many limped and stumbled before finding their footing and eventually becoming a great success.

• For example, Hewlett-Packard (HP) began in 1937 without a product. Bill Hewlett and David Packard used their engineering backgrounds to create various contraptions, from bowling lanes to telescopes to urinals, many of which didn’t produce great results. They didn’t let their failures dissuade them—kept creating and...

Shortform Exercise: Become a Clock Builder

Clock building seems like a daunting task, so start small by determining how processes you’re already involved in can continue to work without you.

List all of your responsibilities in your organization. Of these responsibilities, which ones would create a bottleneck in your organization’s workflow if you were to get promoted or go on leave?

Built to Last Summary Chapter 3: Driven by More Than Profit

In this chapter, we’ll debunk three intertwined myths: first, that visionary companies can’t have it all and need to make a choice between two seemingly paradoxical goals; second, that they’re purely profit-driven; and third, that they all do things the same way and follow one set of values.

Or Versus And

One of the central concepts of visionary companies debunks the myth that they must choose between paradoxical goals: They don’t put limits on themselves by being ruled by or—that is, the view that you must choose between seemingly contradictory choices A or B.

• For example, the idea that a company can have change or stability, go for low cost or high quality, or invest in the long-term or do well in the short-term.

Instead, they believe in the power of and—that is, they figure out a way to have both A and B. It’s like the Chinese yin-yang symbol, where black and white don’t blend into gray but come together in perfect harmony.

The Importance of a Core Philosophy

Not being ruled by or and believing in the power of and means that companies are able to be profitable and stick to their ideals. This debunks another myth, one...

Shortform Exercise: Determine Your Core Philosophy

Knowing your core values and your purpose is fundamental to building a visionary company because it gives you a philosophy that will guide all your decisions. If you’re a CEO, you can form your group of five to seven people to articulate your core. If you’re a non-CEO, you can do this for your group, department, or division. If you’re an entrepreneur, you can verbalize it now and use it to guide you as you grow your business.

List down your core values—what’s most important to you, what brings you fulfillment. You can write as many as you can think of, no need to limit yourself at this point. (For example, reliability, consistency, efficiency, and so on.)

Built to Last Summary Chapter 4: How Visionary Companies Stay Grounded While Moving Forward

This chapter debunks the myth that visionary companies are constantly changing. While they do have an incredible drive for progress and innovation—they don’t evolve at the expense of their core ideals. And this is the very essence of a visionary company: They use the power of and to maintain the core and stimulate progress.

The Difference Between Core Philosophy and Non-Core Practices

While a core philosophy is fundamental, visionary companies don’t thrive by their ideals alone. If you don’t pair your guiding principles with action and innovation, you’ll be left behind in a world that’s constantly on the move. The key to moving forward is to stick to your core ideals while changing only non-core practices.

A core philosophy is an unwavering set of guiding principles, while a non-core practice is a new product line, a new organization structure, or even a new office layout—anything that can change and evolve as long as it aligns with the core philosophy.

• For example,...

Built to Last Summary Chapter 5: Commit to Big Hairy Audacious Goals

In this chapter, we’ll discuss and debunk the myth that successful companies are conservative and prefer not to make bold moves.

The research revealed that far from being overly cautious, visionary companies in fact set risky, progress-stimulating goals—what Collins and Porras have coined Big Hairy Audacious Goals (or BHAGs, pronounced bee-hags). BHAGs are goals that take you out of your comfort zone and require a strong commitment to see them through. They typically take 10 to 30 years to achieve and only have a 50- to 70-percent probability of success, but you should be able to look at them and believe that you can achieve them.

If you’re an entrepreneur, then you’re no stranger to BHAGs, as getting a business off the ground is already a BHAG in itself. If you work for a company, you can pursue BHAGs at any level, whether it’s within your team or within the entire corporation.

• For example, if you’re a new hire in the accounting department of a big corporation, your BHAG might be to become the vice president of finance within 15 years.

Visionary companies use four different types of BHAGs:

1. Ambition: This can be a quantitative or qualitative target that...

Shortform Exercise: Define Your BHAG

A BHAG inspires people, creates momentum, and stimulates progress. If you don’t have a BHAG, now is the time to set one.

Paint a clear picture of where you want to be 10 years from now. Think in terms of operations (number of stores, revenues, etc.), products or services, and even awards you want to win. List them below.

Built to Last Summary Chapters 6-7: Cultivate the Right Culture

In this chapter, we’ll debunk two myths: first, that anyone can fit right in at a visionary company, and second, that visionary companies carefully plan out every move.

The Cult-Like Characteristics of Visionary Companies

People see visionary companies as dream workplaces and consider their biggest hurdle to be getting in the door. And while you likely have to go through stringent screening processes to land a spot in a visionary company, you might encounter an even bigger hurdle as you try to fit in. Contrary to the myth, a visionary company isn’t the best place to work for everyone; some people just don’t fit in. It’s either you’re in or you’re out—there’s no in between. This is because visionary companies want to preserve their core philosophy and thus make sure that everyone in the company is compatible with their ideals.

• For example, at Disney, everyone has to embrace wholesomeness, adhering to a strict grooming code and sanitized language—Walt Disney was said to fire anyone who uttered a swear word in the presence of others. Such rules may seem extreme, but they helped preserve the company’s core philosophies after Walt’s death.

The workplace...

Shortform Exercise: Create an Environment for Progress

Visionary companies have systems and methods to stimulate evolutionary progress. Find opportunities to foster experimentation and innovation within your company.

Visionary companies took incremental steps to pivot their business, sometimes starting with little experiments. Describe a project that your management seems to be wary of. (For example, the management of a chain of coffee stands might be hesitant to introduce snacks as part of their product line.)

Built to Last Summary Chapter 8: Promote From Within

Visionary companies debunk the myth that hiring from outside can revitalize a company. Instead, they promote homegrown, philosophy-supporting leadership in order to preserve their core philosophy.

While both visionary companies and their comparisons have had great leaders at various points in their long histories, comparison companies more often brought in outsiders to fill chief executive roles in the hopes of stimulating progress. The research revealed that visionary companies hired only 3.5 percent of their 113 chief executives from outside versus the comparison companies’ 22.1 percent out of 140.

The Leadership Continuity Loop

To ensure continuity, visionary companies have a leadership loop, which has three essential elements.

1. They develop leaders and come up with a succession plan. Visionary companies have formal management development programs to help them identify and train top managerial talent in the organization. Leaders also put a lot of thought into the best person to succeed them, sometimes planning years in...

Shortform Exercise: Create a Leadership Continuity Loop

One of the keys to building a visionary company is to have a leadership continuity loop. Make sure your company (or department) has capable people ready to take your place.

Imagine that you and your next-rank member of management suddenly left the company. Who would you trust to take your place? List two or three candidates and why you think they’d be a good choice.

Built to Last Summary Chapter 9: Never Settle for Good Enough

This chapter debunks the myth that visionary companies are obsessed with beating their competitors.

Visionary companies recognize that simply aiming to beat their competitors puts a cap on their goals—once they beat the competition, they can drift into contentment. But visionary companies recognize that contentment is one step away from complacency, which may then lead to decline. So, visionary companies are always on a quest for continuous improvement.

The research found that in 16 out of 18 cases, visionary companies were more intent on self-improvement than their comparisons. In particular, they did two things: They seeded discomfort by employing various mechanisms of discontent and they made more long-term investments.

Seed Discomfort

Visionary companies want their people to feel discontented with their accomplishments because it pushes them to strive for more. To create motivational discontent, visionary companies use various tactics.

Tactic 1: Internal Competition

Instead of looking outside for motivation, visionary companies look inside and have employees engage in healthy competitions. Whether it’s brands trying to outdo each other in sales or R&D...

Shortform Exercise: Keep Improving

Visionary companies recognize that success is never final and are thus driven to keep improving, even though they’re at the top of their game. Make sure you have mechanisms in place to prevent complacency.

What mechanisms of discomfort can you implement to keep people from becoming complacent? (For example, you can make it a regular exercise to view the company through the lens of a competitor.)

Built to Last Summary Chapter 10: Bring It All Together

This chapter debunks the myth that a vision statement is integral to a visionary company’s success.

These days, it seems like every company has a vision statement. A vision is a combination of a strong core philosophy and the type of progress you want for your company, so having a clear vision can be useful. But it’s only the first step—the real work is in bringing the vision to life.

As the previous chapters have discussed, visionary companies try to bring their vision to life by incorporating their core philosophy into everything they do, from setting audacious goals to building an elite corporate culture, to evolving continuously and developing generations of leaders. Most importantly, visionary companies make sure their methods of maintaining the core and stimulating progress are aligned with each other.

How to Create Alignment

Alignment means that every element within a company—from decisions and actions to BHAGs to office layout and company culture—reinforces every other element within the company. When a company doesn’t have alignment, their progress will be slowed, hindered by forces constantly opposing each other.

Seeking alignment is a tricky,...

Shortform Exercise: Seek Alignment

Visionary companies don’t come up with random ways to preserve their core and stimulate progress. They make sure that every element they introduce is aligned.

Think about your organization’s incentive systems. Do they reward behaviors that reinforce the company’s core values? If not, what kind of incentive system would reinforce the core values?