Everyone in the organization would prefer a company to be built to last. Take an inventory of all your previous employers. Why did you leave? How many companies continue operations today as when you were there?
Wall Street/Investors want to see results – revenue and profits increasing quarter-to-quarter and year-over-year. These are elements of time telling as explained in my previous blog here. A history of companies built to last includes the importance of revenues and profits but not always the most important. This identifies the tension.
Peter Drucker identified that the existing business and what’s next – innovation is inseparable for any existing business. The current products/services all have a life cycle, a beginning and end. Innovation is what drives the next product or service life cycle and contributes to the company’s existing business for the future.
Important for any companies’ leaders to accept for clock building is “a shift from seeing the company as a vehicle for products to seeing the products as a vehicle for the company” (Collins p 28). Products as a vehicle for the company, makes the company more likely to be built to last. This will be on display in the organizations summarized below.
How do you see the products/services where you work?
Jim Collins identified 18 companies as built to last from his research. Let’s examine two organizations’ startup journey and how they positioned the company to be built to last.
Hewlett-Packard
- 1937
- William Hewlett and Dave Packard.
- No clear idea for a product but industry in the field of electronic engineering.
- They tried anything to “get them out of the garage and pay light bill” (Collins p 24). In our current exit from lockdown, a good idea.
- Created four products initially, all failed.
- First success after a year, oscilloscopes.
- In 1940’s, HP secured war contracts.
The founders’ mindset and core values
- Opportunistic – do anything to bring in a nickel
- HP focused on the company, its core values, creating an organization, its environment that would result in a sustained operation that brought great products to the marketplace (Collins p 29).
- HP Way – core principles, known for progressive personnel practices, innovative and entrepreneurial culture and an unbroken string of products that make a technical contribution” (Collins p 207).
- “Company exists to make technical contributions for the advancement and welfare of humanity” (Collins p 221).
Sony
- August 1945. WWII ended August 14, 1945.
- Rented, abandoned, bombed out, burned out office.
- Masaru Ibuka initially focused on cash flow, sales and most importantly Sony’s Prospectus.
- No specific product but brainstormed with his employees to decide.
- Initial products were rice cooker, tape recorder and others. All of these failed from 1945 to 1950.
- 1952 Sony embarked to make a “pocketable” radio. It involved trial and error and innovation. While outsiders thought foolish, Masaru Ibuka was determined.
- Sony knows who they are as more important than where they are going, where you go certainly changes as world changes. “Leaders die, products become obsolete, market changes, new technology emerge, management fads come and go; but core ideology in a great company endures as a source of guidance and inspiration” (Collins). This clearly explains why products/services are the vehicle for the company and not the other way.
The founder’s mindset and core values
- Evidence of core values, purpose – rice cookers, crude heating pads, tape recorders, transistor radios, Trinitron Color TV, VCR, Walkman, robotic systems and more, “never finish pursuing its core purpose” (Collins pp 77, 78).
- Do the impossible.
- Technology driven purpose.
- “If Sony ‘seed’ leads only to a technically mundane or low quality ‘fruit,’ the company will sow other seeds” (Collins p 168).
- Goal driven was a habit to become the company best known for changing the image of Japanese consumer products as being poor quality” (Collins p 98, 106).
- Be pioneers.
- Risk taking central to ideology.
- Be the first Japanese Company to distribute directly in America (Collins p 237).
- “To experience the sheer joy of innovation and the application of technology for the benefit and pleasure of the general public” (Collins p 237).
- Respect and encouragement of individual ability and creativity (Collins p 237).
- R&D, many corporations have R&D. “The main difference lies in the establishment of mission – oriented research and proper targets.” Other companies didn’t set boundaries. “We (Sony) don’t; we find an aim, a very real and clear target and then establish the necessary task forces to get the job done” (Collins p 107).
There are 16 other organizations in Jim Collins’ built to last category. Each with an individual startup journey. There are a number of constants in each which were shared in my previous blog here. Of the 18 companies only three had an identified product on which to build an organization. These three will be presented in my next blog because it does affect the startup phase. The blog series will continue by examining developments for the built to last companies since 2002.
All the best as you build your organization to last in 2022 and beyond.