This is according to research for over 6 years by a team led by Jim Collins. The details of the research materials are in my previous blog.
First concept, clock building, not time telling. Second concept, “preserve the core, stimulate progress.”
You know your business, markets, industry, the current economic climate, threats to your business, stock market activity, risks and more. Do you know if your company is built to last?
Innovation Advantage LLC analysis includes the determination if both concepts are part of the client’s business. In addition, the compass heading analysis also reviews if the client’s compass heading is growth or decline. Any company planning should be based on if the company is built to last, if its compass heading is growth or decline. Otherwise, the strategic plan and operations plan could be flawed from the start.
Built to last concepts are:
Clock building characteristics are:
- Leaders “concentrate on building an organization” (p. 23).
- Tinker.
- Opportunistic.
- Build a company that prospers beyond its founder through multiple product life cycles.
- “Founders persistent, never, never, never give up. Be prepared to kill, revise or evolve an idea, but never give up on the company” (p. 20).
- “Ultimately, creation of the company, not execution of a specific idea or capitalize on timely market opportunity (a fad)” (p. 20).
- “Products and services make useful and important contributions to customers’ lives. Do something useful” (p. 31).
- Chief executives at built to last companies “overcome significant obstacles, attracted dedicated people (right people, right seats), influencer, achieved goals” (p. 31).
- “Bring on people who share the leader’s vision (passion) and entrepreneurial spirit” (p. 35).
- Leaders at built to last companies value change, experimentation, constant improvement and create organizations with mechanisms to drive change and improvement, (p. 36).
- Create organizations that would evolve and change on its own (p. 37).
- Greater attention is given to developing the company and its capabilities than to products (p. 38).
- Invest in in-house university – orient, train, indoctrinate in core values and all it takes to build a company to last (p. 40).
The result of clock building as described by Jim Collins’ research:
- “Building a company that can prosper far beyond the presence of any single leader and through multiple product life cycles” (p. 23).
- “Shift from seeing the company as a vehicle for the products to seeing the products as a vehicle for the company” (p. 28).
- “See the company as the ultimate creation” (pp. 28 – 34).
Not time telling characteristics are (pp. 31 – 39)
- Company began with a great idea.
- Charismatic leader.
- Hot market just at the right time, visionary product, idea, ride the curve of attractive product life cycle.
- Organizationally not able to pivot, continually change, evolve beyond the existing product life cycles.
- Leaders build upon their egos; limelight is on them.
- No creativity.
- Organization is not developed to do anything on its own.
- Tight controls.
According to Jim Collins’ research, built to last companies are most likely the ones that are clock builders. To know if your company is a clock builder requires research of the company’s beginning and what has developed since.
This leads to the second concept for a company to be built to last – “preserve the core, stimulate progress.”
Core ideology alone can’t make a company built to last. It is the framework to begin. Core ideology is made up of core values and purpose. Core values are defined as “the organization’s essential and enduring tenets – a small set of general guiding principles; not to be confused with specific cultural or operational practices; not to be compromised for financial gain or short-term expediency” (p. 73).
Purpose is defined as “the organization’s fundamental reasons for existence, beyond just making money – a perpetual guiding star on the horizon; not to be confused with specific goals or business strategies” (p. 73).
Do you know your company’s core values and purpose? Are these documented, circulated, reviewed regularly with all employees? How many times in the past 3 months has leadership or you communicated or promoted these? With changes in leadership, have these ever changed? How has your company’s core ideology guided decision making?
Let’s review a short list of examples of core ideology (pp. 81, 82)
- HP – “respect and concern for individual employees.”
- Wal-Mart – “exceed customer expectations.”
- 3M – “respect for individual initiatives.”
- A previous employer – family, have fun.
The next piece of the second concept – stimulate progress. What does it look like? See if any of these are present where you work.
- Built to last companies have a “relentless drive for progress that impels change and forward movement in all that is not part of the core ideology. The drive for progress arises from a deep human urge to explore to create, to discover, to achieve, to change, to improve” (p. 82).
- Drive for progress “is an internal force” (p. 84).
- “Drive to go further, to do better, to create new possibilities needs no external justification” (p. 84).
The combination of clock building, not time telling and preserve the core, stimulate progress are the basic framework elements for built to last companies.
Does your company have these? If not, what should be done? Any corporation wants to avoid risk. This is one path to avoid the risk of not being built to last.
Seventeen of the eighteen companies listed in Built to Last by Jim Collins as companies built to last, continue today. There are no guarantees.
All the best in your journey to be built to last in 2022 and beyond.