Built to Last: Successful Habits of Visionary Companies

 Built to Last: Successful Habits of Visionary Companies is the breakthrough work by Jim Collins and Jerry I. Porras. It is the predecessor to the transformational book Good to Great: Why Some Companies Make the Leap... and Others Don't that I read last year. For Built To Last, the authors spent six years analyzing a number of companies that had been in business for at least 50 years, and had managed to achieve spectacular results throughout their lifetime. Each company was paired with a comparison company that was similar in many ways, but which had achieved far less impressive results over a similar lifespan. Focusing on the difference between the 20 companies in the visionary vs. non-visionary set, the authors presented one overarching theme, and a number of supporting ideas. The list of visionary companies included GE, 3M, HP, Nordstroms, Merck, Proctor & Gamble, Citibank, Disney, Boeing, Motorola, Phillip Morris and Marriott.

The key recommendation for the book was to "Create tangible mechanism designed to preserve the core and stimulate progress".

Although these two principles might seem to be in conflict, the authors described a "yin and yang" system of opposing but necessary checks and balances.

The core of a business is the guiding ideology and purpose that can endure over many years and is unaffected by changes in the external environment. Leaders of a business may have started with this core first, or it may have developed over time. However, having a clear but limited set of core values and a supporting ideology was an important characteristic of the visionary companies.
A significant portion of the book was devoted to identifying the core values and ideology.  These values were almost always separate (and at times even at odds) with the necessary requirement of making a profit. They formed the foundation that continued to guide, inspire and focus the company in a volatile environment.

Two questions can be helpful in discovering/uncovering the core values of a company.

1.. What would we still want to do even if the market did not value it. What would we still be doing in 100 years that would be meaningful, even if the mechanics of how we accomplished it had completely changed?

2. If someone offered us a substantial buyout package to close our doors, what reasons would we have to reject the offer and continue? What is our value to the world?

There is no correct answer, but finding the answer for your company will help to define what is unique about it. One surprising finding was that having values appeared to be more important than what the values were. For example, Phillip Morris values individual freedom, responsibility and a strong desire to win, and these values permeated the culture even though the end result of those values was a profitable tobacco company that stands at best on very dubious moral grounds.

There were two primary mechanisms used to preserve the core ideology:

1. Promote home-grown management.

2. Build a cult-like culture.  It's a great place to work for those who buy into the core ideology. Those who don't fit are "ejected like a virus"

One of the more disturbing findings was that visionary companies were often cult-like, providing very concrete mechanisms intended to reinforce the core ideology to a level that went way beyond typical "corporate culture".

Visionary companies:

- Insure a tightness of fit either before hiring through tight screening, or soon after through a clear weeding process
- Create a sense of belonging to something special
- Provide ongoing corporate training programs with ideological as well as practical content,  teaching values, norms, history and tradition
- Encourage socialization within the organization on and off the job
- Promote from within, and explicitly link compensation and/or advancement policies to following the corporate ideology
- hire young, and indoctrinate
- Create and highlight a corporate mythology of heroes and examples
- Utilize unique terminology that reinforces the sense of belonging to an elite group
- Encourage corporate songs, pledges, affirmations or cheers that reinforce psychological commitment
- Provide awards and recognition for those who show great effort consistent with the ideology, as well as punishments
- Emphasize corporate heritage and values in written and verbal communications

Stimulating progress was similarly distilled down to a few mechanisms:

1. Set Big, Hairy, Audacious Goals (BHAGs)

BHAGs must be simple to understand, and pack an emotional punch. They are not boring missions statements, but concrete, easily stated goals that are so inspiring that they could persist even without the initial leader. They must be achievable, but only barely. The company must stretch to achieve them, and leaders must also be aware that once one is successfully completed, complacency can set it without another large goal. BHAGs must also remain in line with the core ideology.

2. Try lots of experiments, keeping what works and discarding the rest.

Mistakes and failures are a critical part of creation and success. Learn to fail faster, and to not repeat the same mistakes. Also, mistakes in execution are completely different from transgressions against the core values of the company, which are not tolerable.

Allow everyone to exercise a degree of autonomy. From their experiments will come progress. Also allow them to be persistent. Let them work through an idea. Companies that grant substantial operational autonomy have as a prerequisite a set of clear and guiding principles, a mission and purpose. For example, Nordstroms provided a one-page employees manual that boiled down to use your best judgment to make the customer happy. Once the core values have been clarified to provide a guiding framework and direction, then autonomy frees up the employees to move forward with those larger objects as they see fit.

3. Good enough never is. Practice continuous self improvement and set up mechanisms to guard against complacency.

Visionary companies drove themselves harder than the comparison companies. They build "mechanisms of discontent" to "obliterate complacency"  and bring about change and improvement from within still keeping true the core values.

Leaders a visionary companies were "clock builders", not "time tellers". They worked to create patterns today that would lay the foundations for success in the future.

Life in a visionary company is not supposed to be easy, in fact doing well is not even an end goal. Rather, the goal is to always do better tomorrow than you did today.

Mechanism examples:

• Disney didn't leave ideology up to chance. It created Disney University and required all employees to attend classes on Disney history and traditions.
• HP instituted a promote-from-within policy, and encorporated values from the "HP Way" into the annual review process, making it very difficult for anyone to rise through the ranks without demonstrating core values.
• Marriott instituted rigorous employee screening, employee indoctrination programs, and customer feedback loops.
• Nordstrom's created a cult of customer service reinforced by rewards and penalties. "Nordis" who treat the customer well become well-paid customer heros, and those who treat the customer poorly are ejected.
• Motorola committed to six sigma quality, and pursued quality awards.
• GE created one of the first corporate R&D labs to drive innovation.
• Boeing made huge commitments to technological innovations, where failure could have killed the company.
• P&G created an internal competition mechanism that put internal product against product to bring out the best
• 3M decentralized, initiated a 15% time project, created an internal venture capital fund, and introduced a rule that 25% of each division's annual sales should come from products introduced the last 5 years.

In Built to Last, the authors make a strong case for visionary companies as a social institution driven by a shared ideology and set of goals, and  far beyond merely a profit-making venture.  The high-level strategies that visionary companies use to both preserve the core AND to stimulate progress are:

1. Make the shift from time telling to clock building (focus on building processes for the future, with an emphasis on building an organization that will endure)

2. Reject the tyranny of the OR. Embrace the genius of the AND. By changing the approach, it can be possible to have both quality and  low prices, for example.

3. Have a core ideology and core purpose beyond just making money

4. Have a drive for progress, an "almost primal urge for change and forward movement in all that is not part of the core ideology"

5. Preserve the core and stimulate progress through tangible mechanisms.

Built To Last has earned its place as one of the most thought-proving business books of the last 20 years, and although I found the ideas in Good to Great to be even more applicable and actionable, I would definitely recommend Build to Last as a follow-on.

Trying out Evernote for my note collection

Since 2005, I've been keeping my collection of notes in a text file. It is part journal, part idea book, and part todo list. I tried a few different tools and techniques, but kept coming back to the simplicity and ease of a single file edited in vim. I wrote a few supporting perl scripts to make it a little easier, including a template for new notes, timestamps, backups, and some very basic search capabilities. Despite also using version control (RCS), I managed to delete a significant portion of my notes when upgrading my server at one point, and so the system remained a little fragile. However, when I got a smartphone about a year ago, things changed and I began to need a way to add notes on the go as well as from my computer. I created a simple web application wrapper for my notes file, and then I could post to my notes file from the web. Unfortunately, this system was very much optimized for writing notes, and much less useful for searching or browsing through related items. I was intrigued by the idea of a commonplace book as described in the outstanding book Where Good Ideas Come From: The Natural History of Innovation by Steven Johnson. A commonplace book is a cross between a scrapbook, a journal and and idea book, and rose to popularity nearly 500 years ago in Europe. One of the most interesting characteristics of a commonplace book was the cross-indexing of topics to enable me to pick up threads of earlier ideas and combine them together serendipitously. I wanted to have better searching capability than I was willing to write or wire in, and I wanted to be able to combine notes gathered from other sources (like audio transcriptions, documents, images and web pages) into a "common place".

Enter Evernote. I tried their free online note service a few years back when I was looking for an online Getting Things Done (GTD) application, but it didn't stick. However, this time around I was excited to be able to upload audio notes from my phone straight into Evernote, and then transcribe them at my leisure. I record voice memos when listening to audio books on my android phone, or any other time when I have a phone but not a keyboard. I also like Evernote's synchronization feature, which stores notes in the cloud, and also locally on one or more computers/devices, and will automatically synchronize them. (Cloud + local storage is the best sort of backup). What finally tipped me over to giving it another try was the text (XML) import/export format. I'm concerned about vendor lock-in, and wouldn't want to put my notes into a cloud-based application without a clear path to getting my data back out in the event that I was unhappy with the system. So, with a bit of perl hackery, I wrote a script that would parse my existing notes file (350+ notes), massage dates, extract tags, and covert it into an XML document that could be imported directly into Evernote. Evernote has a number of companion products and services made possible through their API, and that is a big plus. The one feature that caught my eye is service that will transcribe up to 30 seconds of audio for free. I'm going to give Evernote another go, and see if I can improve on notes.txt + vim.

Multipliers: How The Best Leaders Make Everyone Smarter

In Multipliers: How The Best Leaders Make Everyone Smarter, authors Liz Wiseman and Greg McKeown outline 5 key disciplines that differentiate "multipliers" (leaders who increase the intelligence and output of the people around them), and contrast these multipliers with "diminishers" (leaders who, although smart, actually decrease the effective intelligence and productivity of the people they lead).

“We’ve all had experience with two dramatically different types of leaders. The first type drains intelligence, energy, and capability from the people around them and always needs to be the smartest person in the room. These are the idea killers, the energy sappers, the diminishers of talent and commitment. On the other side of the spectrum are leaders who use their intelligence to amplify the smarts and capabilities of the people around them. When these leaders walk into a room, light bulbs go off over people’s heads; ideas flow and problems get solved. These are the leaders who inspire employees to stretch themselves to deliver results that surpass expectations. These are the Multipliers. And the world needs more of them, especially now when leaders are expected to do more with less."

The 5 key disciplines of the multiplier (and their corresponding diminisher behaviors) are:

Multiplier: Talent Magnet: Attracts talented people and utilizes them at their highest point of contribution
Diminisher: Empire Builder: People must report to me to be useful

Become a genius-watcher. Identify the key talents of the people around you, and then connect them with opportunities.

Identify talent, shine the spotlight by recognizing their specific abilities publicly, remove the weeds/nonperformers publicly, and always trying to understand how, why and when a situation will allow someone to be successful. Use the 5 whys to understand the underlying cause of someone's success, build a hyposthesis, confirm that with the person and their peers, and then give them an opportunity.

People do not need to report to you to be able to contribute. Tap into their discretionary effort, and they will be able to give even more.

Tips for building up your genius-watching skills:

Identify the areas of strength of the 8 or 10 people that you associate with most often. Keep track of the things that they do both freely and well. Build some assumptions, and then get feedback from others, and the talented person as well. Find ways to give them opportunities.



Multiplier: Liberator: Creates an intense environment that requires a person's best thinking and work

Diminisher: Tyrant: Creates a tense environment that suppresses creativity and risk-taking

People can only give their best efforts, it can't be taken from them, so give them space to step up. Free them to think, but expect their best effort. The most critical aspect of the liberator is their ability to build an environment with high expectations, but where people feel safe to explore.

Get yourself out of the way. When talking with others, differentiate between "soft" opinions (areas where you don't care much, but are throwing something out, musings, "feel free to disregard this") and "hard" opinions (areas where you have a strong interest in a particular outcome).

Give people the freedom to succeed, or fail (in a way that is not devastating). Publicize your mistakes, making it known that failures are an accepted part of risk-taking and progress. Consider even creating/sharing the "screwup of the week". Expect that failures are necessary for progress. Strive to fail faster, and to never repeat failures by learning from them. Iterate rapidly.

Demand the very best from people. Don't be afraid to ask "Is this your best work?" and then expect them to rework it until they can answer yes.

Multiplier: Challenger: Define an opportunity that allows people to stretch
Diminisher: Know-it-all: Gives directives that showcase their knowledge

People grow stronger with challenges. Your job as a leader is to ask the biggest questions, to reframe and/or refocus problems and beliefs, to identify a starting point, and to generate belief that the end can be achieved. Present a concrete challenge, but don't be afraid to let other people fill in the blanks.

Ask hard questions, shape the path foward, co-create the plan, and build momentum with early but significant successes. You can "helicopter down", going from the 10,000 foot strategic plan to something concrete and practical to demonstrate that what you are asking is only improbable or difficult, not impossible.

Know-it-alls limit the ceiling of their organization, and refocus organizational energy on understanding what the boss wants to hear. Challengers force an organization to expand beyond its previous limits by asking bigger questions than they can answer by themselves.

Multiplier: Debate Leader: Together, we can come up with the answers
Diminisher: Decision Maker: I need to have all the answers

• Attempt to run an entire debate without answering any questions, only answering them.
• Ask and/or expect evidence for people to back up their views. Make this a habit rather than a way of putting people on the spot to promote a culture of fact-based decisions.
• Make sure that all voices (particularly the quiet ones) are represented.
• Use debate to drive decisions, not to block it, and to use it as a thinking process.
• Encourage people to switch sides and then argue the other side's point. Drive home the point that the debate is to test the validity of ideas.
• Give space for other people's ideas to flourish. Limit yoursself to a specific amount of contribution in any discussion or meeting (Try the poker chip challenge. 5 chips, each for somewhere between 30 seconds and two minutes of contribution. Use your speaking time wisely). 
• Don't be afraid to be a decision maker. Consensus decisions are not always necessary, but be sure to clarify how the decisions get made.

Multiplier: Investor: With guidance and coaching, they'll figure it out.
Dimisher: Micro-manager: I need to drive direction through my direct involvement.
They will never figure it out without my direction

Do not take over ownership of problems from your staff. If you need to step up in a meeting to clarify a point or refocus the debate, be sure to "hand the marker back". Step back out of the spotlight, and turn it over to whoever was leading before. Allow people to own the own solutions to their problem; guide and support them, but don't disempower them or teach them to give up or expect to be replaced when things get hard.

After discussing a problem with someone, turn it back to them with a simple statement like "you're smart,   you'll figure it out" or "I'm sure you can take it from here". Allow people to learn from taking the solution all the way, and don't teach them to quit once they've reached a roadblock that requires escalation.

Train people to come with you not only with a problem, but also with a potential solution: take the time to think about what the right answer is. No "awk" without a "f-i-x".

Don't be a "bungee manager", jumping in to save the day when things are exciting, and then disappearing after claiming victory for yourself and/or losing interest.

Other ideas:

• The 30 day challenge: Take one of each of these areas, and focus on it for 30 days at a time.
• The question of the year: Pick one question, and pursue the answer for an entire year

Some stats about leaders from the author's research:

• Leaders rated strong in none of the five areas were in ~34th percentile
• Leaders rated strong in only one of the areas were in the 64th percentile, while leaders rated strong in two and three of the areas jumped up to 70th and 84th percentile respectively when they had no strong deficiencies. So concentrate on your strongest area, and your weakest one. 
• Build your strength, and improve your biggest weakness into the average range.

The critical takeaway from the stats is that having/building strength in only a couple areas can clearly differentiate you as a leader.

Key Ideas:

When you identify and tap into someone's talents, you can engage them in a way that can cross organizational boundaries. Inspire, focus and drive debate to a conclusion, don't control it. Learn to create an intense environment, not a tense one, by setting high expectations AND giving autonomy and freedom to fail. Return ownership of solutions to anyone who comes to you with a problem after providing coaching and support.

The authors also offer an online assessment tools that helps to determine where you fall in the multiplier-dimisher spectrum:

Overall, Multipliers: How The Best Leaders Make Everyone Smarter is an extremely good book full of clear ideas and case studies to clarify the principles. Their recommendations are so concrete that it makes them easy to put into practice and to test.



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