Built to Last: Complete Summary of Collins and Porras’s Framework for Enduring Greatness

This summary provides a comprehensive overview of “Built to Last: Successful Habits of Visionary Companies” by James C. Collins and Jerry I. Porras. The book challenges conventional wisdom about corporate success by meticulously researching eighteen “visionary companies” that have consistently outperformed their peers over many decades. Collins and Porras reveal that these enduringly great organizations are not primarily driven by charismatic leaders, breakthrough product ideas, or profit maximization, but rather by deeply ingrained core ideologies and relentless drives for progress.

The authors introduce a powerful conceptual framework centered on “clock building, not time telling” and embracing the “Genius of the AND” to explain how these companies achieve sustained excellence. They detail five key mechanisms—Big Hairy Audacious Goals (BHAGs), Cult-like Cultures, Try a Lot of Stuff and Keep What Works, Home-Grown Management, and Good Enough Never Is—that visionary companies leverage to preserve their core while continually stimulating progress. This summary will delve into each of these fundamental concepts, offering actionable insights for CEOs, managers, and entrepreneurs aiming to build organizations that are truly worthy of lasting.

The book is an invaluable resource for anyone seeking to understand the timeless principles of organizational longevity and superior performance. It provides a research-based, idea-driven approach that transcends fleeting management fads, offering foundational concepts applicable across diverse industries and organizational types, from startups to large corporations and non-profits. Readers will gain confidence and inspiration that the lessons are learnable and applicable, enabling them to contribute to building enduring, great institutions.

Introduction to the Paperback Edition: Sustained Impact and Global Relevance

The paperback edition introduction highlights the unexpected global success of “Built to Last,” with over 40 printings worldwide and translations into 13 languages. The authors express astonishment at the book’s widespread readership, particularly among busy professionals who invest their most precious resource—time—to read and digest the research-based work. This success is attributed to four primary factors, demonstrating the universal appeal and practical utility of the book’s core messages.

The Aspiration for Enduring Greatness

People are inspired by the notion of building an enduring, great company that is bigger and more lasting than themselves. This includes creating an institution rooted in timeless core values, existing for a purpose beyond just making money, and capable of continual self-renewal. This motivation is evident in CEOs, senior executives, entrepreneurs, and leaders of small to mid-sized companies, who see figures like David Packard and Walt Disney as models for building cash-strapped enterprises into enduring corporations. The book provides a confidence-building model for aspiring builders.

Craving Time-Tested Fundamentals

Thoughtful people are tired of the “fad of the year” boom-and-bust cycle of management thinking and crave time-tested fundamentals. While the world changes rapidly, the need for fundamental concepts that stand the test of time remains. The authors argue that current organizational problems stem less from a lack of new ideas and more from a lack of understanding basic fundamentals and a failure to consistently apply them. Executives would contribute more by returning to basics rather than chasing the next management fad.

Guidance for Companies in Transition

Executives in companies undergoing transition find the concepts in “Built to Last” helpful for bringing about productive change without destroying the bedrock foundation. The proper first response to a changing world is not to ask “How should we change?” but rather “What do we stand for and why do we exist?” This timeless core should never change. Visionary companies distinguish their timeless core values and enduring purpose (unchanging) from their operating practices and business strategies (constantly changing). This distinction proves profoundly useful amid dramatic transformations, enabling companies like Rockwell, Southern Company, UST, Cargill, Advanced Micro Devices, and Microsoft to adapt effectively.

Confirmation for Visionary Approaches

Many existing visionary companies have found the book to be a welcome confirmation of their approach to business. The companies studied represent only a small slice of the visionary landscape. The authors observe numerous less well-known visionary companies, public and private, old and up-and-coming, that operate by paying attention to fundamentals and shunning the limelight. These solid companies are creating jobs, generating wealth, and contributing to society, reinforcing the book’s optimistic outlook.

Global Applicability of Core Concepts

Despite the study primarily focusing on U.S.-based firms, the central concepts of “Built to Last” apply worldwide, across diverse cultures. The aspiration to build an enduring great company is not uniquely American; “clock-builders” are found in every culture. Enlightened business leaders globally understand the importance of timeless core values and a purpose beyond just making money. They also exhibit the same relentless drive for progress seen in American visionary companies. Examples like BHAGs in Brazil, cult-like cultures in Scandinavia, and continuous self-improvement in South Africa demonstrate this universality.

Application to Multinational and Global Organizations

The concepts effectively apply to multinational and global companies. A global visionary company separates operating practices and business strategies (which vary by country) from core values and purpose (which are universal and enduring). Such a company exports its core values and purpose while tailoring practices to local cultural norms and market conditions. For example, Wal-Mart exports its core value of customer-centricity but not necessarily the “Wal-Mart cheer.” The authors have helped cynical multinational executives discover and articulate a unifying, global core ideology that already existed but was obscured, leading to a common identity and shared fundamental ideals.

Enduring Standards in Global Business

Enduring great companies do not abandon their core values and high-performance standards when doing business in different cultures. A CEO of a 100-year-old visionary company explained their slower growth in regions like China and Russia due to difficulty finding people who fit their value system. They are willing to forgo business opportunities that would force them to abandon their principles, emphasizing the “long view” and the discipline not to compromise standards for expediency. This long-term adherence to principles is seen as a key factor in their survival and growth over a century.

Applicability Beyond For-Profit Corporations

The findings extend beyond for-profit corporations, applying to a wide range of human institutions. Organizations like the American Cancer Society, school districts, colleges, universities, churches, teams, governments, and even families and individuals have found the concepts valuable. Healthcare organizations use the core/practices distinction to maintain social mission amid changes. A university trustee applied the idea to intellectual freedom versus academic tenure.

Clock Building in Social-Cause Organizations

The “clock building” concept aids social-cause organizations like City Year, a community-service program. Founders of such entities, like Alan Khazei, shift from being social visionaries to building an organization with an enduring social purpose independent of any individual leader. Just as companies move beyond specific product ideas, social-cause organizations seek deeper, more enduring purposes that transcend initial problems, ensuring longevity.

Fundamental Similarities Across Institutions

Conceptually, there is little difference between for-profit visionary companies and non-profit visionary organizations. Both need to transcend dependence on any single leader or great idea, depend on timeless core values and enduring purpose, and must change in response to a changing world while preserving their core. Both benefit from cult-like cultures, succession planning, and mechanisms of forward progress (BHAGs, experimentation, continuous self-improvement). The essence of building an enduring, great institution does not vary despite differences in structure, strategies, and economics.

Societal and Governmental Application

The concepts can apply at the societal/governmental level. Nations like Japan and Israel have consciously cultivated cohesive societies around a strong sense of purpose and core values, alignment mechanisms, and national BHAGs. Israel’s “sense of purpose” to provide a secure place for the Jewish people is deeply ingrained, reinforced by powerful alignment mechanisms like universal military service, demonstrating a motive beyond affluence or quiet life.

Personal and Family Application

A significant number of people have found the key concepts useful in their personal and family lives. The yin and yang of “preserve the core/stimulate progress” applies to self-identity and self-renewal. In a chaotic world, the only truly reliable source of stability is a strong inner core and willingness to change everything except that core. Visionary company builders understood it is better to understand “who you are” than “where you are going,” as the latter will almost certainly change. This lesson is relevant for individual lives as well as aspiring visionary companies.

Ongoing Learning and Future Work

The authors continue their quest to gain new insights, develop new concepts, and create application tools. Jim Collins established a learning laboratory in Boulder, Colorado, for ongoing research, while Jerry Porras teaches and researches at Stanford. They welcome reader feedback on their experiences and observations. They have learned that time-tellers can become clock-builders, underestimated the importance of alignment, and that purpose has a profound effect beyond core values. They acknowledge that 21st-century great companies will have radically different structures and strategies, but the fundamental concepts of “Built to Last” will become even more important as a framework for designing the organization of the future.

Preface: Uncovering Timeless Management Principles

The preface makes a bold claim: every CEO, manager, and entrepreneur should read this book. This assertion stems not from authorship, but from the profound lessons offered by the companies studied. The authors undertook a unique research approach, studying truly exceptional companies (with an average founding date of 1897) from their very beginnings, through all phases of development, and in comparison to a control set of “good” companies that didn’t achieve the same stature. They examined how these companies navigated world wars, depressions, revolutionary technologies, and cultural upheavals, constantly asking: “What makes the truly exceptional companies different from the other companies?”

Beyond Management Buzzwords and Fads

The core objective was to discover timeless management principles that consistently distinguished outstanding companies, moving beyond the incessant barrage of management buzzwords and fads. The research revealed that many of today’s “new” or “innovative” management methods are merely repackaged and updated versions of practices dating back to the 1800s.

Surprising Discoveries and Shattered Myths

The research yielded many surprising, even shocking, findings that shattered widely held myths. Traditional frameworks buckled, and the authors themselves had to unlearn preconceptions and prior knowledge. This six-year process involved tossing out old frameworks and building new ones from the ground up, proving “worth every minute.”

Empowering Protagonists for Extraordinary Institutions

A giant realization emerged: “Just about anyone can be a key protagonist in building an extraordinary business institution.” The lessons from these companies are learnable and applicable by the vast majority of managers at all levels. This insight eliminates the “debilitating perspective” that a company’s trajectory depends on leaders with rare, mysterious, unlearnable qualities. The authors hope readers gain confidence and inspiration to build visionary companies themselves.

Chapter 1: The Best of the Best – Defining Visionary Companies

Chapter 1 introduces the core subject of the book: visionary companies. It defines these entities as “premier institutions—the crown jewels—in their industries,” widely admired by peers and possessing a long track record of significant impact on the world. The key insight is that a visionary company is an organization, an institution, recognizing that individual leaders and products are ephemeral, while the institution itself endures through multiple cycles and generations. The chapter invites readers to ponder what distinguishes these companies before diving into the six-year research project that sought to uncover the underlying factors accounting for their extraordinary long-term position.

Defining Visionary Companies

Visionary companies are characterized by:

• Premier institution in its industry: They stand out as top performers.
• Widely admired by knowledgeable businesspeople: Their peers and experts hold them in high regard.
• Made an indelible imprint on the world in which we live: They have fundamentally shaped society or their industry.
• Had multiple generations of chief executives: Their success transcends individual leaders.
• Been through multiple product (or service) life cycles: They adapt and thrive beyond specific offerings.
• Founded before 1950: This criterion ensures longevity and resilience, proving their enduring nature.

Distinction from Comparison Companies

The study compares visionary companies to “comparison companies,” which are not failures but rather “good companies” that survived equally long and outperformed the general stock market, but did not attain the same overall stature. Visionary companies are the gold medalists, while comparison companies are the silver or bronze.

Resilience and Extraordinary Long-Term Performance

Visionary companies, despite facing setbacks, mistakes, and difficult periods (like Disney’s cash flow crisis, Boeing’s layoffs, or 3M’s near-bankruptcy), display “remarkable resiliency, an ability to bounce back from adversity.” This resilience translates into extraordinary long-term financial performance. A hypothetical $1 investment in a visionary company stock fund on January 1, 1926, would have grown to $6,356 by December 31, 1990, compared to $955 for comparison companies and $415 for the general market. This is over six times the comparison fund and over fifteen times the general market.

Indelible Imprint on Society

Beyond financial returns, visionary companies have “woven themselves into the very fabric of society.” Examples include Scotch tape (3M), the Model T (Ford), the Boeing 747, Tide detergent (P&G), American Express cards, ATM machines (Citicorp), Band-Aids (J&J), laser printers (HP), IBM computers, Motorola cell phones, Nordstrom’s customer service, and Disney’s characters and parks. These companies have profoundly shaped daily life.

Research Objectives

The research project had two primary objectives:

• Identify underlying characteristics and dynamics: Uncover what makes highly visionary companies unique and translate these findings into a useful conceptual framework.
• Effectively communicate findings: Ensure the insights influence management practice and benefit those building and maintaining visionary companies.

Twelve Shattered Myths

The research systematically disproved common myths about great companies:

• Myth 1: It takes a great idea to start a great company.
• Reality: Few visionary companies began with a great idea; some started with outright failures. They were significantly less likely to have early entrepreneurial success than comparison companies, often getting off to a slow start but winning the long race.
• Myth 2: Visionary companies require great and charismatic visionary leaders.
• Reality: A charismatic leader is absolutely not required and can even be detrimental. Significant CEOs often explicitly shied away from this model, focusing on architecting an enduring institution (clock builders) rather than being individual great leaders.
• Myth 3: The most successful companies exist first and foremost to maximize profits.
• Reality: “Maximizing shareholder wealth” or “profit maximization” has not been the dominant driving force. Visionary companies pursue a cluster of objectives, with money being only one. Paradoxically, they make more money than purely profit-driven comparison companies.
• Myth 4: Visionary companies share a common subset of “correct” core values.
• Reality: There is no “right” set of core values. Two visionary companies can have radically different ideologies. The crucial variable is how deeply a company believes its ideology and how consistently it lives it. They ask, “What do we actually value deep down?”
• Myth 5: The only constant is change.
• Reality: A visionary company religiously preserves its core ideology, changing it seldom if ever. Core values form a rock-solid foundation, remaining intact for over a hundred years. While the core is fixed, they display a powerful drive for progress that enables constant change and adaptation.
• Myth 6: Blue-chip companies play it safe.
• Reality: Visionary companies make bold commitments to “Big Hairy Audacious Goals” (BHAGs). Like climbing a big mountain, BHAGs are daunting, perhaps risky, but they grab people, get juices flowing, and create immense forward momentum, allowing them to blast past comparison companies.
• Myth 7: Visionary companies are great places to work, for everyone.
• Reality: Only those who “fit” extremely well with the core ideology and demanding standards find it a great place to work. Those who don’t fit are “expunged like a virus.” It’s binary, with no middle ground, and often described as “cult-like.”
• Myth 8: Highly successful companies make their best moves by brilliant and complex strategic planning.
• Reality: Visionary companies make some of their best moves by experimentation, trial and error, opportunism, and accident. What looks like brilliant foresight was often “Let’s just try a lot of stuff and keep what works,” mimicking biological evolution.
• Myth 9: Companies should hire outside CEOs to stimulate fundamental change.
• Reality: In 1700 years of combined life spans, there were only four individual incidents of going outside for a CEO, in only two companies. Home-grown management rules at visionary companies, debunking the conventional wisdom that change cannot come from insiders.
• Myth 10: The most successful companies focus primarily on beating the competition.
• Reality: Visionary companies focus primarily on beating themselves. Success and beating competitors are residual results of relentlessly asking “How can we improve ourselves to do better tomorrow than we did today?” They never think “good enough” is sufficient.
• Myth 11: You can’t have your cake and eat it too.
• Reality: Visionary companies reject the “Tyranny of the OR” (either A OR B) and embrace the “Genius of the AND” (both A AND B simultaneously). They pursue stability AND progress, cult-like cultures AND individual autonomy, high idealism AND high profitability.
• Myth 12: Companies become visionary primarily through “vision statements.”
• Reality: Visionary status is not primarily from pronouncements or written statements, though they often create them decades before it was fashionable. A statement is a helpful but small step in a never-ending process of expressing fundamental characteristics.

Research Process: From Survey to Data Analysis

The research process involved several meticulous steps:

• Step 1: Company Selection: To minimize bias, 700 CEOs of leading corporations were surveyed in 1989 to nominate “highly visionary” companies. Companies founded before 1950 were selected, resulting in a final list of 18 visionary companies.
• Step 2: Comparison Group: A control group of “comparison companies” was systematically chosen for each visionary company. They shared the same founding era, similar initial products/markets, and had fewer CEO mentions. The goal was to compare “gold medalists” to “silver or bronze medalists” to identify true distinguishing factors, avoiding the “discover buildings” trap of identifying common but non-distinguishing traits.
• Step 3: Historical and Evolutionary Analysis: The study examined companies throughout their entire histories (average of 90+ years) to understand their evolution from startups to global institutions. This historical perspective aimed to uncover timeless, fundamental principles and patterns that apply across eras, similar to understanding a nation’s history.
• Step 4: Data Collection and “Tortoise Hunting”: A daunting task involving collecting and sorting information across nine categories (organizing arrangements, social factors, physical setting, technology, leadership, products/services, vision, financial analysis, markets/environment) over each company’s history. This involved reviewing nearly 100 books and over 3,000 documents (60,000+ pages of material), including financial statements back to 1915, aiming for “unexpected observations” like Darwin’s tortoises.
• Step 5: Harvesting Findings: The overwhelming qualitative information was distilled into key concepts and a framework. Comparison analyses were central, systematically contrasting visionary and comparison companies. Inspiration also came from non-business disciplines like biology, psychology, and history.
• Step 6: Field Testing and Application: Findings and concepts were continuously tested via consulting engagements and board responsibilities in over 30 diverse organizations. This “trial by fire” provided a valuable feedback loop, refining concepts based on real-world application.

Transparency and Confidence in Findings

The authors acknowledge inherent limitations in social science research, such as the inability to perform controlled experiments. However, the sheer volume of information, combined with the continuous research-to-practice feedback loop, provides confidence that their conclusions are reasonable and helpful. They do not claim to have found “Truth with a capital T,” but rather a better understanding of organizations and conceptual tools for building outstanding companies. The invitation is to “let the evidence speak for itself,” positioning the reader as judge and jury.

Chapter 2: Clock Building, Not Time Telling – Building Enduring Organizations

Chapter 2 introduces the foundational concept of “clock building, not time telling.” This distinction means that the builders of visionary companies primarily concentrate on creating an enduring organization—a “ticking clock”— rather than excelling at specific product ideas or charismatic leadership. Their greatest creation is the company itself and what it stands for, designed to prosper far beyond any single leader or product life cycle. This finding challenges two deeply cherished myths: the “great idea” myth and the “great and charismatic leader” myth.

The Myth of the “Great Idea”

The popular mythology suggests that highly successful companies begin with a brilliant product idea or market insight. However, the research found this to be largely untrue for visionary companies.

• Hewlett-Packard (HP): Founded in 1937 by Bill Hewlett and Dave Packard, they had no clear initial product idea. They “just started moving forward, trying anything that might get them out of the garage and pay the light bills.” Early attempts included a bowling foul-line indicator, automatic urinal flushers, and fat-reduction shock machines, none of which became market revolutions. Their first big sale was eight audio oscilloscopes to Walt Disney, but HP remained unfocused for a year until war contracts boosted them.
• Texas Instruments (TI): In contrast, TI began in 1930 as Geophysical Service, Inc., formed to exploit a specific technological and market opportunity (reflection seismograph surveys). TI started with a “great idea”; HP did not.
• Sony: Masaru Ibuka founded Sony in 1945 with no specific product idea. He and his initial seven employees brainstormed product ideas after starting the company, considering items from bean-paste soup to slide rules. Sony’s first product (a rice cooker) failed, and its first significant product (a tape recorder) also failed in the marketplace. The company survived by making crude heating pads.
• Kenwood: Sony’s comparison, Kenwood, was founded with a specific category of products in mind, specializing in audio technology from its inception.
• Wal-Mart: Sam Walton started in 1945 with a single Ben Franklin five-and-dime store, driven by a desire to work for himself and a passion for retailing, not a “great idea”. The “great idea” of rural discount retailing emerged as a natural evolutionary step almost two decades after he started. His first Wal-Mart store was an “outgrowth of everything we’d been doing.”
• Ames Stores: Wal-Mart’s comparison, Ames, had a four-year head start in rural discount retailing, founded specifically in 1958 to pursue the “great idea” of discount stores in small towns and achieving $1 million in sales in its first year.

Visionary Companies: Slow Start, Long Race Win

Few visionary companies traced their roots to a great idea or fabulous initial product. J. Willard Marriott started with an A&W root beer stand. Nordstrom began as a small shoe store. Merck started as a chemical importer. Procter & Gamble began as a simple soap and candle maker. Motorola started as a struggling battery eliminator repair business. Philip Morris began as a small tobacco retail shop.

• Some, like 3M, started with outright failures (a failed corundum mine, almost going out of business, stock exchanged for whiskey). Its second president didn’t draw a salary for 11 years. Norton, 3M’s comparison, had innovative products and steady profits from the start.
• Bill Boeing’s first airplane failed, and his company entered the furniture business to survive. Douglas Aircraft, his comparison, had superb initial success.
• Walt Disney’s first cartoon series failed. Columbia Pictures, his comparison, achieved substantial success with its first film.

Only three visionary companies (J&J, GE, Ford) began with a highly successful initial product, and even then, there were caveats (Edison’s DC system was inferior to Westinghouse’s AC; Henry Ford founded his company first, then introduced the Model T after five earlier models). In fact, visionary companies were less likely to have early entrepreneurial success than comparison companies (10 cases where the comparison company had greater initial success versus 3 where the visionary company did). The long race goes to the tortoise, not the hare. The “great idea” approach can distract from seeing the company itself as the ultimate creation.

The Company as the Ultimate Creation

The research forced a shift in perspective: from seeing the company as a vehicle for products to seeing the products as a vehicle for the company. This is the essence of clock building versus time telling.

• George Westinghouse was a brilliant product visionary (time teller), inventing the AC power system. Charles Coffin (GE’s first president) invented no products but founded the General Electric Research Lab (clock builder). Coffin’s greatest creation was GE itself.
• Luck favors the persistent. Visionary company builders were highly persistent, adhering to “Never, never, never give up.” Their persistence was with the company itself. They were prepared to kill, revise, or evolve an idea, but never give up on the company. If success is tied to a specific idea, its failure can lead to giving up on the company, or its success can lead to sticking with it too long.
• Hewlett-Packard’s ultimate creation wasn’t the oscilloscope or calculator, but the Hewlett-Packard Company and the HP Way. Bill Hewlett emphasized building an environment conducive to great products, stating “engineering is one of our most important products.” Dave Packard focused on organizational decisions.
• Similarly, Masaru Ibuka’s greatest “product” was Sony the company and what it stands for. Walt Disney’s greatest creation was the Walt Disney Company. Sam Walton’s greatest creation was the Wal-Mart Corporation. Paul Galvin’s genius was crafting the Motorola Company. Procter and Gamble’s primary contribution was an adaptable organization with a “spiritual inheritance” of core values.
• The continual stream of great products and services from visionary companies stems from them being outstanding organizations, not the other way around. Products become obsolete; visionary companies can continually change and evolve beyond existing product life cycles due to their organizational ability.

The Myth of the Great and Charismatic Leader

The research found no evidence that “great leadership” is the distinguishing variable during the critical, formative stages of visionary companies. Comparison companies also had strong leaders during these stages.

• A high-profile, charismatic style is absolutely not required. Some of the most significant CEOs in visionary company history did not fit this mold.
• William McKnight (3M, 52 years of leadership) is little known, described as “soft-spoken, gentle,” “humble,” and “quiet.” 3M is famous; McKnight is not, likely by his design.
• Masaru Ibuka (Sony) was reserved. Bill Hewlett was “friendly, no-nonsense.” Procter and Gamble founders were “stiff, prim, proper.” Bill Allen (Boeing) was a pragmatic lawyer, “shy and infrequent smile.” George W. Merck embodied “Merck restraint.”
• For individuals not naturally charismatic, trying to develop such a style might be wasted energy, as personality traits are set relatively early. More importantly, it’s not needed for building a visionary company.
• The core point is that both sets of companies had strong leaders, so leadership per se cannot explain the superior trajectories. The difference is one of orientation: visionary company builders had a stronger organizational (clock-building) orientation.

An Architectural Approach: Clock Builders at Work

The key difference observed was the “architectural” or “clock-building” approach of visionary company shapers.

• Citicorp vs. Chase: James Stillman (Citicorp president 1891-1909) focused on organizational development to build a great national bank. He transformed it into a modern corporation, instituting decentralized structures, strong boards, and management training programs. He deliberately stepped aside to allow the company to grow beyond him. Albert Wiggin (Chase president 1911-1929) did not delegate, ran Chase with centralized control, and was focused on his own aggrandizement.
• Wal-Mart vs. Ames: Sam Walton, despite his flamboyant personality, was much more of a clock builder. He was obsessed with being the “most professional managers” and making things work better. He institutionalized change and improvement through programs like “A Store Within a Store” (department manager autonomy), cash awards for cost-saving ideas, VPI contests, merchandise and Saturday morning meetings, profit sharing, and satellite communication for idea dissemination. Ames leaders dictated all changes top-down, leaving no room for initiative, and had no capable successor. Walton set audacious goals for Wal-Mart beyond his lifetime, demonstrating confidence in the company’s endurance.
• Motorola vs. Zenith: Paul Galvin (Motorola founder) dreamed of building a great and lasting company. He, without an engineering background, hired excellent engineers, encouraged dissent, gave individuals latitude, and focused on crafting an innovative engineering organization. He was “obsessed with management succession.” Commander Eugene F. McDonald, Jr. (Zenith founder) was a charismatic leader who moved the company by sheer force of personality. He had no succession plan, leaving a void after his unexpected death, and Zenith languished, never regaining its spark. Motorola sailed successfully into new arenas, thriving decades after Galvin’s death because Galvin built a clock.
• Walt Disney vs. Columbia Pictures: Walt Disney brought immense personal imagination, but in comparison to Harry Cohn (Columbia Pictures counterpart), Walt was more of a clock builder. Cohn focused on being a movie mogul and wielding personal power, caring little about Columbia’s enduring identity. After Cohn’s death, Columbia fell into disarray. Walt Disney, however, constantly invested in his company’s capabilities: paying creative staff well, establishing art classes for animators, inventing team processes, investing in technology, and instituting “You Create Happiness” training and Disney University. Even on his deathbed, he was thinking about Disney World. Walt built an institution bigger than himself, which, though it struggled after his death, could still deliver the “Disney Magic” and fought hostile takeovers because it was Disney. Columbia ceased to exist independently.

The Profoundly Liberating Message

The critical shift in perspective is seeing the company itself as the ultimate creation. This means managers should spend less time on specific product lines and market strategies, and more time on organization design. Less time being a time teller, more time being a clock builder. This is analogous to the Newtonian revolution (God setting principles, not making every specific decision), the Darwinian revolution (species evolving, not directly created in preplanned forms), and the founding of the United States (architecting a country based on principles, not just seeking a good king). The success of visionary companies comes from underlying processes and fundamental dynamics embedded in the organization, not primarily from a single great idea or an all-knowing visionary. Most of what’s required to build a visionary company can be learned and applied by anyone, without waiting for luck or a charismatic leader.

Interlude: No “Tyranny of the OR” – Embracing the “Genius of the AND”

The “Interlude” introduces a fundamental concept found in visionary companies: their ability to transcend the “Tyranny of the OR” and embrace the “Genius of the AND.” This Chinese yin/yang symbol represents the powerful dualistic philosophy that allows these companies to hold and pursue seemingly contradictory forces or ideas simultaneously, rather than being forced to choose between them.

Rejecting the “Tyranny of the OR”

The “Tyranny of the OR” is a purely rational view that struggles with paradox, forcing a choice between two seemingly opposite concepts. It manifests in common business proclamations like:

• “You can have change OR stability.”
• “You can be conservative OR bold.”
• “You can have low cost OR high quality.”
• “You can have creative autonomy OR consistency and control.”
• “You can invest for the future OR do well in the short-term.”
• “You can make progress by methodical planning OR by opportunistic groping.”
• “You can create wealth for your shareholders OR do good for the world.”
• “You can be idealistic (values-driven) OR pragmatic (profit-driven).”

Embracing the “Genius of the AND”

Visionary companies liberate themselves by embracing the “Genius of the AND,” finding ways to have both A AND B at the same time. This isn’t about mere balance (a 50-50 midpoint); it’s about pursuing both extremes vigorously. For instance, they aim to do very well in the short-term AND very well in the long-term. They are highly idealistic AND highly profitable. They combine preserving a tightly held core ideology AND stimulating vigorous change and movement.

Examples of Paradoxes in Visionary Companies

The book’s subsequent chapters reveal numerous such paradoxes:

• Purpose beyond profit AND vigorous pursuit of profit.
• A relatively fixed core ideology AND vigorous change and movement.
• Bold, committing, risky moves AND conservatism around the core.
• Clear vision and sense of direction AND opportunistic groping and experimentation.
• Big Hairy Audacious Goals AND incremental evolutionary progress.
• Selection of managers steeped in the core AND selection of managers that induce change.
• Ideological control AND operational autonomy.
• Investment for the long-term AND demands for short-term performance.
• Philosophical, visionary, futuristic AND superb daily execution, “nuts and bolts.”
• Organization aligned with a core ideology AND organization adapted to its environment.

This ability to hold two opposed ideas in the mind simultaneously and still function is what distinguishes visionary companies. It is irrational, rare, and difficult, but it is precisely what they do to achieve enduring greatness.

Chapter 3: More Than Profits – The Power of Core Ideology

Chapter 3 explores a crucial finding: visionary companies are driven by “more than profits.” Contrary to traditional business doctrine, maximizing shareholder wealth or profit maximization is not their dominant driving force or primary objective. Instead, they pursue a “cluster of objectives,” with money being only one, and not necessarily the primary one. They are equally guided by a core ideology—core values and a sense of purpose beyond just making money. Paradoxically, these visionary companies make more money than their purely profit-driven comparison companies.

Pragmatic Idealism: The “Genius of the AND” in Action

Visionary companies exemplify the “Genius of the AND” by embracing both high ideals and pragmatic self-interest.

• Merck & Company is a prime example. Their 100th-birthday book was titled Values and Visions, not Financial Success. George Merck I articulated ideals in 1935: “Medicine is for the patient; not for the profits. The profits follow.” This ideal guided the decision to develop and give away Mectizan, a drug for “river blindness,” even though the customers couldn’t afford it. CEO P. Roy Vagelos stated, “Our business success means victory against disease and help to humankind,” and that such acts of goodwill “somehow… always pay off.” This demonstrates pragmatic idealism.
• Pfizer, Merck’s comparison, displayed a more lopsided perspective, with President John McKeen aiming “to get profit out of everything we do,” even diversifying aggressively into unrelated areas purely for financial gain.

Ideals Enduring Through Struggle

High ideals and core ideology exist in visionary companies not just when they are successful, but even when struggling to survive.

• Sony’s Founding: In war-devastated 1945 Japan, Masaru Ibuka started Sony with $1,600 and seven employees in a bombed-out department store. Amidst survival struggles, he codified an ideology for his newly founded company in a “prospectus” (May 1946). This document emphasized creating a workplace for technological innovation, mission to society, reconstruction of Japan, elevation of culture, applying advanced technology to public life, eliminating unfair profit-seeking, embracing technical difficulties, and valuing ability and character. This ideology guided Sony’s evolution, inspiring pioneering products despite no proven market demand. Kenwood, Sony’s comparison, had no similar articulated ideology.
• Ford’s Turnaround: In the early 1980s, facing $3.3 billion in losses, Ford’s management team clarified its guiding principles, developing its “Mission, Values, Guiding Principles (MVGP).” They decided “people should absolutely come first” (products second, profits third). This reawakened Henry Ford’s early ideals of affordable cars for the multitude and good wages, even against shareholder lawsuits and industry outrage (e.g., the $5 day). Ford demonstrates pragmatism AND idealism.
• General Motors (GM), Ford’s comparison, under Alfred P. Sloan, built a “cold, impersonal, inhuman, pure business, and totally pragmatic clock,” focused exclusively on policies, business decisions, and structure, lacking community or social purpose. Drucker called it a “failure as an institution” despite financial success.

Core Ideology: Exploding the Profit Myth

A fundamental element in the “ticking clock” of a visionary company is a core ideology—core values and sense of purpose beyond just making money— that guides and inspires and remains relatively fixed.

• A detailed pair-by-pair analysis found that visionary companies were more ideologically driven and less purely profit-driven than comparison companies in 17 out of 18 pairs.
• Profit is seen as a necessary condition for existence and a means to more important ends, not the end in itself. Profit is like oxygen for the body; it’s vital for life but not the point of life.

Examples of Ideology AND Profits

Visionary companies embrace ideology AND profits:

• Hewlett-Packard (HP) vs. Texas Instruments (TI): David Packard explicitly stated HP exists to “make a contribution to society” by providing unique, valuable products for science and humanity, with profit enabling these aims. He made it clear that profit is not the “proper end.” TI, in contrast, defined itself almost exclusively by financial goals (e.g., $10 billion sales) and growth, with little emphasis on “why,” even pursuing low-quality, low-contribution products.
• Johnson & Johnson (J&J) vs. Bristol-Myers: J&J was founded with the ideal “to alleviate pain and disease.” Its “Credo” (1943) explicitly places customers first, employees second, society third, and shareholders last, with profits being a “fair return” that follows. CEO Jim Burke famously used the Credo to guide J&J’s costly Tylenol recall, demonstrating adherence to principles over short-term financial impact. Bristol-Myers had no comparable ideology until much later and made decisions based on minimizing earnings impact.
• Boeing vs. McDonnell Douglas: Boeing’s key strategic decisions were driven as much by an idealized self-identity (“pioneering aviation,” “building big, fast, advanced aircraft,” “having the Right Stuff”) as by pragmatism. Bill Allen emphasized contribution over profit. The 747 decision, though financially risky, was made because “We’re Boeing!” McDonnell Douglas, in contrast, was slower to commit and displayed less non-financial motivation.
• Motorola vs. Zenith: Paul Galvin (Motorola) viewed profitability as a necessary means, never letting it become the primary objective. He institutionalized a paradoxical perspective of pragmatic idealism, promoting honesty and continuous self-renewal. Motorola’s official purpose statement emphasized serving the community with superior quality at a fair price, with adequate profit to grow and provide opportunity. Zenith’s founder, Commander McDonald, did not pass on an enduring ideology, and after his death, the company defaulted to a “profits-only” perspective.
• Marriott vs. Howard Johnson: J. Willard Marriott, Sr., had three equally important ideas: friendly service, quality food at a fair price, and working hard for a profit to support employees and good causes. He institutionalized this perspective, treating employees as number one and customers as guests. Howard Johnson, Sr.’s ideology was not instilled in his successor, leading to a one-sided financial focus, squeezed customers, and eventually the company being “milked” for short-term profits.
• Philip Morris vs. R.J. Reynolds: Philip Morris exhibited an “esprit de corps” linked to a strong core ideology, framing its work in terms of personal freedom of choice, individual initiative, and pride in excellent business execution. They aggressively defended smoking rights. R.J. Reynolds executives, especially after 1960, seemed less ideologically attached to tobacco products, viewing them merely as a means to make money. Philip Morris’s ideology, though different from Merck’s, demonstrates a deep-seated belief system that sets it apart from its comparison.

Is There a “Right” Ideology?

The research found no “right” set of core values or specific ideological content essential to being a visionary company.

• While themes like contribution, integrity, respect for the individual, customer service, and innovation appear, no single item is consistent across all 18 visionary companies.
• The crucial issue is not the content of a company’s ideology, but its authenticity and the extent to which it achieves consistent alignment. Visionary companies ask, “What do we actually value deep down to our toes?”
• A company’s core ideology should be meaningful and inspirational to people inside the organization, not necessarily exciting to outsiders.

Words or Deeds? Making Ideology Pervasive

Core ideologies in visionary companies are more than just “nice-sounding platitudes.”

• Public espousal of a point of view makes people more likely to behave consistently with it.
• Visionary companies take steps to make the ideology pervasive and transcend individual leaders:
  • Thorough indoctrination into a cult-like culture.
  • Careful nurturing and selection of senior management based on fit with core ideology.
  • Consistent alignment in goals, strategy, tactics, and organization design.
• While not always perfect (e.g., GE’s ethical transgressions, P&G’s phone record seizure, J&J’s Credo rededication effort), visionary companies place great emphasis on having a core ideology and preserving it as a vital shaping force, more so than comparison companies.

Guidelines for CEOs, Managers, and Entrepreneurs: Defining Core Ideology

A key step in building a visionary company is to articulate a core ideology, defined in two parts:

• Core Values: The organization’s essential and enduring tenets; a small set of timeless guiding principles (usually three to six) that are not compromised for financial gain or short-term expediency. They have intrinsic value and require no external justification. They are discovered, not created or set. They must be authentic and passionately held at a gut level. A company should ask: “If circumstances penalized us for holding this value, would we still keep it?” If not, it’s not core.
• Core Purpose: The organization’s fundamental reason for existence beyond just making money; a perpetual guiding star on the horizon that is pursued but never fully achieved (like Disneyland always being “never completed”). It reflects the importance people attach to the company’s work and taps their idealistic motivations, capturing the soul of the organization. It should be broad, fundamental, and enduring, lasting a century or more. Effective purposes are not merely descriptive of products but get at deeper, more fundamental reasons for being (e.g., Fannie Mae: “to strengthen the social fabric by continually democratizing home ownership”). The “Five Whys” technique can help uncover deeper purpose. “Maximize shareholder wealth” is a weak, uninspiring substitute. The “Random Corporate Serial Killer” game helps surface deeper purpose.

Core Ideology: Key Considerations

• Discovery, not Creation: Core ideology is found by looking inside, not to the external environment. It must be authentic and cannot be faked.
• Meaningful Internally: It needs only be meaningful and inspirational to people inside the organization, serving to guide and inspire their long-term commitment.
• Attraction and Repulsion: A clear ideology attracts compatible individuals and repels those whose values contradict it. You cannot “install” new core values; you find people who already predisposed to them.
• Beyond Statements: A strong core ideology doesn’t require a formal statement, but it must be lived (e.g., Nike’s powerful but unstated purpose of “experiencing the emotion of competition, winning, and crushing competitors”). Focus on capturing the essence, not perfect wordsmithing.
• Distinct from Core Competence: Core competence is about what you are good at (capabilities), while core ideology is what you stand for and why you exist. Competencies change; ideology does not.

Implications for Change

Once the core ideology is clear, organizations should feel free to change absolutely anything that is not part of the core ideology. Anything non-core is “up for change,” even “change it!” This provides a framework for adaptation without compromising identity.

Chapter 4: Preserve the Core/Stimulate Progress – The Essential Dynamic

Chapter 4 introduces the central concept of the book: the underlying dynamic of “Preserve the core and stimulate progress.” Visionary companies must carefully preserve their core ideology while simultaneously embracing a relentless drive for progress in everything that is not part of that core. This means not confusing core ideology with specific, noncore practices (like IBM’s blue suits or HP’s doughnuts), which must be open for change and evolution. The core ideology provides the continuity and stability, enabling the necessary change and forward movement.

The Relentless Drive for Progress

The drive for progress is an internal, compulsive, almost primal urge to explore, create, discover, achieve, change, and improve. It is not a sterile intellectual recognition but a deep-seated inner force.

• It is exemplified by Sam Walton constantly seeking to stay “out in front of that change,” and Thomas J. Watson, Jr., emphasizing changing “everything about itself except [its basic] beliefs.”
• It’s the drive that led Citicorp to aim for pervasive global financial institution status, Walt Disney to gamble on Disneyland, Henry Ford to “democratize the automobile,” Motorola to live by “Be in motion for motion’s sake!” and pursue “six sigma” quality, and 3M to continually experiment and solve problems (leading to Post-it notes).
• It spurred Procter & Gamble to adopt progressive employee programs early and Sony to commercialize transistor-based products.
• It is never satisfied with the status quo, even when successful. It means “We can always do better; we can always go further; we can always find new possibilities.” As Henry Ford said, “You have got to keep doing and going.”
• The drive doesn’t wait for external demands; it pushes outward and onward from within.
• Visionary companies combine self-confidence with self-criticism. Self-confidence enables audacious goals and bold moves, believing they can beat the odds. Self-criticism pushes for self-induced change and improvement before the outside world demands it, making the company its own harshest critic. Bruce Nordstrom’s view: “We’re not as good as our reputation. It is a very fragile thing. You just have to do it every time, every day.”

The Dynamic Interplay: Core and Progress

The interplay between core ideology and the drive for progress is one of the most important findings. In the spirit of the “Genius of the AND,” visionary companies do not seek mere balance, but strive to be both highly ideological AND highly progressive at the same time, all the time.

• Core ideology enables progress by providing a base of continuity around which the company can evolve, experiment, and change. Clarity on what is fixed allows for variation in what is not.
• The drive for progress enables the core ideology, as without continual change and forward movement, the company (the carrier of the core) would fall behind and cease to exist.
• While roots often trace to individuals, visionary companies institutionalize core and progress, weaving them into the fabric of the organization. They have concrete, tangible mechanisms to preserve core and stimulate progress.
• Intentions are not enough; translation into concrete mechanisms “with teeth” is vital. Examples: Disney University, HP’s promote-from-within policy, Marriott’s screening, Nordstrom’s rewards/penalties, Motorola’s six-sigma goal, GE’s R&D labs, Boeing’s audacious project commitments, P&G’s internal competition, 3M’s 15% rule and venture fund.
• The gears and mechanisms of the “ticking clock” work in concert, in alignment, not grinding against each other.

Key Concepts for CEOs, Managers, and Entrepreneurs

The core ideas are summarized in a two-layer conceptual framework:

• Top Layer (Guiding Intangibles):
  • Clock-building orientation: Focus on building the organization.
  • “Genius of the AND”: Embrace paradox.
  • Core Ideology: Core values + purpose (what we stand for, why we exist – fixed).
  • Drive for Progress: Relentless self-improvement and forward movement (what we aspire to become – changing).
• Second Layer (Tangible Mechanisms): This is where most companies fail. The single most important point is creating tangible mechanisms aligned to preserve the core and stimulate progress. This is the essence of clock building.

The five categories of specific methods for preserving the core and stimulating progress are:

• Big Hairy Audacious Goals (BHAGs): Commitment to challenging, audacious goals that channel efforts (stimulates progress).
• Cult-like Cultures: Great places to work only for those who buy into the core ideology; others are ejected (preserves the core).
• Try a Lot of Stuff and Keep What Works: High levels of unplanned experimentation producing new paths of progress (stimulates progress).
• Home-Grown Management: Promotion from within, ensuring senior levels are steeped in the core ideology (preserves the core).
• Good Enough Never Is: Continuous, relentless self-improvement (stimulates progress).

The framework serves as a guide for diagnosing and designing an organization, ensuring all elements are in alignment.

Chapter 5: Big Hairy Audacious Goals – The Power of Audacious Ambition

Chapter 5 highlights Big Hairy Audacious Goals (BHAGs) as a powerful mechanism to stimulate progress in visionary companies. Unlike mere goals, BHAGs are huge, daunting challenges, like climbing a big mountain, that are clear, compelling, unifying, and create immense team spirit. They have a clear finish line and grab people “in the gut,” inspiring extraordinary effort and commitment.

The Audacity of Boeing

Boeing is presented as an excellent example of using BHAGs.

• In 1952, despite virtually no commercial market presence, earlier commercial failures, dependence on military contracts (80% from Air Force), airline anti-Boeing bias, and an estimated cost of three times average annual profit (a quarter of net worth), Boeing committed to building the 707 commercial jet. This defied odds and brought the world into the jet age.
• McDonnell Douglas, Boeing’s comparison, chose a cautious “wait-and-see” approach, sticking with piston planes, and consequently fell behind.
• Boeing’s pattern of bold commitment continued: the B-17 Flying Fortress, the 727 (built to land on a specific, too-short LaGuardia runway), and the 747 jumbo jet. The 747 decision was a $2.5 billion gamble that nearly killed the company, with Chairman William Allen committed to “build this airplane even if it takes the resources of the entire company!” This willingness to make bold moves despite risks is characteristic.
• Visionary companies showed more evidence of this powerful mechanism in 14 out of 18 cases compared to their counterparts.

Characteristics of a True BHAG

• Clear and Compelling: A true BHAG is easily understood and highly motivating, like “landing a man on the moon and returning him safely to earth.” It doesn’t need verbose “mission statements.”
• Stimulates Progress: The essential point of a BHAG is whether it “stimulates forward progress? Does it create momentum? Does it get people going? Does it get people’s juices flowing?”
• Consistent with Core Ideology: A visionary company only pursues BHAGs that fit with its core ideology.
• Audacious but Believable: BHAGs are bold, falling in the gray area where prudence might say “unreasonable,” but the drive for progress says, “We believe we can do it nonetheless.” The BHAGs looked more audacious to outsiders than to insiders, who believed they were eminently doable with extraordinary effort.

Historical Examples of BHAGs

• General Electric (GE): Jack Welch articulated the BHAG: “To become #1 or #2 in every market we serve and revolutionize this company to have the speed and agility of a small enterprise.” This was clear, compelling, and understood by all employees, unlike Westinghouse’s vague “vision statement.”
• Philip Morris vs. R.J. Reynolds: In 1961, Philip Morris was a distant sixth-place player (under 10% market share) but set the audacious goal of “becoming the General Motors of the tobacco industry.” They committed to this, rising to blast long-time leader R.J. Reynolds out of first place. RJR, in contrast, lacked this clear, driving ambition beyond good shareholder returns.
• Ford: In 1907, Henry Ford set the astounding BHAG to “Democratize the automobile,” proclaiming everyone would afford one. This inspired his team to work ferociously. However, once achieved, Ford suffered from the “we’ve arrived” syndrome, becoming complacent, allowing GM to set and achieve the goal of overcoming Ford. Organizations need follow-on BHAGs.
• Sony: In the late 1950s, Sony (then Tokyo Tsushin Kogyo) took the costly step of changing its name to Sony Corporation with the immense BHAG to “change the worldwide image of Japanese products as poor in quality.” This was a non-trivial ambition for a small company with no overseas presence, when “Made in Japan” meant “cheap, junky.” In 1952, Sony pursued the “impossible” goal of making a “pocketable” radio, which required significant innovation and defied experts. Sony engineers “reveled in the idea of doing something deemed by outsiders as foolhardy.”
• Wal-Mart: Sam Walton’s first goal was to make his Newport store the “best, most profitable variety store in Arkansas within five years.” Later, in 1977, he aimed to become a $1 billion company in four years. In 1990, he set a new target of $125 billion by 2000, a target expressed with “complete confidence” by a director even as Walton was dying, demonstrating that the goal transcended the leader.

Commitment and Risk

BHAGs require a high level of commitment, often in the face of significant risk. Boeing’s 747 commitment led to painful layoffs, but the company endured due to its willingness to make bold moves despite the pain.

• Walt Disney Company used bold commitments to audacious projects like Snow White (“Disney’s Folly”), Disneyland, and EPCOT Center to stimulate progress. These were highly risky, but the commitment was unwavering. Columbia Pictures, in contrast, did little that was bold or risky.
• IBM propelled itself forward with the IBM 360 in the early 1960s, a “$5,000,000,000 gamble” and the largest privately financed commercial project ever undertaken, which made most of its existing product lines obsolete. IBM’s Tom Watson, Jr., agonizingly committed because he “believed there was nothing IBM couldn’t do.” Burroughs, with a technological lead, took the conservative approach and lost the market.
• Procter & Gamble periodically used bold BHAGs, like the 1919 goal to revolutionize distribution by going straight to retailers, despite significant internal resistance and risks. Colgate, in contrast, was reactive.

The “Hubris Factor”

Visionary companies exhibit a “hubris factor”—self-confidence bordering on overbearing pride or arrogance. They don’t see their audacity as taunting the gods; it simply never occurred to them that they couldn’t do what they set out to do. Like a rock climber on a path she knows is within her ability, the BHAG is stimulating but not too risky from her perspective.

The Goal, Not the Leader

The key mechanism of BHAGs is the goal itself, not charismatic leadership. John F. Kennedy’s BHAG to go to the moon and back by 1969 continued to inspire after his death in 1963. Sam Walton’s $125 billion goal continued to pull Wal-Mart forward after his passing. The BHAG transcends the leader. Boeing’s commitment to BHAGs was institutionalized, continuing long before and after William Allen’s tenure. McDonnell Douglas’s risk-averse approach was a characteristic of its individual leader, James McDonnell, not the institution. Sony institutionalized the habit of BHAGs, with “Target” being a repeated word in the company, leading to breakthroughs like the “pocketable” radio.

Post-Heroic Leader Stall

BHAGs offer a partial solution to the “post-heroic leader stall” (decline after a highly energetic leader departs), a pattern seen in many comparison companies. Visionary companies create BHAGs that take on a life of their own, acting as a stimulus through multiple generations of leadership. This ensures momentum even after founders retire or pass away.

Guidelines for CEOs, Managers, and Entrepreneurs

BHAGs can be applied at any organizational level.

• Clear and Compelling: A BHAG must be so clear it needs little explanation and gets people’s “juices going.” It’s a goal, like climbing a mountain, not a verbose statement.
• Outside Comfort Zone: It should be a 50-70% probability of success, requiring heroic effort and a little luck.
• Leader-Independent: It should stimulate progress even if leaders disappear before completion.
• “We’ve Arrived” Syndrome: Beware complacency after achieving a BHAG; be prepared with follow-on BHAGs.
• Consistent with Core Ideology: Most importantly, a BHAG must be consistent with the company’s core ideology, reflecting its self-concept and values (e.g., Ford democratizing cars, not railroads; Sony pioneering innovation, not making cheap products). This helps reinforce the core.

BHAGs, coupled with the core ideology, create a powerful interplay. The core enables progress by providing continuity, and progress enables the core by ensuring viability. This results in an organization that feels special, elite, and different, attracting commitment and pride.

Chapter 6: Cult-Like Cultures – Intense Dedication and Alignment

Chapter 6 reveals that visionary companies often cultivate “cult-like cultures” where only those who “fit” with the core ideology and demanding standards thrive. These are not “soft” or “comfortable” environments; instead, they are highly disciplined and demanding, both in performance and congruence with the company’s ideology. The term “cult-like” is descriptive—not pejorative—to capture the intensity of these cultures and their role in preserving the core ideology.

Nordstrom: A Case Study in Cultism

The chapter opens with a detailed narrative illustrating the cult-like aspects of Nordstrom’s culture:

• Intense Screening: The hiring process is selective, with an emphasis on finding individuals (like “Robert”) who can fully buy into the Nordstrom way.
• Indoctrination: New hires are immersed in the “Nordie” world, learning about heroic customer service stories, positive affirmations (“I feel proud to be a Pacesetter”), chanting (“We’re number one!”), and public recognition (Customer Service All-Star, Pacesetter).
• Tightness of Fit: Employees who fit receive positive reinforcement (high pay, awards, recognition) while those who don’t fit (like “Robert”) feel miserable, get negative reinforcement, and often leave (“ejected like a virus”). The culture is binary: “You’re either in or you’re out.”
• Elitism: Nordstrom cultivates a sense of belonging to something “special, elite, different, better,” reinforced by personalized business cards, an upside-down pyramid company structure (customers and salespeople at the top), and the very term “Nordie.”
• Operational Freedom within Ideological Bounds: While employees have immense operational freedom (e.g., to personally deliver a suit, iron a shirt, refund tire chains), this is strictly within the demanding core values of customer service. There are “no additional rules” beyond “use your good judgment,” but actions inconsistent with service (like frowning) are penalized.
• Performance-Driven Culture: High sales goals and productivity (SPH – sales per hour) are tracked publicly, creating intense internal competition and pressure to perform.

Cultism: More Than Just “Culture”

The research found something much stronger than mere “culture” at work in visionary companies. “Cultism” (indoctrination, tightness of fit, elitism) plays a key role in preserving the core ideology.

• Indoctrination: Stronger evidence in 11 out of 18 visionary companies compared to comparisons.
• Tightness of Fit: Greater evidence in 13 out of 18 visionary companies. People either fit and flourish or flounder and leave.
• Elitism: Greater evidence in 13 out of 18 visionary companies—a sense of belonging to something special and superior.
• Overall, visionary companies showed greater cultism in 14 out of 18 pairs.

IBM’s Rise to Greatness Through Cultism

Thomas J. Watson, Sr., consciously created a cult-like atmosphere at IBM from 1914.

• Indoctrination: He plastered walls with slogans (“THINK”), instituted strict rules (dress code, no smoking/alcohol), created formal training programs (the “schoolhouse” with its granite staircase, “IBM-speak”), and had employees sing corporate songs like “Ever Onward.” IBM’s “three basic beliefs” were deeply ingrained.
• Tightness of Fit: IBM imposed severe tightness of fit, screening employees from the first interview and clearly stating expectations. “If our attitude… is incompatible with yours, we’ll part ways.” Employees either bought in or were “ejected like a virus.”
• Elitism: Watson, Sr., instilled the belief that IBM was a “superior and special place to work,” reinforcing it by renaming the company from “Computing Tabulating Recording Company” to “International Business Machines Corporation.” This sense of being elite continued for decades.
• Adaptability: IBM’s cult-like culture, specifically its fanatical preservation of core values, did not hinder its ability to adapt to dramatic industry shifts (e.g., automated accounting, computers, personal computers). In fact, IBM achieved its greatest success during periods of strong cult-like culture. Burroughs (IBM’s comparison) showed little cultism and consistently lagged behind.

The Magic of Walt Disney: Cultivating “Clean-Cut Zealots”

Walt Disney Company made extensive use of indoctrination, tightness of fit, and elitism.

• Indoctrination: Every employee attends “Disney Traditions” at Disney University, taught by “trainers” who use “pixie dust” to immerse “cast members” in Disney’s history, philosophy, and goal “to make people happy.” They learn unique language (customers are “guests,” shifts are “performances,” uniforms are “costumes”).
• Tightness of Fit: Strict grooming codes (no facial hair for men), rigorous screening (multiple interviews, personality tests), and immediate dismissal for “sins” (e.g., using foul language, disloyalty during strikes). Employees are expected to adopt the “Disney Magic” and become “clean-cut zealots.”
• Elitism: Secrecy shrouds inner workings, contributing to a sense of mystery and elitism. Company publications emphasize being “special,” “different,” “unique,” and “magical.” Loyal customers feel a strong bond, perceiving Disney as a “social or religious movement.”
• Walt Disney’s Legacy: Walt himself, though not building a “perfectly ticking clock,” laid tangible processes in place (grooming code, training, meticulous detail, character sanctity) to preserve the core ideology. This allowed Disney to rebound after his death, while Columbia Pictures, lacking such mechanisms, ceased to exist independently.

Complete Immersion at Procter & Gamble

Procter & Gamble (P&G) preserved its core ideology through extensive indoctrination, tightness of fit, and elitism.

• Indoctrination: P&G screens rigorously, hires young, molds new employees into “P&G ways,” and promotes only loyal insiders. New hires are inducted with training, reading “The Book” (Eyes on Tomorrow), and exposure to P&G’s history, values, and traditions. The relatively isolated Cincinnati location reinforces “complete immersion.”
• Tightness of Fit: P&G uses paternalistic pay and benefit programs (profit-sharing since 1887, employee stock ownership since 1892) to bind people and influence behavior. Profit-sharing was tied to cooperation, and stock ownership required significant personal investment to ensure “full psychological membership.” Strict dress codes, office layouts, and the “one-page memo” policy enforce consistency.
• Elitism: P&G cultivates elitism, with employees feeling proud to be part of an organization described as “special,” “great,” and “unique.” Secrecy rules (e.g., no business talk in public) further reinforce this. The culture extends globally, with employees expected to adapt to P&G culture first, then national culture.
• Colgate, P&G’s comparison, showed less rigorous screening, indoctrination, or emphasis on uniqueness, often defining itself in relation to P&G.

Message for CEOs, Managers, and Entrepreneurs

The point is not to create a “cult of personality” but to build an organization that fervently preserves its core ideology through specific, concrete ways. Cultism around an ideology is clock building.

• Tangible Mechanisms: Visionary companies translate ideology into tangible reinforcing mechanisms:
  • Orientation and training with ideological content.
  • Internal “universities” and training centers.
  • On-the-job socialization by peers and supervisors.
  • Rigorous “up-through-the-ranks” policies.
  • Pervasive mythology of “heroic deeds” and exemplars.
  • Unique language and terminology.
  • Corporate songs, cheers, affirmations, or pledges.
  • Tight screening processes.
  • Incentive/advancement linked to ideological fit.
  • Awards, contests, public recognition for ideological congruence; penalties for ideological breaches.
  • Tolerance for “non-sins” (honest mistakes), but severe penalties for “sins” (ideological breaches).
  • “Buy-in” mechanisms (financial, time investment).
  • Celebrations reinforcing success and specialness.
  • Plant/office layout reinforcing norms.
  • Constant emphasis on values and heritage.

Preserve the Core AND Stimulate Progress

A cult-like culture is not dangerous if complemented with a huge dose of stimulating progress. It can actually enhance a company’s ability to pursue BHAGs by creating a sense of being an elite organization capable of anything.

• IBM’s cultishness contributed to the IBM 360 gamble. Disney’s belief in its special role enhanced its radical BHAGs. Boeing’s dedication allowed it to launch the 707/747.
• Cult-like cultures can also be about innovation, competition, or change. Wal-Mart’s cheer reflects a “cult-like culture of zaniness.”
• Diversity can coexist with cult-like tightness: Companies like Merck have excelled in equal opportunity, valuing diversity within a shared core ideology.

Ideological Control/Operational Autonomy

Visionary companies embrace the “Genius of the AND” by imposing tight ideological control AND simultaneously providing wide operational autonomy that encourages individual initiative.

• Nordstrom’s one-page employee handbook: “Use your good judgment in all situations. There will be no additional rules.” This grants immense discretion within the core value of fanatical customer service. Clerks are empowered to resolve issues creatively, but ideological breaches are not tolerated.
• This finding implies that companies seeking “empowered” or decentralized environments should first impose a tight ideology, screen and indoctrinate people, eject misfits, and then give tremendous responsibility. Getting the right actors on stage and in the right frame of mind allows them the freedom to ad-lib. Ideological control preserves the core, while operational autonomy stimulates progress.

Chapter 7: Try a Lot of Stuff and Keep What Works – Evolutionary Progress

Chapter 7 delves into the second type of progress stimulated by visionary companies: evolutionary progress. This involves making some of their best moves not through detailed strategic planning, but through experimentation, trial and error, opportunism, and even accident. What appears in hindsight as brilliant strategy was often the residual result of “purposeful accidents.” This concept parallels Charles Darwin’s theory of evolution and the idea of “branching and pruning.”

Unplanned Strategic Shifts

Many key strategic shifts in visionary companies were unplanned:

• Johnson & Johnson’s Accidental Move into Consumer Products:
  • In 1890, J&J, a medical supplier, sent soothing talc to a physician to relieve skin irritation from plasters. Customers surprisingly asked to buy the talc, leading to “Johnson’s Toilet and Baby Powder,” an accidental strategic shift that grew to 44% of revenues.
  • In 1920, employee Earle Dickson created a ready-to-use bandage for his wife; marketing experimented with it, and Band-Aid products became the biggest-selling category, further solidifying J&J’s “accidental” move into consumer products.
• Marriott’s Opportunistic Step into Airport Services: In 1937, J. Willard Marriott observed passengers buying food from his restaurant near an airport. He opportunistically created a new business arrangement to deliver prepackaged meals directly to planes. This “odd variation” evolved into a major business, not through strategic analysis, but by quick, vigorous action and experimentation.
• American Express’s Unintended Evolution into Financial and Travel Services:
  • Starting as a freight express business in 1850, AmEx faced declining demand due to postal money orders. In response, they created their own “Express Money Order,” which became an unexpected success and the genesis of a dramatic strategic shift into financial services.
  • In 1892, President J.C. Fargo’s personal difficulty cashing letters of credit in Europe led to the invention of the “American Express Travelers Cheque,” creating an “unintentional… ‘float’” that became a major revenue source.
  • Despite Fargo’s explicit dictum against entering the travel business, an entrepreneurial employee in Paris began expanding activities in response to American travelers’ needs, leading to the “Travel Department.” By 1912, AmEx was a great travel organization, though it still “did not admit the fact.” These were incremental, opportunistic steps, not grand plans.
• Hewlett-Packard (HP): Bill Hewlett stated HP “never planned more than two or three years out.” HP’s entry into the computer business in 1965 was “basically an under the bench thing”—a small computer designed to enhance its instrument products, with no grand plan to become a computer company.
• Motorola: Initially entered advanced electronics (transistors, semiconductors) as a natural outgrowth of a small lab, only making a conscious strategic choice to move into the business later out of necessity (to afford an advanced plant, they had to sell output externally).

Corporations as Evolving Species: Darwin’s Theory Applied

This “unplanned progress” leads to evolutionary progress, resembling how organic species evolve: undirected variation and natural selection.

• “Multiply, vary, let the strongest live, and the weakest die.” Companies like American Express, when facing external threats (government regulation, nationalization of freight), found their accidental experiments in financial and travel services to be “favorable variations” better suited to the changed environment. These were then “selected” as the path forward.
• This process is described as “branching and pruning.” By adding enough “branches” (variation) and intelligently pruning the “deadwood” (selection), an organization can evolve into a collection of healthy branches well-positioned to prosper in a changing environment.
• Johnson & Johnson (J&J) consciously encourages this, fostering a decentralized environment that promotes individual initiative and experimentation, while imposing rigorous selection criteria: only profitable experiments consistent with J&J’s core ideology survive. R.W. Johnson, Jr., stated, “Failure is our most important product,” recognizing mistakes as integral to evolutionary progress. J&J’s history is filled with favorable accidents and failures, yet it has never posted a loss in 107 years.
• Wal-Mart’s phenomenal success resulted largely from an evolutionary process of variation and selection, not a grand strategic plan. Their motto is, “Do it. Fix it. Try it.” If it works, keep it; if not, fix or try something else. The famous people greeters originated from a store manager’s experiment to deter shoplifting; this “odd experiment” became a company-wide competitive advantage.
• While companies can plan, the process of variation and selection in human organizations differs from purely Darwinian natural selection. Companies make conscious selections. Visionary companies stimulate evolutionary progress toward desired ends within the context of a core ideology—a process called purposeful evolution.
• Visionary companies more aggressively harness the power of evolution than comparison companies (15 out of 18 cases).

3M: “The Mutation Machine from Minnesota”

3M is presented as a prime example of purposeful evolution.

• Origin from Failure: 3M started as a failed corundum mine. Out of desperation, it shifted to sandpaper manufacturing.
• William McKnight’s Vision: As general manager from 1914, McKnight, an “instinctive clock builder,” encouraged individual initiative and experimentation. He created 3M’s first laboratory, leading to innovations like “Three-M-Ite” abrasive.
• Opportunistic Discoveries: McKnight’s curiosity led 3M to waterproof sandpaper (“Wetodry”) after an unusual letter from a manufacturer. He not only acquired the rights but also hired the inventor, Francis G. Okie, creating new internal capabilities.
• “Branching and Pruning” Institutionalized: McKnight wanted 3M to “self-mutate from within” through employee initiative. Slogans like “Listen to anyone with an original idea, no matter how absurd,” “Encourage; don’t nitpick,” and “Hire good people, and leave them alone” fostered undirected variation. He understood that mistakes would be made, but were less serious than dictatorial management.
• Scotch Tape’s Accidental Birth: Dick Drew, a 3M employee, impulsively promised a solution for auto paint masking problems, leading to the invention of 3M masking tape, then Scotch cellophane tape. This wasn’t planned; it was an outgrowth of McKnight’s climate.
• Institutionalized Evolutionary Process: 3M codified a strategy of “variation and selection” as early as 1925, requiring ideas to be new, meet a human need, and be innovative. They embraced “Make a little, sell a little” and “Take small steps,” allowing tiny “twigs” to grow into “branches” or “trees” based on promise. Their product families were explicitly depicted as “branching trees.”
• Post-it Notes: Purposeful Accidents: Co-inventor Art Fry’s church choir problem led him to Spence Silver’s “aberrant adhesive,” invented by “experimental doodling” during Silver’s 15% rule (time for personal projects). This “accidental” invention only became a success because the 3M environment encouraged persistence despite initial market skepticism. The creation of the 3M environment that allowed it was anything but an accident.
• Mechanisms for Progress at 3M: 3M’s “ticking clock” included:
  • “15 percent rule”: Technical employees spend 15% of time on self-chosen projects.
  • “25 percent rule”: Divisions generate 25% of annual sales from new products in the past five years.
  • “Golden Step” award: For successful new internal ventures.
  • “Genesis Grants”: Internal venture capital fund.
  • Technology sharing awards.
  • “Carlton Society”: For outstanding technical contributions.
  • “Own business” opportunities: Champions of new products run them as their own ventures.
  • “Dual ladder” career track: For technical professionals.
  • New product/technical forums.
  • “Problem-solving missions”: Small teams to customer sites.
  • “High Impact Programs”: Priority products for quick market entry.
  • Small, autonomous divisions/units.
  • Early profit sharing (since 1916).
• Propelled by these, 3M branched into over 60,000 products by 1990.

The Stark Contrast at Norton

Norton, 3M’s comparison, failed to keep pace despite a vastly superior early life.

• In 1914, Norton was 10 times larger and more profitable than 3M. By 1956, 3M was twice Norton’s size, and by 1986, nearly 8 times larger, with significantly higher profitability (e.g., 34.36% ROA vs. 17.72%).
• Norton’s Decline: While 3M fostered experimentation, Norton became centralized and bureaucratic, characterized by “routinization and stagnation.” It had an explicit policy not to encourage new opportunities outside traditional abrasives. Its research focused on “making better grinding wheels” (anything “round and had a hole in it”).
• Reactive Strategy: Norton’s few attempts to diversify were thwarted by lack of resources and encouragement. When it did enter a new market, it was often decades late (e.g., cellophane tape in 1957, 27 years after 3M).
• “Buy Progress” vs. “Evolve Progress”: In the late 1950s, Norton tried to diversify like 3M but chose to do so primarily through corporate strategic planning and acquisition (becoming a disciple of Boston Consulting Group’s “portfolio management”), rather than internal evolution. While 3M’s diverse portfolio emerged organically, Norton sought to buy it.
• By 1990, 3M was a $13 billion company with thousands of innovations; Norton was the target of an unfriendly takeover and ceased to exist independently.

Lessons for CEOs, Managers, and Entrepreneurs

Five basic lessons for stimulating evolutionary progress:

1. “Give it a try—and quick!”: When in doubt, vary, change, experiment. Vigorous action, especially in response to unexpected opportunities or problems, creates variation. Don’t sit still.
2. “Accept that mistakes will be made.”: Failures are integral to evolution. To have vibrant self-mutation, you need many failed experiments. Learn from failures; “it’s a lot easier to learn from a failure.”
3. “Take small steps.”: Small incremental steps can lead to significant strategic shifts. It’s easier to tolerate failed experiments when they are small. Be an “incremental revolutionary.”
4. “Give people the room they need.”: Provide greater operational autonomy and decentralized structures to enable unplanned variation. Allow people to be persistent in pursuing their ideas.
5. Mechanisms—build that ticking clock!: Translate these principles into tangible mechanisms that continually stimulate and reinforce evolutionary behavior (e.g., 3M’s 15% rule, Golden Step awards). Good intentions are insufficient; mechanisms with teeth are needed.

What Not to Do: Suppressing Evolutionary Progress

Comparison companies often actively suppressed evolutionary progress:

• Chase Manhattan: Ruled by an obsessively controlling David Rockefeller, it became a “fear-filled environment” where managers avoided risk. Citibank, in contrast, was a “chaotic kind of creativity.”
• Burroughs: President Ray W. Macdonald stifled individual initiative, drove away talent, and centralized all decisions, inhibiting managers from seizing opportunities like computers where IBM excelled.
• Texas Instruments (TI): While innovative under Patrick Haggerty, his successors imposed a top-down, autocratic approach, obliterating TI’s entrepreneurial culture through fear and intimidation, leading to decline.

“Stick to the Knitting”? Stick to the Core!

The concept of “stick to the knitting” (staying close to known businesses) does not fully align with evolutionary progress. If 3M stuck to mining or sandpaper, it wouldn’t exist. Instead, the “knitting” for a visionary company is its core ideology. Evolution is guided by whether an experiment fits with the core ideology and is pragmatic (“Does it work?”).

• Preserve the Core/Stimulate Progress: Evolution involves both variation AND selection. In visionary companies, selection is guided by “Does it work?” AND “Does it fit with our core ideology?”
• Core ideology serves as a bonding glue and guiding force that holds a visionary company together while it mutates and evolves. It’s like the genetic code in the natural world, remaining fixed while species vary and evolve, giving the company a purpose and a spirit.

Chapter 8: Home-Grown Management – Cultivating Internal Talent

Chapter 8 emphasizes that visionary companies achieve enduring greatness not just through quality leadership, but through “continuity of quality leadership” ensured by home-grown management. These companies develop, promote, and carefully select managerial talent from within, using this as a key step in preserving their core ideology. They rarely hire chief executives from outside, debunking the myth that outsiders are necessary for fundamental change.

General Electric: A Century of Home-Grown Excellence

Jack Welch is celebrated as a master of corporate change, yet his story exemplifies home-grown management:

• Internal Growth: Welch joined GE directly from graduate school at 24 and worked for 20 years before becoming CEO. Like all his predecessors, he came from deep inside the company.
• Succession Planning: Welch inherited a well-managed company from Reginald Jones, who was “the most admired business leader in America.” Jones spent years on a meticulous CEO succession process, paring 96 internal candidates down to a strong field of six (including Welch), all of whom went on to head major corporations. This process involved rigorous challenges, interviews, and evaluations, demonstrating GE’s commitment to internal talent development.
• Continuity of Excellence: GE boasts a remarkable track record of continuity in top management excellence over a hundred years. GE’s performance under Welch’s predecessors was comparable, if not better in some metrics, than Welch’s early tenure. The ability to produce a “Welch-caliber CEO” consistently from within is a hallmark of GE.
• Westinghouse, GE’s comparison, suffered from turmoil and discontinuity, having nearly twice as many CEOs, some with short tenures, and periodically resorting to hiring outsiders (e.g., bankers in 1908, 1946; an ex-PepsiCo executive in 1993 after billion-dollar losses), indicating a lack of robust internal succession planning.

Promote from Within to Preserve the Core

Visionary companies consistently promote from within.

• Data on Internal CEOs: From 1806 to 1992, only 2 visionary companies (11.1%) ever hired a CEO directly from outside, compared to 13 (72.2%) of comparison companies.
• Of 113 visionary company CEOs, only 3.5% came directly from outside, versus 22.1% of 140 comparison company CEOs. Visionary companies were six times more likely to promote insiders.
• This continuity ensures that leaders are steeped in the company’s core ideology and can preserve it while driving progress.

The Leadership Continuity Loop

Visionary companies maintain a “leadership continuity loop” to ensure quality and ideological preservation:

• Develop managerial talent from within.
• Careful succession planning.
• Promote from within.
• Leaders steeped in core ideology.
• New leaders continue to develop managerial talent from within.

Conversely, comparison companies often exhibit a “leadership gap and savior syndrome,” leading to management discontinuities and a search for outside saviors, which can pull the company away from its core ideology.

Discontinuity at Colgate Versus Talent Stacked Like Cordwood at P&G

• Colgate: Began as an extraordinary company with a strong core ideology but suffered from poor succession planning in the early 1900s. The lack of developed successors led to a merger that “put an alien management in office” (Charles Pearce, 1928-1933). Pearce ignored fundamentals and values, causing profit declines and retailer revolt. Subsequent CEOs were also ill-prepared or lacked succession plans, leading to constant “fits and stalls” and a decline to one-fourth the size and profitability of P&G.
• Procter & Gamble (P&G): In contrast, P&G carefully prepared its first non-family CEO, Richard Deupree, who then ensured continuity for subsequent generations. P&G continually develops managerial talent, aiming to have “two or three people equally capable of assuming responsibility of the next step up” at all times. This commitment to internal talent led to “talent stacked like cordwood” and avoided leadership lurches.

Leadership Gaps at Zenith Versus Motorola’s Deep Bench

• Zenith: Founder Eugene F. McDonald, Jr., developed no capable successors. After his death in 1958, Zenith experienced a vacuum, leading to short-tenured CEOs, a drift from core values, and a need to hire an outside savior (John Nevin). Subsequent unexpected deaths caused further crises, leaving Zenith without continuous strong guidance.
• Motorola: Paul Galvin began grooming his son, Bob Galvin, years before formal transfer. Bob started as a stock clerk, moved up, and shared presidential duties before his father’s death. Bob then institutionalized a “Chief Executive Office” concept (multiple team members) and the “Office Of” concept at lower levels, ensuring a “deep bench” of well-trained internal managerial talent. This structure ensured continuity even when key executives departed unexpectedly, allowing Motorola to continually reinvent itself without leadership turmoil.

Management Turmoil and Corporate Decline

Numerous comparison companies suffered from top management turmoil:

• Melville Corporation: Founder Ward Melville failed to prepare successors, leading to a decline and a need for an outside CEO (though they eventually developed a capable insider).
• Douglas Aircraft: Founder Donald Douglas turned the company over to an inadequately prepared son, leading to talent loss and a forced merger with McDonnell Aircraft.
• R.J. Reynolds: Experienced leadership instability, with outsiders taking top roles and a disastrous Johnson era ending in a junk-bond-financed takeover by KKR, bringing in yet another outside CEO.
• Ames and Burroughs also saw their creations “destroyed” or decline due to lack of capable internal successors.

Visionary Companies and Outsiders

Even when a visionary company brought in an outsider, it was an exception and often done with careful consideration of ideological fit.

• Disney: After Walt’s death, the company floundered. While outsiders Michael Eisner and Frank Wells were hired in 1984, the board chose Eisner partly because he “understood and appreciated—indeed, had unabashed enthusiasm for—the Disney values.”
• IBM’s 1993 Decision: IBM’s decision to hire Louis V. Gerstner (an outsider with no industry experience) in 1993 is highlighted as a significant anomaly. The authors argue that IBM, with its thorough management development programs, should have had internal candidates capable of driving change, as demonstrated by GE’s Jack Welch. The crucial question for IBM is whether Gerstner can preserve IBM’s core ideals while bringing monumental change.

Message for CEOs, Managers, and Entrepreneurs

• Extraordinarily Difficult for Outsiders: It is “extraordinarily difficult to become and remain a highly visionary company by hiring top management from outside.”
• Internal Promotion AND Significant Change: There is “absolutely no inconsistency between promoting from within and stimulating significant change.” Internal leaders steeped in the core are often best equipped to drive healthy change without compromising identity.
• Develop Managers and Plan Succession: Large companies must have robust management development processes and long-range succession planning. Small companies and entrepreneurs should also adopt a long-term view, carefully grooming successors (even family members) long before the actual transition.
• Reject False Narratives: The entrepreneurial model of cashing out and passing to outside managers is unlikely to produce the next HP or Merck. The focus must be on how well the company performs in future generations. Leaders eventually die, but a visionary company can endure for centuries, pursuing its purpose and expressing its values.

Chapter 9: Good Enough Never Is – The Relentless Pursuit of Improvement

Chapter 9 explores the relentless drive for self-improvement that distinguishes visionary companies. For these organizations, the critical question is never “How well are we doing?” or “How well do we have to perform to meet the competition?” Instead, it is perpetually, “How can we do better tomorrow than we did today?” This institutionalized habit of self-stimulated improvement and investment for the future ensures superb execution and performance, not as an end goal, but as a residual result of a never-ending cycle.

The Absence of a Finish Line

Visionary companies have no ultimate finish line, no “having made it,” and no point where they can coast. They possess a “visceral revulsion to any tendency toward smug self-satisfaction.” Success, for them, is “never final.” This requires immense discipline, hard work, and a continuous desire to overcome adversity, as J. Willard Marriott, Sr., noted: “Discipline is the greatest thing in the world… And without character, there is no progress.” The concept of “continuous improvement” has been ingrained in these companies for decades, even over a century, long before it became a management catchphrase.

Mechanisms of Discontent

Visionary companies are not comfortable places; “Comfort is not the objective.” They intentionally install powerful mechanisms to create discomfort and obliterate complacency, stimulating change and improvement before external demands. This “fire that burns from within” keeps them pushing, never satisfied.

• Procter & Gamble (P&G): Richard Deupree worried about P&G becoming complacent. In 1931, marketing manager Neil McElroy proposed a radical brand management structure that pitted P&G brands directly against other P&G brands. This internal competition became a powerful mechanism to stimulate continuous improvement from within, later widely copied but not for decades.
• Merck: In the 1950s, Merck consciously adopted a strategy of yielding market share as products became low-margin commodities, forcing itself to produce new innovations to grow.
• Motorola: Used an “innovate-or-die” mechanism, cutting off mature product lines (like televisions and car radios) to force the development of new products, guided by “Technology Road Maps” benchmarking future needs.
• General Electric (GE): Institutionalized discomfort with “work out” sessions, where employee groups made concrete improvement proposals that upper managers had to decide on the spot, preventing evasion.
• Boeing: Created discomfort with “eyes of the enemy” planning, where managers developed strategies to obliterate Boeing as if working for a competitor, then used these insights to improve.
• Wal-Mart: Sam Walton used “Beat Yesterday” ledger books to track daily sales against the previous year, constantly pushing standards higher.
• Nordstrom: Created an environment of continuous improvement with Sales Per Hour (SPH) rankings (measuring success against peers), and by relentlessly tracking customer feedback, linking it to compensation and advancement. Bruce Nordstrom emphasized that customers are “never happy,” forcing continuous betterment.
• Hewlett-Packard (HP): Historically used peer-based employee ranking sessions to prevent complacency. HP also enforced a “pay as you go” policy (no long-term debt), which, though seemingly irrational financially, enforced extreme fiscal discipline, forcing the company to fund its rapid growth and R&D entirely internally. This created a culture of leanness and efficiency.
• In contrast, comparison companies showed less evidence of installing such discomfort mechanisms, often taking the comfortable road or milking the company for short-term gains.

Build for the Future (and Do Well Today)

Visionary companies exhibit a paradoxical ability to build for the long term AND perform extremely well in the short term. They do not accept that they must choose between them.

• Hewlett-Packard’s Farsighted Investment: In 1946, facing a 50% revenue decline post-WWII and an imminent cash flow crisis, HP boldly decided to hire talented scientists and engineers from defense labs and retain its best in-house talent. This farsighted investment, despite financial struggles, paid off handsomely in future decades. David Packard constantly emphasized never compromising HP’s long-term principles or health for quick profits, but also stressed that “It is just as easy to make a profit today as it will be tomorrow.”
• Texas Instruments (TI), HP’s comparison, also hired scientists in 1946 but later veered from this balanced view. In the 1970s, TI pursued cheap consumer products and drastic price cuts at the expense of quality and reputation, eroding its long-term foundation for short-term gain.

Greater Long-Term Investment in Visionary Companies

Systematic financial analysis reveals that visionary companies consistently invest more heavily in their future:

• Property, Plant, and Equipment (PP&E): They invested more as a percentage of annual sales than comparison companies in 13 out of 15 cases.
• Earnings Reinvestment: They plowed a greater percentage of earnings back into the company, paying out less in dividends (12 out of 15 cases).
• Research & Development (R&D): In every case where data was available, visionary companies invested more heavily in R&D as a percentage of sales (8 out of 8 cases). Merck consistently out-invested Pfizer in R&D, a key to its preeminence.
• Human Capital: They invested more aggressively in employee recruiting, training, and professional development (e.g., Merck’s manager training, Motorola’s 40 hours/week training per employee, HP’s extensive interview processes).
• Early Adoption: They invested earlier and more aggressively in technical know-how, new technologies, new management methods, and innovative industry practices. GE embraced new management methods earlier than Westinghouse. Merck adopted TQM processes in 1965 and advanced financial analysis. Philip Morris adopted state-of-the-art production technologies faster than RJR. Motorola committed to new technologies while Zenith held back. Citibank consistently adopted new methods (e.g., divisional profitability, merit pay, ATM machines, credit cards, retail branches) decades earlier than Chase Manhattan.

Milking the Company: Comparison Company Failures

In contrast, comparison companies often shirked investment or “milked” the company for short-term gain:

• R.J. Reynolds: Executives used the company for “self-aggrandizement and enrichment” (e.g., “RJR Air Force,” “Taj Mahal of corporate hangars”), neglecting investments while Philip Morris invested relentlessly.
• McDonnell Douglas: Demonstrated “penny-wise, pound-foolish fanatical attention to the short-term bottom line,” inhibiting bold leaps into the future (like jumbo jets) and leading to a “conservative, short-term” approach that avoided costly new development programs.
• Colgate: For decades, neglected investments in new product development, marketing, and plant modernization, consistently lagging behind P&G. CEOs “borrowed from the future” to keep earnings up.

Marriott Versus Howard Johnson: The Decline of a Great American Franchise

Howard Johnson declined precipitously while Marriott thrived, exemplifying the core/progress dynamic.

• In 1960, Howard Johnson was a well-known American business; Marriott’s founder hoped his company could one day be as successful. By 1985, Marriott was seven times larger.
• Howard Johnson’s Complacency: Howard Johnson, Jr., described the company as “a reacting company,” not trying to “anticipate the future,” and unwilling to invest in tailoring restaurants/hotels to market segments. It became “overpriced and understaffed purveyors of pallid food,” its profits “artificially high” due to neglected reinvestment and “milking the business.” Howard Johnson, Jr., himself focused on cost control and socialized in elite circles rather than visiting restaurants.
• Marriott’s Relentless Self-Discipline: Marriott, Jr., lived a “Mormon work ethic” (70 hours/week), personally visiting hundreds of facilities. He institutionalized a “continuous improvement machine” with tangible mechanisms:
  • “Guest Service Index” (GSI): Computerized customer feedback linked to bonuses and promotions.
  • Annual performance reviews for every employee.
  • Incentive bonuses down to coffee shop managers (based on service, quality, cleanliness).
  • Profit-sharing program where employees invested wages.
  • Extensive interviewing and screening for quality hires.
  • Management and employee development programs, investing up to 5% of pretax profits.
  • A full-scale corporate “Learning Center” for “total immersion” training.
  • “Phantom Shoppers”: Inspectors posing as customers, rewarding good service and retraining poor service.

Message for CEOs, Managers, and Entrepreneurs

Self-improvement stands out as one of the clearest differences. Visionary companies drove themselves harder for self-improvement in 16 out of 18 cases.

• Mechanisms of Discontent: Create mechanisms “with sharp teeth” to obliterate complacency and drive change from within, consistent with core ideology.
• Invest for the Future: Habitually invest in long-term growth (PP&E, R&D, human capital, early adoption of methods/technologies) while maintaining strong short-term performance.
• Respond to Downturns: Continue building for the long-term even in difficult times.
• Reject Comfort: People must understand that life in a visionary company is not easy; it’s about the “never-ending discipline of working to do better tomorrow than it did today.”
• Building a visionary company requires “huge quantities of good old-fashioned hard work, dedication to improvement, and continually building for the future.” There are no shortcuts, magic potions, or work-arounds.

The Parable of the Black Belt

The chapter concludes with a parable of a martial artist seeking a black belt. The master sensei teaches that the black belt is not the “end of my journey” but “the beginning—the start of a never-ending journey of discipline, work, and the pursuit of an ever-higher standard.” This illustrates that success is never final; it is a continuous process of self-improvement and striving.

Chapter 10: The End of the Beginning – The Power of Alignment

Chapter 10 serves as a capstone, emphasizing that visionary companies are not defined by elegant “vision statements” but by the “translation of its core ideology and its own unique drive for progress into the very fabric of the organization.” This means consistent alignment across goals, strategies, tactics, policies, processes, cultural practices, management behaviors, building layouts, pay systems, and job design—into everything the company does. A visionary company creates a total environment that “envelops employees, bombarding them with a set of signals so consistent and mutually reinforcing that it’s virtually impossible to misunderstand the company’s ideology and ambitions.”

The Power of Alignment

Alignment is the essence of clock building, where all elements of a company work together in concert within the context of its core ideology and envisioned progress.

• Ford’s Turnaround: The “Mission, Values, and Guiding Principles” (MVGP) statement did not cause Ford’s 1980s turnaround by itself. Ford dramatically translated the MVGP into reality by aligning operations, strategies, and tactics:
  • Statistical quality control: Empowering production managers to shut down lines for faulty parts, and implementing a “Q1” program for suppliers, providing education and assistance.
  • Employee involvement: Creating programs, training managers in participative management skills, linking them to promotions.
  • Communication: Investing in satellite TV to inform employees.
  • Labor relations: Negotiating a profit-sharing clause, leading to union recognition for CEO Philip Caldwell.
  • Product focus: Creating the Taurus/Sable program with a $3.25 billion budget and soliciting input from production workers.
  • Customer satisfaction: Top executives attending focus groups, creating the “President’s Award” for dealerships with high customer ratings.
    This comprehensive alignment, not just rhetoric, powered Ford’s turnaround.

Merck: Consistency Across Decades

Merck’s vision, articulated by George W. Merck in the late 1920s, became a visionary company due to its consistent alignment with its core ideology and envisioned progress.

• Research Capability: Aimed to build research to “talk on equal terms with the universities.” Laboratories were designed with an academic atmosphere (“Merck Campus”), scientists encouraged to publish and collaborate externally, and prominent academics recruited to the board.
• Scientific Freedom: Dual career tracks allowed scientists to advance without becoming managers. Research scientists were given “greatest possible latitude” to pursue investigations regardless of immediate practical returns, with marketing input prohibited until development stage.
• Unconventional Practices: Rejected R&D budgets; project teams (champions) persuaded others to commit resources, creating a “survival-of-the-fittest” selection. Unconventional strategy of being least diversified to focus all bets on breakthrough drugs. Self-imposed standard: new products must be significantly better than competitors.
• BHAGs Aligned with Ideology: From building a research capability in the 1930s to transforming into a fully integrated pharmaceutical company (1950s acquisition of Sharp & Dohme) to becoming the pre-eminent drug maker worldwide (1970s, 1980s) and redefining the pharmaceutical paradigm (1990s acquisition of Medco), all BHAGs aligned with its core purpose.
• Corporate Responsibility in Practice: Early donor to United Negro College Fund, first in industry to establish an Office of Minority Affairs, tied affirmative action goals to executive bonuses, recognized for programs promoting women and minorities, and decisions like bringing streptomycin to Japan at no profit and giving away Mectizan. Set environmental BHAGs.
• Talent Investment: Rigorous hiring (like applying to graduate school), heavy investment in employee development and retention, leading to low turnover.
• Pervasive Ideology: Constantly reinforced through shareholder reports, recruiting materials, internal publications, and executive speeches. The company held an elaborate centennial emphasizing its heritage and values. For Merck, there is “no difference” between rhetoric and reality.

Hewlett-Packard: The Comprehensive “HP Way”

HP’s vision, focused on progressive personnel practices, innovation, and technical contribution, was brought to life by comprehensive and consistent alignment.

• Respect for Employees: Introduced “production bonus” (profit sharing) for all, catastrophic medical insurance (1940s). Stock grants and options for all employees when public (1950s), 25% company subsidy for stock purchase. Avoided “hire-and-fire” tactics by passing on government contracts and asking employees to take days off during downturns. Early adopter of flextime and open-door policies. Open office floor plan to promote communication and deemphasize hierarchy.
• Technological Contribution and Entrepreneurship: Hired top 10% engineering graduates. Grew by introducing new and better products annually; 50% of sales from products introduced in past three-five years. Weeded out “me-too” products, bypassing large markets unless a technical contribution could be made (“Next Bench Syndrome” – engineers solving own problems). Corporate hero programs geared toward inventors.
• Entrepreneurial Culture: “Provide a well-defined objective, give the person as much freedom as possible… and provide motivation by seeing that the contribution of the individual is recognized.” Decentralized into highly autonomous divisions, dispersed geographically, allocated R&D funds to innovative divisions, encouraged international R&D.
• Shunning Fads: Shuns corporate debt (“irrational” but enforced discipline). Avoided venture capitalists (“push companies to grow too fast”). Forbade personnel department from handling personnel problems (“manager’s responsibility”). Explicitly rejected “learning-curve/market-share” theory (cutting prices for market share) in the 1970s, holding to a standard of “excellent gross margin in the first year.”
• Pervasive “HP Way”: Hewlett and Packard articulated their ideology in “Sonoma Conferences” (akin to a U.S. Constitution). Strict promote-from-within policy, extensive interviewing emphasizing “adaptability and fit,” and indoctrination for first-line supervisors. Hundreds of documented instances of HP managers discussing values. “Bill and Dave stories” (e.g., cutting a locked storeroom chain) conveyed the HP Way’s essence. This ensured a “spirit” where employees felt like “integral part of management.”

Lessons of Alignment for CEOs, Managers, and Entrepreneurs

• Paint the Whole Picture: Visionary companies do not rely on any single program or strategy. It’s the remarkable comprehensiveness and consistency over time – the overwhelming set of signals and actions – that creates a visionary company. It’s like a great work of art where “God is in the details.”
• Sweat the Small Stuff: People work in the “nitty-gritty details.” Little things (Nordstrom’s business cards, Wal-Mart’s financial reports for lowest-level employees, Motorola’s chairman prioritizing quality reports, J&J’s division logos, Philip Morris’s cigarette giveaways, HP’s locked storeroom story) send powerful signals and make a big impression, reinforcing ideology and ambition. Inconsistencies create cynicism.
• Cluster, Don’t Shotgun: Mechanisms are not random; they reinforce each other, clustered to deliver a powerful combined punch. Ford’s quality control was reinforced by employee involvement and training. Merck’s scientific recruitment was reinforced by publishing policies and academic atmosphere. HP’s values were amplified by multiple, consistent signals.
• Swim in Your Own Current, Even if You Swim Against the Tide: Alignment means being guided by one’s internal compass, not external fads or conventions. Merck and HP made unconventional decisions that made perfect sense for them. The question is not “Is this practice good?” but “Is this practice appropriate for us—does it fit with our ideology and ambitions?“
• Obliterate Misalignments: Alignment is a never-ending process of identifying and doggedly correcting “cancer cells”—practices that push the company away from its core ideology or impede progress. If an incentive system contradicts values, change it. If strategy deviates from purpose, change it. The only sacred cow is the core ideology; everything else can be changed or eliminated.
• Keep Universal Requirements While Inventing New Methods: Core ideology, relentless drive for progress, and organizational design for alignment are universal requirements that endure for centuries. However, the specific methods (BHAGs, cult-like cultures, etc.) can and should evolve and be invented anew. Companies must use proven methods AND create new ones. The primary work of the clock-builder is to align the organization to preserve the core and stimulate progress so effectively that “a visitor could drop into your organization from another planet and infer the vision without having to read it on paper.”

Chapter 11: Building the Vision – A Framework for Clarity and Action

Chapter 11, new to the paperback edition, provides a conceptual framework for defining and articulating a coherent vision within an organization. It aims to add clarity and rigor to the vague term “vision” and offers practical guidance rooted in the Built to Last research. The core message is that a good vision builds on the interplay between core ideology (what doesn’t change) and an envisioned future (what inspires change and progress), providing the guiding context for the fundamental dynamic of “preserve the core/stimulate progress.”

The Vision Framework

A well-conceived vision consists of two major components: Core Ideology and an Envisioned Future. This parallels the “preserve the core/stimulate progress” dynamic.

• Core Ideology: Defines “what we stand for and why we exist”—the enduring character that remains consistent through time, transcending product/market cycles, technology, fads, and individual leaders. It is the “self-identity that remains consistent.”
• Envisioned Future: Sets forth “what we aspire to become, to achieve, to create”—requiring significant change and progress.
• Alignment: To pursue the vision means creating organizational and strategic alignment to preserve the core ideology and stimulate progress toward the envisioned future.

Core Ideology: The Enduring Character

Core ideology is the most lasting and significant contribution of visionary company architects. It is more important to know “who you are” than “where you are going.” Leaders die, products become obsolete, but core ideology endures as a source of guidance and inspiration. It provides the “bonding glue” that holds an organization together amidst growth, decentralization, and diversification. Core ideology has two sub-components:

Core Values: Timeless Guiding Principles

• Definition: The organization’s essential and enduring tenets; a small set of timeless guiding principles that require no external justification. They have intrinsic value and are not compromised for financial gain or short-term expediency.
• Intrinsic Value: Examples include Disney’s imagination and wholesomeness, P&G’s product excellence, Nordstrom’s customer subservience, HP’s respect for the individual. They stem from an inner belief, not market requirements.
• No “Right” Set: There is no universally “right” set of core values. The key is that a company has core values, not what they are. Authenticity and consistent alignment are crucial.
• Identifying Core Values: Push for truly core values (usually 3 to 6). Ask: “If circumstances penalized us, would we still keep it?” If not, it’s not core. Strategies change, core values don’t. A company should change markets if needed to remain true to core values.
• “Mars Group”: Select 5-7 credible individuals who deeply understand the core values to articulate them.
• Discovery, Not Creation: Core values are discovered by looking inside, not derived from external environments or intellectual exercises. They must be passionately held at a gut level. Aspirations should be part of the envisioned future, not core values.
• Guidance, Not Differentiation: Core ideology guides and inspires, but doesn’t necessarily differentiate. Many companies can share similar values/purpose, but few live them as passionately or consistently.
• Internal Meaning: Core ideology needs to be meaningful and inspirational to people inside the organization. It attracts compatible individuals and repels others. You cannot “install” new core values; you find people who already have a predisposition to them.
• Beyond “Statements”: A strong core ideology doesn’t require a formal statement; it’s about deep understanding and consistent living. Focus on content over wordsmithing.

Core Purpose: Fundamental Reason for Being

• Definition: The organization’s fundamental reason for existence beyond just making money. It taps idealistic motivations and captures the soul of the organization.
• Enduring and Unattainable: A purpose should last at least 100 years. It’s like a “guiding star on the horizon”—forever pursued, but never reached. It inspires continual change and progress because it can never be fully realized.
• Beyond Products: Avoid defining purpose by current product lines or customer segments (e.g., Fannie Mae’s purpose: “to strengthen the social fabric by continually democratizing home ownership,” not packaging mortgages).
• “Five Whys” Technique: Start with a descriptive statement (“We make X products”) and ask “why is that important?” five times to get at the fundamental purpose. This helps even “mundane” industries find deeper meaning (e.g., asphalt company: “To make people’s lives better by improving the quality of man-made structures”).
• Inspiring, Not Maximizing Profit: “Maximize shareholder wealth” is a weak, uninspiring substitute. Great organizations talk about contributions, quality improvements, and societal impact, not just EPS.
• “Random Corporate Serial Killer” Game: Helps financial-focused executives reflect on deeper reasons for the organization’s continued existence (“What would be lost if the company ceased to exist?”).
• Motivation for Commitment: In the 21st century, with mobile societies and cynicism, companies need a clear purpose to make work meaningful and attract/retain outstanding people. Ask: “If I never needed to work again, how could this organization’s purpose motivate me to continue dedicating my creative energies?”

Envisioned Future: The Aspiration for Progress

The second primary component of vision, the envisioned future, consists of two parts: a BHAG and vivid descriptions.

Vision-Level BHAG

• Definition: A ten-to-thirty-year “Big Hairy Audacious Goal” that applies to the entire organization, requiring significant effort and pushing beyond current capabilities and trends. It should have a 50-70% probability of success but the organization must believe “we can do it anyway.”
• Categories:
  • Target BHAGs: Quantitative or qualitative (e.g., Wal-Mart: “$125 billion company by the year 2000”; Ford: “Democratize the automobile”; Sony: “change worldwide image of Japanese products”).
  • Common Enemy BHAGs: Focus on beating a competitor (e.g., Philip Morris: “Knock off RJR”; Nike: “Crush Adidas”; Honda: “Yamaha wo tsubusu!”).
  • Role Model BHAGs: Effective for up-and-coming organizations (e.g., Giro Sport Design: “Become the Nike of the cycling industry”; Stanford: “Become the Harvard of the West”).
  • Internal Transformation BHAGs: For old/large organizations needing change (e.g., GE: “Become #1 or #2… and revolutionize this company to have the speed and agility of a small enterprise”).

Vivid Descriptions

• Definition: A vibrant, engaging, and specific description of what it will be like to achieve the BHAG. It translates the vision from words into pictures that people can “carry around in their heads.”
• Passion and Emotion: Essential parts of the description, attracting and motivating others (e.g., Henry Ford’s description of affordable cars for the multitude; Churchill’s description of winning WWII).
• BHAG/Vivid Description Creation: Can start with vivid description first and then impute the BHAG. Questions like “What would we love to see in 20 years?” can guide this.
• No “Right” Answer: Since it’s a creative process (creating, not predicting, the future), there’s no “right” envisioned future. The essential questions are: “Does it get our juices flowing? Do we find it stimulating?” It should produce a “gulp factor”—an almost audible gulp when people realize the commitment required.
• Remarkable Achievement: Visionary companies display a remarkable ability to achieve even their most audacious goals, often through “try a lot of stuff and keep what works” rather than rigid strategic plans, because they are built to create the future.
• “We’ve Arrived Syndrome”: Beware complacent lethargy after achieving a BHAG. Organizations must replace achieved BHAGs with new ones to avoid losing momentum (e.g., NASA post-moon landing, Apple post-Macintosh).

Putting It All Together: Complete Vision Examples

The chapter provides examples of complete visions:

• Merck (1930s):
  • Core Values: Corporate social responsibility, excellence, science-based innovation, honesty, profit from work that benefits humanity.
  • Purpose: To preserve and improve human life.
  • BHAG: Transform from chemical manufacturer to preeminent drug-making company with university-rivaling research.
  • Vivid Description: Advance science, increase knowledge, free human life from suffering, uphold faith, shine light for truth-seekers, toil for a better world, hold aloft science/knowledge.
• Sony (1950s):
  • Core Values: Elevation of Japanese culture/status, pioneering (not following, doing impossible), respect/encouragement of individual ability/creativity.
  • Purpose: Experience sheer joy of innovation and technology application for public benefit/pleasure.
  • BHAG: Become company most known for changing worldwide image of Japanese products as poor quality.
  • Vivid Description: Create pervasive worldwide products, be first Japanese company to distribute directly in America, succeed where American companies failed (transistor radio), brand-name known globally for innovation/quality, “Made in Japan” signifies quality.

Actionable Steps for Building Vision

• Beyond Statements: Don’t just write a statement. The essence is alignment. Vision provides the guiding context for “preserve the core/stimulate progress.”
• Creating Alignment: Two key processes:
  1. Developing new alignments: Inventing new mechanisms, processes, strategies to bring core values/purpose to life and stimulate progress.
  2. Eliminating misalignments: Doggedly correcting inappropriate practices that promote behavior inconsistent with core ideology or impede progress (e.g., inconsistent incentive systems, misaligned strategies, penalties for honest mistakes). Misalignments are “cancer cells” to be cut out quickly.
• Action-Oriented Visioning: When articulating a vision, also identify specific, concrete changes to increase alignment (add new things, obliterate misalignments). Most time should be spent on bringing the organization into alignment, not just articulating the vision.
• Universal Requirements vs. New Methods: Core ideology, relentless drive for progress, and organizational design for alignment are universal requirements. However, the specific methods (BHAGs, cult-like cultures, etc.) can and should be invented and improved.
• The Primary Work of the Clock-Builder: When superb alignment is achieved, a visitor could infer the vision without reading it.

Epilogue: Frequently Asked Questions – Practical Applications and Enduring Relevance

The Epilogue addresses common questions about the book’s findings, offering practical advice and reinforcing the timeless nature of the core concepts.

What Can a Non-CEO Do with These Findings?

• Apply at Any Level: Most findings apply to any work area, even on a smaller scale. One can be a “clock builder” at any level, building a cult-like culture around a strong ideology for a group or department.
• Stimulate Progress: Set personal and group BHAGs, encourage experimentation (“try a lot of stuff and keep what works”), and invent mechanisms of discontent. Example: a manufacturing manager who allowed internal customers to buy components externally to force his group to improve.
• Educate Others: Help colleagues understand clock building, “Genius of the AND,” preserving the core/stimulating progress, and alignment. Point out misalignments.
• Use Credibility: Leverage the success of the visionary companies as evidence when senior executives resist “soft” ideas like core values or purpose. This can “virtually demand that senior management pay attention.”

Is There Hope for Old, Large, Non-Visionary Corporations?

• Yes, but Difficult: It’s harder than building from scratch due to entrenched misalignments.
• Positive Examples: Ford successfully realigned decades after straying. Philip Morris didn’t show many visionary characteristics until its 100th birthday. A large bank, by clarifying its core ideology and aligning, experienced an “amazing” release of human energy.
• Continuum, Not Static: Being visionary is a continuum. Any company can move along it, even if they have a long way to go. It’s a long-term process for those who persist, not a quick fix or fad.

Guidance for a Visionary Company Losing Status (Like IBM)?

• Learn from the Past: Companies can move backward. IBM, once visionary, became conservative. It should re-embrace its own history of audacious BHAGs (like the IBM 360) and fanatical protection of its “Three Basic Beliefs.”
• Challenge to Recalibrate: Set a BHAG equal to the boldness of the IBM 360, betting the company to “obsolete itself.” Revisit and recommit to basic beliefs, possibly through formal rededication efforts.
• Ruthless Realignment: Identify and eliminate specific misalignments that contradict core beliefs or inhibit progress.
• Belief in People: Have faith that IBM people can achieve the impossible again. IBM has the roots to regain its stature if it re-embraces these lessons; otherwise, it may continue to decline long-term.

Are There Any People Who Can’t Build a Visionary Company?

• Few Restrictions: Only those unwilling to persist for the long haul, who like to rest on laurels, have no core ideology, or don’t care about the company’s health after they’re gone.
• No Other Prerequisites: Beyond these, there are no other prerequisites.

Do Your Findings Apply to Nonprofit Organizations?

• Yes: They apply to any type of organization (e.g., universities, churches, hospitals). The form might vary, but the principles hold. The authors believe the architects of the United States used similar concepts.

How Does Your Book Fit Other Works (e.g., In Search of Excellence)?

• Compatibility and Differences: There’s much compatibility with Peters and Waterman’s In Search of Excellence, but key differences:
  • Method: “Built to Last” studied entire life spans and used direct comparisons.
  • Framework: “Built to Last” boiled findings into underlying ideas, particularly “preserving the core and stimulating progress” as an umbrella concept.
  • Specific Attributes: “Hands-On/Value-Driven,” “Autonomy & Entrepreneurship,” “A Bias for Action,” and “Simultaneous Loose-Tight Properties” from Excellence were supported.
  • Less Supported Attributes: “Stick to the Knitting” (unless “knitting” is defined as core ideology; visionary companies can diversify widely if it aligns with core) and “Close to the Customer” (some visionary companies like Sony, HP, Merck were more technology-driven, ignoring customer demands if they pulled away from ideology). It’s “Close to the customer yes, but never at the expense of the core.”
• Peter Drucker: Immense respect for Drucker’s prescience; visionary companies were often influenced by his works.
• Other Works: Compatibility with Schein’s Organizational Culture and Leadership (cultural “hybrids”) and Kotter and Heskett’s Corporate Culture and Performance (strong cultures and performance).

Will Your Findings Become Obsolete in the Twenty-First Century?

• No, More Relevant: The core findings—clock building, the Genius of the AND, preserving the core/stimulating progress, and alignment—will become even more important in the 21st century.
• Accelerating Change: As product life cycles shorten, focus on building the enduring organization, not just fleeting ideas.
• Leader Mortality: All leaders die, reinforcing the need to build organizational characteristics that transcend individuals.
• Ideological Bonding: With decentralization and remote work, traditional controls weaken. Ideology will increasingly become the corporate bonding glue, fulfilling human needs for meaning, shared values, and connection. Employees will demand autonomy AND organizations that stand for something.
• Relentless Self-Renewal: Fragmented, unpredictable environments demand companies adept at stimulating progress (BHAGs, self-stimulated improvement, “try a lot of stuff”).
• Imagination in Application: The book is not a “ten-step program” or cookbook. Building a visionary company is a design problem. General principles must be applied with imagination, adapted to changing conditions. The basic elements underlying Merck, Motorola, P&G, and 3M will remain relevant for a century, even if their form changes.

The End of the Beginning

The authors emphasize four key concepts to take away:

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.

Visionary company builders are not necessarily more brilliant or charismatic; their work is within the conceptual grasp of every manager, CEO, and entrepreneur. This is a profoundly liberating implication, meaning anyone can contribute to building a visionary company. However, it also means life will be “more difficult,” as it requires accepting the frightening truth that one is qualified to help and can start applying lessons “right now—today.” Ultimately, it means working with a deep respect for the corporation as an important social institution that requires care and attention, as it is through human organization that the world’s best work gets done. The book marks “the end of the beginning”—the beginning of the challenging, arduous, but eminently doable task of building a visionary company.