Tuesday, April 21, 2009

Built to Last

I just finished reading Built to Last: Successful Habits of Visionary Companies, and I enjoyed it quite a bit. I first read about it in this WSJ article, where CEOs pick their favorite leadership books, and after seeing its high ratings on Amazon, decided to pull the trigger and pick it up.

The book was written by a team at the Stanford GSB, and it identifies and discusses the common behaviors and practices found in visionary companies while discrediting common myths by comparing them to a set of counterparts considered less visionary. For example, 3M is compared to Norton, IBM to Burroughs, Merck to Pfizer, etc, etc. The book defines visionary companies as "premier institutions in their industries, widely admired by their peers and having a long track record of making a significant impact on the world around them".

I took away the following key points:
  • A company doesn't need to be built around a great idea/product. They refer to Sony and 3M as examples of companies that were created in order to pursue a goal and initially toyed with a variety of products before finding anything that gained traction. Sony's founders wanted to improve the image of Japanese products across the world, so that "Made in Japan" would be a sign of quality; they just didn't know how to do it at first.
  • A visionary company doesn't require a high-profile, charismatic leader. Although having someone like Steve Jobs as your CEO is nice, a lot of great companies (3M, Procter & Gamble, Sony, Boeing, Merck) are started by regular Joes like you and me.
  • It is important to have a core ideology that never changes. It should be composed of core values, which are a small list of unequivocal tenets that the company/organization adheres to at all times, and a purpose (why the company exists). This core ideology should be ingrained in the fabric of your company, and employees should be sought that wholeheartedly believe in the core ideology. In some of the companies studied, the culture, built on the idealogy, was almost cult-like. For example, at IBM, we have a company song, Ever Onward!
  • Outside of the core ideology, everything else can change. The book's core principle is summed up as "Preserve the Core/Stimulate progress". They recommend putting mechanisms, such as Big Hairy Audacious Goals, in place that will give the company/organization something that it can constantly strive to achieve and a reason to continue improving. Complacency is your worst enemy! New things should be encouraged, and you should only hold on to what works. These mechanisms should align closely with your core ideology. They identify "alignment", the process of setting your company up to succeed per its core ideology, as the most important job of a leader. Above all else, the leader should build a company that can continue to succeed even after they are gone.
There were other ideas, such as leadership progression, covered in the book, but it is getting late, and I'm too tired to remember or cover them all.

In summary, if you are interested in starting/managing a company or organization, I would highly recommend that you pick up this book. It is a fairly short read, and it is well worth the time required to cover it.

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