"Built to last" Business Classics Presentation by Mr.James C.Collins & Mr.Jerry I.Porras
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"Built to last" Business Classics Presentation by Mr.James C.Collins & Mr.Jerry I.Porras

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"Built to last" by Mr.James C.Collins & Mr.Jerry I.Porras

"Built to last" by Mr.James C.Collins & Mr.Jerry I.Porras

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  • 1. BUILT TO LASTSuccessful Habits of Visionary Companies James C. Collins and Jerry I. Porras (BUSINESS CLASSIC PRESENTATION) BY
  • 2. TEAM-SOUTHWEST AIRLINESHARSH DALVIABHISHEK VARMARAHUL WADHWA 05/02/2012
  • 3. PREFACEWhat these companies have to teach?The average founding date being 1897.Research Results and Comparison Companies.Looked as start-ups, midsize and large companies.Lessons can be learned and applied by the majority ofmanagers.Lessons to be learn and apply to build visionary companies.
  • 4. CONTENTSChapter 1 – Best of the BestChapter 2 – Clock Building, Not Time TellingChapter 3- More than ProfitsChapter 4 – Preserve the Core/Stimulate ProgressChapter 5- Big Hairy Audacious GoalsChapter 6 – Cult-like Cultures LearningsWhat WorksChapter 7 – Try a Lot of Stuff and KeepChapter 8 – Home Grown ManagementChapter 9 – Good Enough Never IsChapter 10 –The End of the BeginningChapter 11 – Building the Vision
  • 5. INTRODUCTION What is VISIONARY COMPANY? Criteria for a Visionary Company-  Premier institution in its industry  Widely admired by knowledgeable business  Made an indelible imprint on the world  Had multiple generations of chief executives  Been through multiple product life cycles  Founded before 1950  Selection Process-  Surveyed 700 CEO’s from 200 Companies  The youngest company was founded in the year 1945 and the oldest was founded in 1812.  The average founding date of 1897
  • 6. Visionary Companies and Comparison CompaniesVisionary Companies Comparison Companies 1. Norton1. 3M 2. Wells Fargo2. American Express 3. McDonnell Douglas3. Boeing 4. Chase Manhattan4. Citicorp 5. GM5. Ford 6. Westinghouse6. General Electric 7. Texas Instruments7. Hewlett-Packard 8. Burroughs8. IBM 9. Bristol-Myers Squibb 10. Howard Johnson9. Johnson & Johnson 11. Pfizer10. Marriott 12. Zenith11. Merck 13. Melville12. Motorola 14. RJR Nabisco13. Nordstrom 15. Colgate14. Philip Morris 16. Kenwood15. Procter & Gamble 17. Ames 18. Columbia16. Sony17. Wal-Mart18. Walt Disney
  • 7. THE BEST OF THE BEST Imagine how different the world would have looked and felt without the great companies? TWELVE SHATTERED MYTHS Research Project (Six Steps)-1) What companies should we study?2) A comparison Group3) History and Evolution4) Collecting the data5) Harvesting the fruits of our labor6) Field Testing and Application in real world LET THE EVIDENCE SPEAK
  • 8. CLOCK BUILDING , NOT TIME TELLING “The builders of Visionary Companies tend to be clock builders, not time tellers.” THE MYHT OF THE “GREAT IDEA”- TI started with ‘great idea’ HP did not Sony had no specific product idea, while Kenwood appeared to have a specific category of products in mind. Negative correlation between early entrepreneurial success and becoming a highly visionary companies. The Company itself is a great creation. The Myth of the Great and the Charismatic Leader. Clock Builders at Work.
  • 9. NO “TYRANNY OF THE OR”(EMBRACE THE “GENIUS OF THE AND”)
  • 10. MORE THAN PROFITS CORE IDEOLOGY: EXPLODING THE PROFIT MYTH- Makes the clearest difference between the Visionary companies and the Comparison companies. For Example, Johnson & Johnson Versus Bristol-Myers ( J&J Credo Vs Bristol Myers Pledge) IS THERE A “RIGTH” IDEOLOGY? Certain common factors seen in the number of visionary companies. Great emphasis on having the core ideology and preserving the core ideology as a vital shaping force. Core Ideology= Core Values + Purpose
  • 11. PRESERVE THE CORE/STIMULATE THE PROGRESS The essence of the visionary companies is to Preserve the core ideology of the business while simultaneously stimulating progress. For example , at 3M, “Respect for individual initiative” is a part of their core value group. This proves the “Genius of the AND” as visionary companies seeks to be both highly ideological and highly progressive at the same time.
  • 12. BIG HAIRY AUDACIOUS GOAL BHAG (Big Hairy Audacious Goal)  BHAG should be understandable and clear  BHAG should not be inside comfort zone  Progress should be their even if leaders loose their trust  BHAG should always have consistent growth Commitments and risks The Hubris Factor The Goal, not the Leader Preserve the core and stimulate progress 12
  • 13. CULT LIKE CULTURE 13
  • 14. TRY A LOT OF STUFF AND KEEP WHAT WORKS Corporations as evolving species Darwin’s theory of Evolution Applied to Visionary companies Lesson for CEO, Managers and Entrepreneurs Stick to the knitting ??? Stick to the core 14
  • 15. Home-Grown Management  Visionary companies develop, promote and carefully select managerial talent from inside of the company to greater degree than the comparison company. They do this as a key step in preserving their core.  Quality of leadership separates visionary companies from comparison companies.  It is the continuity of quality leadership that matters – continuity that preserves the core. Leadership continuity loop.  As companies like GE, Motorola, P&G, Boeing, Nordstrom, 3M and HP have shown in time and again, a visionary company absolutely does not need to hire top management from the outside in order to get change and fresh ideas.Management Strong StrongDevelopment Internal Internal& Succession Candidates Candidates Planning
  • 16. Message for CEO’s, Managers & Entrepreneurs  If you’re a CEO or Board Member at a large company, you can directly apply the lesson of this chapter. Your company should have management development processes and long range succession planning to ensure smooth transition from one generation to the next.  If you’re a manager, and building a visionary department, division or group, you can also be thinking about management development and succession planning, but on a smaller scale.  Smaller companies and entrepreneurs can be developing managers and planning succession, not for the current generation, but for the next, so that the company keeps ticking even after the leaders are gone. Poor LeadershipManagement Dearth of GapDevelopment Strong Corporate & Internal Stall Inadequate Candidates Search for a Succession “Savior” Planning
  • 17. CEO Statistic 1806 - 1992 No. Of No. Of No. Of Avg. Avg. No. Of Visionary Company Outside Outside Comparison Company CEOs Tenure Tenure CEOs CEOs CEOs 3M 12 7.5 0 1 8.92 12 Norton Americam Express 9 15.78 0 4 9.33 15 Wells Fargo Boeing 8 9.63 0 0 14.4 5 McDonnell Douglas Citicorp 20 9 0 4 11.5 10 Chase Manhattan Ford 5 17.8 0 2 7 12 GM General Electric 7 14.29 0 3 8.15 13 Westinghouse Hewlett-Packard 3 18 0 0 7.75 8 Texas Instrument IBM 6 13.5 0 1 10 10 Burroughs J&J 7 15.14 0 0 21 5 Bristol-Myers Squibb Marriott 2 32.5 0 3 13.4 5 Howard Johnson Merck 5 20.2 0 0 13 11 Pfizer Motorola 3 21.33 0 1 11.5 6 Zenith Nordstorm 3 30.33 0 0 20 5 Melville Philip Morris 12 12.08 3 3 8.36 14 RJR Nabisco Procter & Gamble 9 17.22 0 1 16.91 11 Colgate Sony 2 23.5 0 1 11.5 4 Kenwood Wal-Mart 2 23.5 0 2 8.5 4 Ames Walt Disney 6 11.5 1 5 9 8 Columbia Average Total 6.72 17.38 11.68 8.78 Total 121 4 31 158% of total No. of external 3.54 22.14
  • 18. Some Key Example in the Chapter
  • 19. Good Enough Never Is “How can we do better tomorrow than we did today?” The essence of this chapter lies in the above question. Comfort is not the objective in a visionary company. Create discomfort – to obliterate complacency Stretching ahead to beat themselves. Invest more of the profit back into the company Invest more in their people’s training, spending a significant amount in training centres.
  • 20. Message for CEO’s, Managers & Entrepreneurs If you are involved in building and managing a company, the book urges you to consider the following questions: What mechanisms of discontent can you create that would obliterate complacency and bring about change and improvement from within, yet are consistent with your core ideology? How can you give these mechanism sharp teeth? What are you doing to invest for the future while doing well today? Does your company adopts new technologies and innovative ideas before the rest of the industry? How you respond to downturns? Does your company continue to build for a the long term even during difficult times? Do people in your company understand that comfort is not the objective – that life at visionary company is not supposed to be easy? Does your company reject doing well as an end goal, replacing it with the never-ending discipline of working to do better tomorrow that it did today?
  • 21. The End of the Beginning It’s become fashionable in recent decades for companies to spend countless hours and money drafting elegant vision, mission, value, purpose statements. But they are not the essence of visionary companies Just because a company has a vision statement or something like that in no ways guarantees that it will become a visionary company The essence of a visionary company comes in the translation of its core ideology & its unique drive for progress Visionary company aligns its core ideology for future progress
  • 22. The Power of Alignment Ford Wrote statement of mission, values and guiding principles – MVGP It listed people and product ahead of profit Emphasized the central importance of quality improvement, employee involvement and customer satisfaction MVGP however, did not bring the turnaround It had translated MVGP into reality by aligning its operations, strategies and tactics consistently with the MVGP The real force behind Fords remarkable turnaround was the translation of MVGP into daily practice and into reality
  • 23. Lesson of Alignment Paint the whole picture Sweat the small stuff Cluster, don’t shotgun Swim in your own current, even if you swim against the tide Obliterate Misalignment Keep the universal requirement while inventing new methods
  • 24. Building The Vision Key finding from “Built to Last” Preserve core ideology and stimulate progress Understand the difference Two major components of well conceived vision
  • 25. Examples of Complete VisionMerck, 1930sCore IdeologyCore Values: Corporate Social Responsibility Unequivocal excellence in all aspects of the company Science-based innovation Honesty and integrity Profit, but profit from work that benefits humanityPurpose: To preserve and improve human lifeEnvisioned FutureBHAG: To transform this company from a chemical manufacturer into one ofthe preeminent drug-making companies in the world, with a research capabilitythat rivals any major universityVivid Description: With the tools we have supplied, science will be advanced,knowledge increased, and human life win ever a greater freedom fromsuffering and disease....we pledge our every aid that this enterprise shall meritthe faith we have in it. Let your light so shine – that those who seek the Truth,that those who toil that this world may be a better place to live in, that thosewho hold aloft that torch of science and knowledge through these social andeconomic dark ages, shall take new courage and feel their hands supported.
  • 26. Which Company had greater initialFounding Root Summary Founded with a Great Idea success? Visionary or Comparison? Visionary Comparison3M vs. Norton No Yes Comparison CompanyAmex vs. Wells Fargo No No Visionary companyBoieng vs. McDonnell No Yes Comparison CompanyCiticorp vs. Chase No No IndistinguishableFord vs. GM Yes No Visionary companyGE vs. Westinghouse Yes Yes IndistinguishableHP vs. TI No Yes Comparison CompanyIBM vs. Burroughs No Yes Comparison CompanyJ&J vs. Bristol Myers Yes No Visionary companyMarriott vs. Howard Johnson No No IndistinguishableMerck vs. Pfizer No Yes IndistinguishableMotorola vs. Zenith No Yes Comparison CompanyNordstrom vs. Melville No No Comparison CompanyP&G vs. Colgate No Yes IndistinguishablePhilip Morris Vs. R.J.Reynolds No Yes Comparison CompanySony vs. Kenwood No Yes Comparison CompanyWal-Mart vs. Ames No Yes Comparison CompanyWalt Disney vs. Columbia No No Comparison CompanyOverall 3 Yes 11 Yes 3 Visionary Company 15 No 7 No 5 Indistinguishable 10 Comparison Company
  • 27. Conclusion Instead of telling time, built a clock that could tell the time forever, even when you are dead or gone. Find the purpose and not profits. Preserve the core and stimulate progress. Develop and promote insiders who are highly capable of stimulating healthy change and progress, while preserving the core. Compete with yourself. Seek consistent alignment. Build the core purpose, vision and value for your organization.