Built to last This is not a book about charismatic visionary leaders. It is not about visionary product concepts or visionary products or visionary market insights. Nor even is it about just having a corporate vision. This is a book about something far more important, enduring, and substantial. This is a book about visionary companies.                                                                                      James C. Collins and Jerry I. Porras.

Chapter 1 : The Best of the Best 

Two objectives of the research project

what is visionary company? Visionary companies are premier institutions in their industries, widely admired by their peers and having a long track record of making a significant impact on the world around them.

We wanted to compare gold medal teams to silver and bronze medal teams whenever possible to give real meaning to our findings.

We chose the term "visionary" companies rather than just "successful" or "enduring" companies, to reflect the fact that they have distinguished themselves as a very special and elite breed of institutions. They are more than successful. They are more than enduring. In most cases, they are the best of the best in their industries and have been that way for decades.

Chapter 2 : Clock Building, Not Time Telling

Having a great idea or being a charismatic visionary leader is "time telling". Building a company that can prosper far beyond the presence of any single leader and through multiple product life cycle is 'clocking building". The greatest creation is the company itself and what it stands for.

We found that creating and building a visionary company absolutely does not require either a great idea or a great and charismatic leader. In fact we found evidence that great ideas brought forth by charismatic leaders might be negatively correlated with building a visionary company.

Waiting for "The great idea" might be a bad idea. The evidence suggests that it might be better to not obsess on finding a great idea before launching a company. why? because the great-idea approach shifts your attentions away from seeing the company as your ultimate creation.

The company itself is the ultimate creation. we have to shift from seeing the company as a vehicle for the products to seeing the products as a vehicle for the company. GE's first president, Charles Coffin, invented not a single product. But he sponsored an innovation of great significance, the establishment of the General Electric Research Lab, billed as "America's first industrial research laboratory".

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. "Hewlett Packard Chairman built company by design, calculator by chance"

Charisma not required. a high-profile, charismatic style is absolutely not required to successfully shape a visionary company

One of the most important steps you can take in building a visionary company is not an action, but a shift in perspective.

No tyranny of the OR. embrace the genius of the AND. you can have change OR stability. you can have low cost OR high quality. Instead of being oppressed by the "Tyranny of the OR", highly visionary companies liberate themselves with the "Genius of the AND", the ability to embrace both extremes of a number of dimensions at the same time. instead of choosing A or B, they figure out a way to have both A and B.

The test of a first-rate intelligence is th4e ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function.

Chapter 3 : More Than Profits

We are in the business of preserving and improving human life. All of our actions must be measured by our success in achieving this goal.  - Merck (1989) - 

In 1935, George Merck 2 said, "We are workers in industry who are genuinely inspired by the ideals of a advancement of medical science, and of service to humanity". "Above all, lets remember that our business success means victory against disease and help to humankind".

George Merck 2 said, We try to remember that medicine is for the patient. 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. The better we have remembered it, the larger they have been.

Sony, Masaru Ibuka (1945). He started Sony among the ruins of a defeated and devastated 1945 Japan.

Profitability is a necessary condition for existence and a means to more important ends, but it is not the end in itself for many of the visionary companies. Profit is like oxygen, food, water, and blood for the body; they are not the point of life, but without them, there is no life.

Hewlett-Packard mission statement

Tylenol crisis, 1982, J&J. when the deaths of seven people in the Chicago area revealed that someone had tampered with Tylenol bottles, lacing them with cyanide. J&J immediately removed all Tylenol capsules from the entire U.S. market even though the death occurred only in Chicago area. with an estimated cost of $100 million. Washington post wrote "Johnson & Johnson has succeeded in portraying itself to the public as a company willing to do what's right, regardless of cost."

Boeing, Bill Allen, CEO 1945~1968, commented on the purpose of work at the company

Is there a "RIGHT" ideology? In short, we did not find any specific ideological content essential to being a visionary company. Our research indicates that the authenticity of the ideology and the extent to which a company attains consistent alignment with the ideology counts more than the content of the ideology. 

Jack Welch of GE described the difficulty of living with the tension between pragmatism and idealism, or what he calls "numbers and values".　

Thomas J. Watson, former IBM chief executive, commented in his book "A Business and Its Beliefs"

we believe Merck's dedication to fighting disease, relieving suffering and helping people is a righteous cause.

Disneyland will never be completed as long as there is imagination left in the world

Chapter 4 : Preserve the Core/Stimulate Progress

A visionary companies carefully preserves and protects its core ideology, yet all the specific manifestations of its core ideology must be open for change and evolution.

An internal drive. the drive for progress is an internal force. The drive for progress doesn't wait for the external world to say "it's time to change" or "it's time to improve". In a visionary company the drive to go further, to do better, to create new possibilities needs no external justification.

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. Self-criticism, on the other hand, pushes for self-induced change and improvement before the out side world imposes the need for change and improvements.

A highly visionary company does not simply have some vague set of intentions or passionate zeal around core and progress. To be sure, a highly visionary company does have these, but it also has concrete, tangible mechanism to preserve the core ideology and to stimulate progress.

Intentions are all find and good, but it is the translation of those intentions into concrete items, mechanism with teeth, that can make the difference between becoming a visionary company or forever remaining wannabe.

Chapter 5 : Big Hairy Audacious Goals (BHAG)

Moon mission in the 1960, President Kennedy. The most optimistic scientific assessment of the moon mission's chances for success in 1961 was fifty-fifty and most experts were more pessimistic. Yet, nonetheless, Congress agreed an immediate %549 million and billions more the following five years. Given the odds, such a bold commitment was, at the time, outrageous. but that's part of what made it such a powerful mechanism for getting the United States still groggy from the 1950 and the Eisenhower era, moving vigorously forward.

General Electric. "To become #1 or #2 in every market we serve and revolutionize this company to have the speed and agility of a small enterprise".

SONY, 1950, Pocketable radio. lets work on a transistor radio, whatever the difficulties we may face proclaimed Masaru Ibuka. Even in America transistors are used only for defense purpose where money is no object. (As an outgrowth of this effort, one of Sony's scientists made break through in the development of transistors that eventually led to a Nobel Prize)

Commitment and risk. It is not just the presence of a goal that stimulates progress, it is also the level of commitment to the goal. Indeed, a goal cannot be classified as a BHAG without a high level of commitment to the goal.

A BHAG should be so clear and compelling that it requires little or no explanation. Remember, a BHAG is a goal, not a statement. and BHAG should fall well outside the comfort zone and BHAG should be so bold and exciting in its own right that it would continue to stimulate progress.

Chapter 6 : Cult-like culture

Nordstrom Rules : Rule #1 "Use your good judgment in all situations. there will no additional rules.

Welcome to Nordstrom. we are glad to have you with our company. our number one goal is to provide outstanding customer service. set both your personal and professional goals high. we have great confidence in your ability to achieve them.

The definition of cult. a cult is a body of persons characterized by great or excessive devotion to some person, idea, or thing. The terms "cultism" and "cult-like" can conjure up a variety of negative images and connotations. they are much stronger words than "culture".

The four common characteristics of cults that the visionary companies displayed. Fervently held ideology. Indoctrination. Tightness of fit. Elitism (Sense of belonging to something special and superior)

IBM, Thomas J. Watson, Time lost is time gone forever. There is no such thing as standing still. A company is know by the men it keeps. You cannot be a success in any business without believing that it is the greatest business in the world.

At Disney we get tired, but never bored, and even if it's a rough day, we appear happy. You've got to have have an honest smile. It's got to come from within... If nothing else helps, remember that you get paid for smiling.

P&G, in 1887, introduced a profit-sharing plan for workers, which is the oldest in American industry.

P&G, in 1892, introduced an employee stock ownership plan, one of the first in history.

The point is to build an organization that fervently preserves its core ideology in specific, concrete ways. The visionary companies translate their ideologies into tangible mechanism. Cult-like cultures, which preserve the core, must be counterweighted with a huge dose of stimulating progress.

Chapter 7 : Try a lot of Stuff and Keep What Works

Failure is our most important product (J&J CEO, 1954).  company must accept failed experiments as part of evolutionary progress. "Growth is a gambler's game".

Our company has, indeed, stumbled onto some of its new products. But never forget that you can only stumble if you moving.  (3M CEO, 1950)

Corporations as evolving species. Evolutionary progress differs from BHAG progress in two key ways. First, whereas B HAG progress involves clear and unambiguous goals, evolutionary progress involves ambiguity. (by trying lots of different approaches, we are bound to stumble onto something that works. we just don't know ahead of time what it will be)   Second, whereas BHAG progress involves bold discontinuous leaps, evolutionary progress usually begin with small incremental steps or mutations. 

Darwin's theory of evolution. The central concept of evolutionary theory and Charles Darwin's great insight is that species evolve by a process of undirected variation and natural selection. "Multiply, vary, let strongest live and the weakest die".

Wal-Mart. Try a lot of experiments, seize opportunities, keep those that work well (consistent the the core ideology) and fix or discard those that don't.

Jack Welch, Detailed plans usually fail, because circumstances inevitably changes. Evolution in the natural world has no goal or ideology other than sheer survival of the species. Visionary companies, on the other hand, stimulate evolutionary progress toward desired ends within the context of a core ideology, a process we call "Purposeful Evolution".

3M decentralized and installed mechanism to stimulate continued evolutionary progress. On the other hand, Norton remained centralized and concentrated primary on cost cutting and efficiency. Give people the room they need. 3M provided greater operational autonomy and maintained a more decentralized structure than Norton.

You can learn from success but you have to work at it. But It is a lot easier to learn from a failure

Chapter 8 : Home-Grown Management

From now on choosing my successor is the most important decision I will make. It occupies a considerable amount of thought almost every day. (Jack Welch, 1991, nine years before his anticipated retirement)

Welch was pure GE home-grown stock, having joined the company directly out of graduate school one month before his twenty-fifth birthday. It was his first full-time job and he worked at GE for twenty consecutive years before becoming chief executive. GE performed as well under Jones(predecessor)'s eight year tenure as during Welch's first eight years.

It is not the quality of leadership that most separates the visionary companies from the comparison companies. It is the continuity of quality leadership that matters, continuity that preserves the core.

It is extraordinarily difficult to become and remain a highly visionary company by hiring top management from outside the organization. Equally important, there is absolutely no inconsistency between promotion from within and stimulating significant change.

Your company should have management development process and long-range succession planning in place to ensure a smooth transition from one generation to the next. The key is to develop and promote insiders who are highly capable of stimulating healthy change and progress, while preserving the core.

Chapter 9 : Good Enough Never Is

Don't bother just to be better than your contemporaries or predecessors. Try to be better than yourself.

William Marriott. Discipline is the greatest thing in the world. where there is no discipline, there is no character. and without character, there is no progress. adversity give us opportunities to grow. and we usually get what we work for. If we have problems and overcome them, we grow tall in character, and the qualities that bring success.

Visionary companies, we learned, attain their extraordinary position not so much because of superior insight or special secret of success, but largely because of the simple fact that they are so terribly demanding of themselves.

David Packard. "Continuous improvement" in a visionary company, it is an institutionalized habit, a disciplined way of life, ingrained into the fabric of the organization and reinforced by tangible mechanism.

Comfort is not the objective in a visionary company. Indeed, visionary companies install powerful mechanism to create discomfort, to obliterate complacency, and thereby stimulate change and improvement before the external world demands it.

Visionary companies habitually invest, build, and manage for the long term to a greater degree than the comparison companies in our study. "Long term" at a visionary company does not mean five or ten years. it means multiple decades, fifty year is more like it.

Chapter 10 : The End of the beginning

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)

The essence of a visionary company comes in the translation of its core ideology and its own unique drive for progress into the very fabric of the organization, into goals, strategies, process, cultural practices, management behaviors, into everything that the company does.

By "alignment" we mean simply that all the elements of a company work together in concert within the context of the company's core ideology and the type of progress it aims to achieve, its vision.

Merck. Merck prohibited marketing input into the pure research process until products and clearly entered the development stage. "We keep basic research exclusively in the hands of research". 

Merck explicitly rejected budgets as a planning or control tool in R&D. It creates new product project teams and explicitly does not give them  budget. Instead team leaders must persuade people from a variety of disciplines to join team and to commit their resources to the project. Bets projects attract resources and the weakest perish.

I used to work at another major American corporation before coming to Merck. The basic difference I see between the two companies is rhetoric versus reality. The other company touted values and visions and all the rest, but there was a big difference between rhetoric and reality. at Merck, there is no difference.

Swim in your own current. Alignment means being guided first and foremost by one's own internal compass, not the standards, practices, conventions, forces, trends, fashions and buzzword of the outer world. Not that you should ignore reality, but your company's own self-defined ideology and ambitions should guide all of its dealings with reality.

The real question to ask is not "Is this practice good", but "Is this practice appropriate for us? does it fit with our ideology and ambitions"