76 pages • 2 hours read
Jim CollinsBuilt to Last: Successful Habits of Visionary Companies
Nonfiction | Book | Adult | Published in 1994A modern alternative to SparkNotes and CliffsNotes, SuperSummary offers high-quality Study Guides with detailed chapter summaries and analysis of major themes, characters, and more.
Chapters 9-10Chapter Summaries & Analyses
Chapter 9 Summary: “Good Enough Never Is”
Visionary companies perpetually strive for progress, never content with mere competition but dedicated to surpassing their past achievements. This relentless pursuit of improvement extends beyond internal ideation, encompassing substantial investments in the future and nurturing promising talents. Visionary companies embrace emerging technologies, constantly seeking novel avenues for enhancement.
A pivotal strategy these companies employ is deliberately cultivating discomfort within their organizational fabric. Comfort, viewed as a breeding ground for complacency, is eschewed in favor of proactive improvement. Procter & Gamble exemplify this ethos through an innovative competition framework among their brands, fostering internal rivalry for continuous enhancement. Merck strategically relinquishes market shares of declining products, compelling innovation, or the consequences of unprofitability. Motorola prematurely terminates aging product lines, instigating the creation of new offerings. General Electric mandates public acceptance or rejection of proposals by managers, instilling accountability. Boeing adopts a competitive perspective analysis by managers, stimulating the identification and rectification of product weaknesses. Wal-Mart aims to surpass the previous year’s daily sales, while Nordstrom and Hewlett-Packard employ peer ranking mechanisms.
Comparatively, comparison companies exhibit a dearth of such “mechanisms of discomfort,” often fixating on short-term successes (190). On the other hand, visionary companies pursue short-term victories and sustained long-term growth. They reflect this commitment in their substantial property, equipment, research, and development investments. Additionally, visionary companies return more earnings to the organization, emphasize comprehensive employee training and professional development, and eagerly adopt new technologies and innovative practices.
Examining Marriott and Howard Johnson, the authors illustrate how visionary strategies yield enduring success. While Howard Johnson’s decline resulted from a focus on cost-cutting and efficiency, Marriott’s foresighted approach led to significant growth. Marriott implemented various mechanisms, including a Guest Service Index, employee incentives based on customer feedback, annual performance reviews, profit-sharing, stringent employee screenings, development programs, a corporate learning center, and quality-control investigators posing as customers. These mechanisms foster a company culture that constantly seeks improvement.
The authors underscore companies’ need to actively seek “mechanisms of discomfort” as catalysts for progress (190). Simultaneously, they advocate for strategic investments in future planning, urging companies to prepare for inevitable downturns.
Chapter 10 Summary: “The End of the Beginning”
Collins and Porras assert that visionary companies are distinguished not merely by mission statements, visions, or declarations but by their integration of core ideology and commitment to progress into every facet of their organization. This holistic approach extends to building layouts, accounting practices, policies, and technologies, creating an environment that consistently communicates and reinforces the company’s ideology and aspirations. The authors stress the importance of alignment, where all components work cohesively to uphold the core ideology while pursuing progress.
Using Ford as an illustration, the authors emphasize that a mission statement alone is insufficient; the mechanisms implemented to enforce a mission or vision statement transform a company into a visionary one. Ford’s commitment to quality control, employee involvement, profit-sharing, and innovation demonstrated the practical embodiment of their Mission, Values, and Guiding Principles (MVGP). Merck and Hewlett-Packard, having established mission statements, reinforced their visions through strategic mechanisms. Merck’s encouragement of employee publications aligns with its core value of research, while Hewlett-Packard’s emphasis on employee welfare and creative policies intertwines with their foundational ideologies.
Visionary companies employ various strategies and mechanisms, ranging from large-scale procedures to small details, to maintain core ideology and facilitate comprehensive progress. The authors stress the importance of consistency and alignment across the organization, emphasizing that the company as a whole must embody the visionary principles. They advocate focusing on both the big picture and small details, citing examples like Nordstrom’s business cards and Johnson & Johnson’s decentralized logo creation. Companies are also encouraged to use reinforcing mechanisms and procedures, exemplified by Merck’s hiring and publication policies.
Despite evolving management trends and policies, the authors advise remaining steadfast to core ideology and long-term goals. Boeing’s commitment to surpassing safety standards, not merely for profitability but to align with their ideology, serves as an illustration. The authors contend that visionary companies may, at times, adopt practices that seem counterproductive but emphasize the importance of alignment with the company’s goals and ideology regardless.
Collins and Porras recommend a proactive approach in seeking and removing policies and practices misaligned with the core ideology, emphasizing that this process is continuous. They stress that companies must have a core ideology, actively pursue progress, and establish reinforcing mechanisms. While acknowledging that methods may evolve with time, the authors encourage companies to experiment with established and new methods alike.
In conclusion, the authors distill their insights into four key concepts: “1. Be a clock builder—an architect—not a time teller. 2. Embrace the ‘Genius of the AND.’ 3. Preserve the core/stimulate progress. 4. Seek consistent alignment” (217). They underscore the notion that any organization can create and sustain a visionary company with diligence.
Chapters 9-10 Analysis
Collins and Porras delve into their final exploration of methods to “preserve the core and stimulate progress,” offering key insights in these chapters (217). Initially serving as the culmination of the first printing of Built to Last, these chapters encapsulate crucial takeaways from Collins and Porras’s extensive research.
The authors begin by examining a pivotal strategy that visionary companies employ to foster growth and progress—perpetual dissatisfaction. Dissatisfaction leads to a relentless pursuit of improvement, which becomes ingrained in the company’s essence, propelling it to surpass past achievements. Visionary companies exhibit an unwavering commitment to continuous improvement even at the zenith of success.
The challenge lies in establishing diverse methods to ensure ongoing enhancement. To illustrate this, the authors present various examples, emphasizing the crucial element of aligning these mechanisms with the company’s core ideology. Boeing, for instance, defines its core ideology as “Being on the leading edge of aeronautics [...] tackling huge challenges and taking risks [...] product safety and quality [...] integrity and ethical business” (68). Boeing’s approach involves scrutinizing ideas through the lens of an aggressive competitor, reflecting their dedication to quality and risk-taking. Conversely, Marriott prioritizes “friendly service & excellent value,” fostering a culture of treating people well, embracing hard but enjoyable work, continual self-improvement, and overcoming adversity (69). Marriott’s methods for promoting self-improvement align seamlessly with these values, incorporating performance reviews for every employee, hourly included. Additionally, employees are eligible for incentives, bonuses, and promotions based on their performance. Implementing “phantom shoppers,” employees posing as customers to evaluate service, is a unique but effective method. Employees who receive low scores undergo retraining rather than immediate termination. Both Marriott and Boeing find their respective approaches effective in fostering continual improvement, but neither would flourish using the other’s method.
The authors emphasize that visionary companies prioritize long-term growth over immediate shareholder satisfaction, reinvesting more money back into the company. The authors scrutinize visionary companies’ commitment to self-improvement through four criteria: “Long-Term Investments (PP&E [Property, Plant, and Equipment], R&D [Research and Development], Earnings and Reinvestments), Investment in Human Capabilities (Recruiting, Training, and Development), Early Adoption of New Technologies, Methods, Processes, and Mechanisms to Stimulate Self Improvement” (240). Out of 18 visionary companies, 16 scored higher than their comparison counterparts, with two groups tying. However, four visionary companies closely matched competitors; the overall average across all areas was notably higher for visionary companies (9.7) compared to comparison companies (6.5). The most significant gap occurred in Investment in Human Capabilities, where 13 visionary companies earned a “high” score, whereas comparison companies had none. The authors caution against a myopic focus on crafting and distributing a company vision, stressing the need for policies and procedures supporting this vision. While Collins and Porras provide a plethora of advice, critics point out the challenge in implementation, particularly for established companies, and the questionable practicality of some methods in a modern business environment. Despite effectively outlining the “what” of visionary companies, Collins and Porras fall short on the “how,” leaving room for experimentation aligned with core ideologies but presenting challenges for readers seeking practical guidance.
Collins and Porras culminate their exploration of visionary companies by emphasizing the imperative of dissatisfaction as a driving force for growth and continual improvement. They delve into specific mechanisms employed by visionary companies, emphasizing the crucial aspect of aligning these methods with the company’s core ideology. Additionally, they underscore the visionary companies’ distinct approach to investment, focusing more on long-term growth than immediate shareholder satisfaction. The authors present compelling data, revealing the visionary companies’ superiority across criteria for self-improvement and investment in human capabilities. However, they caution against fixating solely on crafting a vision, stressing the importance of implementing supporting policies and procedures. The final chapter offers a wealth of advice but with challenging applicability, especially for established companies. While providing valuable insights into the “what” of visionary companies, the authors struggle to detail the “how.” While this leaves room for companies to experiment and find their unique path aligning with their core ideology, some may be overwhelmed and dissatisfied with applying these strategies.
