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Built to last or built to sell? Some entrepreneurs build companies with the purpose of selling them. Others build companies because they want to leave something behind, create a legacy. Their goal is creating great companies that will exist long after they are are gone. Recently, I read a book on this subject called Built to Last by written by James C. Collins and Jerry Porras. Today, I will share with you the lessons I learned from this book. Learn how to build visionary company!
The last three habits of companies built to last are in part 2.
Short introduction
Before we take a look at the first lesson I learned from the Built to Last book, there is one thing I should address. In order to give you actionable amount of information and keep it digestible, I decided to split this article into two shorter parts. We will discuss six main lessons that will help you build visionary company, or company built to last. In this first part, we will discuss the first three. And, the remaining three will be discussed in the second part. I hope you will enjoy both.
Focus on building a clock
The first and most important ideas of the Built to last book, and framework, is about building a clock. Let me explain what this means. In Built to last, Jim Collins talks about two types of people who build companies. The first type of people focuses on telling or announcing the time. Chances are that you already know what “telling the time” is about. Have you ever seen a company that depended on charismatic and visionary CEO and his ability to come up with great ideas?
That’s telling time. There is nothing wrong with being this kind of charismatic visionary, and telling the time. However, problem with arise when you leave the company. What if the survival of your company depends on your ability to create these groundbreaking ideas? Then, it is not built to last. When you leave it, it is doomed. Sooner or later, it will stop making any progress and slowly die. Some people might ask why?
The truth is that you were that one thing that hold the company in motion. Without You? This is why some of the greatest companies ended up in ruins when the founders left. These founders were literally the living blood of their companies. When these founders were still around, there was always someone to “tell the time”. There was always someone who was able to come up with new and groundbreaking product and save the situation and company.
However, without these visionaries, these companies have almost no chance of surviving. It is almost certain that this path will end with the company left in ruins. Well, unless another visionary appear again and take over the reins. Otherwise, it is a dead end. Fortunately, there is another way–the second type of founders, or people.
From time telling to building a clock
Instead of telling the time, this second type of people focuses on building the clock. For these people, it is not important to be the visionary. They don’t need to be in the spotlight every time to feel good about themselves. For these people, their biggest concern, and life’s goal, is their company, company built to last. These people want to create something that will outlast them when they will die. Also, for these people, one product or idea is not make it or break it situation.
They are not in it for just one gig. They know that their company must be able to continuously create new products. Success or failure, it doesn’t really matter. When one idea or product is built and released, company must immediately start working on the next big thing. And, this cycle has to work even when the founder is no longer present. Hewlett-Packard, IBM, Walt Disney, Sony, 3M, Pixar or Apple. All these companies survived their founders. Well, maybe with a few troubles.
This is the idea of building a clock and companies that are built to last. Founders job is creating products, seeking new market opportunities in order to build a great company. In this sense, the company itself is your main and final product, not the products or services you create and sell.
This view goes against the idea that you have to have some concrete idea to start a business. A lot of founders of the companies studied in Built to last started without having any idea. This may surprise you. However, even companies such as Hewlett-Packard, 3M and Sony started without that starting idea. Their founders only knew they have to somehow make money. So, no idea? No problem. Focus on building company. You can always find something to sell.
Creating the future by building a clock
What adopting this idea about building a clock means for you? If you want to be a founder of company built to last, you have to make sure that you are not the most important wheel in the machine. This may be a little bit uncomfortable. Let’s be honest. There is always at least a little bit of ego included in building a company. You may want to build a company to make the world a better place. This is great because this goal will provide you with fuel even in the toughest times.
However, a lot of people want to build a company to make themselves more visible. There is nothing wrong with that. The problem is when this goal becomes your primary driver or focus. Company built around the personality of its founder is not built to last. Let’s assume that you are a true visionary. Then, your company may be successful. It may achieve a lot and really make a difference. However, when you are gone, it will fall like a house of cards.
By building the company around yourself you made yourself irreplaceable. You made yourself the most important wheel in the machine. In other words, you were a time teller. The question is, who will tell the time after you? Sure, you can, and should, nurture your successor. However, your company will still depend on that one wheel. If that wheel fails, then the whole machine will stop. The only way out of this trap is by doing something different.
The solution is quite simple. Find great, audacious, relentless and innovative people and build your company with them. So, you want to be a visionary? Okay. Just make sure to find another visionaries and hire them. Make sure you are not the most important wheel in the machine. Find the smartest people in the world and hire them. This is how you build a clock. Hire the best people and make yourself replaceable. Make sure your company will thrive without you.
Establish set of core values and ideology
All companies built to last have at least this one thing in common. They all have some core ideology, or values. These values are what gives your company a purpose. It works as your north star. It gives you a sense of identity and guides you. This core ideology and values also help you and your people decide what to do and what to avoid. This is important. Your core values and ideology are something you have to follow all the time, no matter the conditions.
It is something set in stone. Even if it looks like the whole world is against you, your core values and ideology is untouchable. This is one rule all companies built to last follow. For example, let’s say one of your core values is creating excellent products. Then, it doesn’t matter how hard you have to work or how bad the situation is. You will not create and sell some bad product. If excellence is one of your core values, it is a commitment. And, you have to live up to it.
What if one of your core values is treating your employees fairly and with respect? Then, you have to make sure to establish transparent and clear communication. You have to listen their concerns and help them solve them. You have to reward them fairly for their work. Also, give them autonomy and let them control their work. Finally, create an environment they will love to work at. Remember that it’s not only about having core values, but also about living them. Be authentic.
And, yes. You can have more core values. For example, Zappos has 10 core values. Apple has seven. However, don’t copy values from others. Choose values important for you. They all must be something you live and breathe for.
Core values, ideology, strategy and tactics
One thing before we move on to the next lesson. There is a difference between core values, ideology, strategy and tactics. Core values and ideology are sacred. Once you find and choose the values and ideology that are important for you, they are set in stone. You can’t change them because you changed your mind or because the times are tougher then before. This is why I suggest that you take some time to find core values and ideology for your company.
However, strategy and tactics you use are a different story. You can change these as you wish. So, if one strategy doesn’t work as expected, doesn’t bring desired results, try something else. Built to Last book is full of stories describing how visionary companies had to revise their strategy to stay alive. For example, William Boeing had to sell furniture to keep his company afloat. Sony is another example. For a period of time, Sony had to sell ramen noodles in order to survive.
The key is that none of these companies changed their core values and ideology or went against them. So, if you have to change the product or service you sell, be it. If you have to change the way you make profit, be it. If you have to change the way you establish culture in your company, be it. The same is true about the structure of your company. However, never ever change the core values, ideology or culture itself once you choose them.
As you could see on the example of Sony and Boeing, they both had to temporarily change the way they made profit. However, they never changed their values or ideology. The goal of Boeing was always building the world’s largest aerospace company. The goal of Sony was always being a pioneer, doing the impossible and elevating Japanese culture and national status. It is like traveling. The destination is the same. What changes are the ways that will get you to that destination.
Create a cult-like culture
This will probably be a little bit controversial step on the way to create company built to last. Almost all companies studied for Built to last book had cult-like culture. In other words, it was not enough that employees knew about the core values. They had to live and breathe these values just like founder(s) and embrace them. It sometimes looked almost like a religion, or a cult. It was unacceptable for anyone to not to follow the core values and ideology. That would be a deadly sin.
When you decide to create this cult-like culture, to increase your chance of building company built to last, one thing is clear. Not everyone will be the right fit for your company. The authors came to the same conclusion. For some people, those companies were like a heaven. They could not imagine a better place to work. However, for others, it was not as great. Sometimes, for some, it was more like a hell. They just could not come to taste of the culture.
This is unavoidable as cult-like cultures are on the extremes of the spectrum. Your employees either love it or they don’t. There is nothing in between. If they love and embrace the culture, they will love to work there and they will love the people around them as well. If they don’t love it, every day will be a test of their willpower. Sooner or later, either they will decide to leave or you will do that for them, and fire them.
This is another aspect of cult-like culture and companies built to last. If one is not a right fit, she has to go. In other words, they are either all-in or they don’t play at all. There is no way around it.
What makes cult-like culture
During the study, authors of Built to last found four main characteristics of cult-culture. These characteristics are fervently held ideology, indoctrination, tightness of fit and elitism. Let’s briefly take a look at each of these characteristics. First, there is the fervently held ideology. This means that not only the founder(s) believe strongly in the company ideology and core values, but all employees as well. Every person in the company has to live and breathe this ideology and values.
Second, characteristic is indoctrination. This means that management of the company is directly responsible for establishing the ideology and core values. Then, it has to encourage all employees to follow this culture. This can be done through training, courses, seminars, creating and sharing some physical or digital materials and so on. The key is that this is inseparable part of the job of management. In other words, it is not a nice-to-have, but a must-have.
The third characteristic is tightness of fit. We already touched this a little bit. You want to hire and keep only people who fit, embrace and believe in the same ideology and values as your company. Otherwise, you should let the person go. Doing so is usually better for both sides. Sure, you can also offer that person a different position. However, since the ideology and values are shared across the whole company, this is unlikely to work.
The last characteristic of companies built to last is elitism. In other words, your employees should be proud of being a part of the company. They should feel like being part of something extraordinary. And, they should also recognize the responsibility and commitment that comes with it. This means embracing, following and living the core values and ideology and representing the company in the best way possible.
Closing thoughts on companies built to last
This is all I have for you. Well, at least in the scope of the first part. Today, we discussed the first three lessons that will help you build visionary company. These three lessons were focusing on building a clock, establishing set of core values and ideology and creating a cult-like culture. These three lessons are very important for building visionary company. However, they are not enough. These lessons will only help you get started. Then, you need to keep the company in motion. You will learn how to do that, and the remaining three lessons, in the second part.
I hope you enjoyed this a little bit unusual digression from tutorial and talking about business. If you liked it, let me know and I will write more of these lessons learned from great books. And, if didn’t like it, tell me about it as well and I will go back to tutorials and more practice-based business lessons. Although, lessons in books are based on practice too. Well, at least sometimes. Anyway, thank you very much for your time and reading this article.
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