In Jim Collins 1994 book Built to Last, he analyzed companies that were successful over the long term. Not one hit wonders, not those that are remembered for a product, but those that transcended changes in technology, customer needs and wants, and changes in leadership. The basic tenant of building something to last is to focus on the fundamentals.
“In a world of constant change, the fundamentals are more important than ever” – Jim Collins
Listed below are five main themes from Built to Last. Let’s see how each of those applies to leadership today.
“Make the company itself the ultimate product—be a clock builder, not a time teller”
This is the difference between fulfilling one need one time, or building a company, process, or person that can fulfill many needs many times.
“Having a great idea or being a charismatic visionary leader is time telling; building a company that can prosper far beyond the tenure of any single leader and through multiple product life cycles is clock building.” – Jim Collins
Here is how you can use this theme in your leadership practices:
Companies – “We don’t have products we sell to customers, we have customers that we sell products to.” – Denis G. McLaughlin
Processes – “We don’t use people to complete projects, we use projects to complete people.” – Denis G. McLaughlin
People – “Don’t strive to earn a million dollars, instead strive to become a person capable of earning a million dollars.” – Paul Martinelli
“Build your company around a core ideology”
Change is the only thing that will consistently happen. The economy changes, regulations change, customer needs change, and leadership changes. To be successful over the long term, you must adapt to these changes. According to Collins, the only way that this can work is for a company to “be prepared to change everything about itself except its basic beliefs as it moves through corporate life.”
Here are a few examples from the book:
-3M’s dedication to innovation
-P&G’s commitment to product excellence
-Nordstrom’s ideal of heroic customer service
Other leaders have viewed this theme in their leadership practices:
“We succeed only as we identify in life, or in war, or in anything else, a single overriding objective, and make all other considerations bend to that one objective.” – Dwight Eisenhower
“Success demands singleness of purpose.” – Vince Lombardi
“You have to know where you’re going. If you don’t know where you’re going, you’ll never know if you’ve arrived.” – Denis G. McLaughlin
“Build a cult-like culture”
Having a strong core ideology, or purpose, is foundational. But unless that ideology is lived out it is just words. You have to have a plan for establishing a culture that supports the ideology. Leaders are responsible for defining the purpose, articulating the purpose, and rewarding achievement of the purpose.
Once you establish your vision, you must clearly articulate it, over and over, to maintain focus.
Theodore Hesburgh said, “The very essence of leadership is that you have a vision. It’s got to be a vision you articulate clearly and forcefully on every occasion. You can’t blow an uncertain trumpet.”
People will naturally repeat the very things that they are rewarded for achieving. First, set goals that when successful completed, lead to achieving the purpose. Second, reward the employees who participated in the successful goals. This is more than money. Rewards come in many forms, all which should be used with regularity, as earned: Public and private praise, increased responsibility, new challenges, more training,
“The only way to get people to like working hard is to motivate them. Today, people must understand why they’re working hard. Every individual in an organization is motivated by something different.” – Rick Pitino
“Homegrow your management”
I view succession planning with equal importance as setting the vision and strategy for the company or team. I fact everything that I do is about succession planning, including setting the vision and strategy. Leaders should use every opportunity to teach and grow leaders in the organization.
“One of the things we often miss in succession planning is that it should be gradual and thoughtful, with lots of sharing of information and knowledge and perspective, so that it’s almost a non-event when it happens.” – Anne Mulcahy
If you aren’t teaching someone else how you do what you do, you are letting opportunity pass you by. Your main role as the leader is to prepare a successor while you lead the team. It shouldn’t be something that is part of your long term plan to get to when you are near the end of your season – that’s too late.
“From now on, choosing my successor is the most important decision I’ll make. It occupies a considerable amount of my thought almost every day.” – Jack Welch, former CEO of General Electric, nine years before he retired.
Are homegrown managers effective? Don’t we need new ideas from outside of the organization? Collins summarizes the success in developing CEO’s in house with some examples from his book:
“Consider that the founders of Ford, Hewlett-Packard, Johnson & Johnson, Marriott, Merck, Motorola, Nordstrom, Philip Morris, Procter & Gamble, Sony, Wal-Mart, and Disney remained in the role of chief executive for an average of 37 years each. They were founder-entrepreneur types and manager-builder types. Not only that, their immediate successors—all homegrown insiders—remained in office for 24 years on average.
“Stimulate progress through experimentation and continuous improvement”
Throughout this article we have stated that companies that were built to last were those that transcended changes in technology, customer needs and wants, and changes in leadership. To survive change, one must be willing to change. However, the willingness to change does not bring with it the perfect ability to successfully change.
The secret to success in a changing environment is to allow for continuous improvement through small experiments that yield small successes in finding ways to take small steps forward.
“The way to simulate the drive for progress is to create an environment that encourages people to experiment and learn—to try a lot of stuff and keep what works.” – Jim Collins
Companies that are built to last do not rest upon their current state of achievement. Instead they are always looking forward to the next change, challenge, and championship.
“Excellent firms don’t believe in excellence – only in constant improvement and constant change.” – Tom Peters