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Built to last companies established core values by founders and reinforced by successors.  “Core values are the organization’s essential and enduring tenets – a small number of timeless guiding principles that require no external justification; they have intrinsic value and importance to those inside the organization” (Collins p 222).  These companies’ leaders held tight to these values through the years.  However, missteps occurred (self-inflicted or external) that required action.

Let’s review some of the companies and what they did.  All references are from Jim Collins’, Built to Last.

Citicorp – Founded 1812

Ideology (Collins p 68)

• “Expansionism – of size, of services offered, of geographic presence
• Being out front – such as biggest, best, most innovative, most profitable
• Autonomy and entrepreneurship (via decentralization)
• Meritocracy
• Aggressiveness and self-confidence”

Challenges

• The Great Depression that affected all financial institutions in this era
• Fined $400 million for internal practices, October 2020
• No other significant challenges were identified

Initiatives to support the core values

• ATM pioneered on a wide scale
• “Set a goal to become the most pervasive financial institution in the world when it was small enough that such an audacious goal would seem ludicrous, if not foolhardy” (Collins p 83).
• Unlike its comparison company, during the 60’s to 80’s Citi was “loosely structured corporation fueled by a chaotic kind of creativity, a corporate survival of the fittest among highly talented people well rewarded for championing innovative ideas” (Collins p 165).
• Citi invested in important new methods like (Collins p 194)
  • “Divisional profitability statements
  • Merit pay
  • Management training programs
  • College recruiting programs
  • National charter
  • ATM
  • Credit cards
  • Retail and Foreign branches”
• James Stillman, president and chairman “concentrated on organizational development in pursuit of his goal to build a great national bank” (Collins p 35).
• He built the organization with people who shared “his own vision and entrepreneurial spirit, people who would build an organization” (Collins p 35). The organizational building continued with successors of leadership and those who shared in the vision.

Proctor and Gamble (P&G) – Founded 1837

Ideology (Collins p 70)

• “Product excellence
• Continuous self-improvement
• Honesty and fairness
• Respect and concern for the individual”

Challenges

• In 1991, P&G attempted to obtain Cincinnati phone records of employees to identify those who spoke with a Wall Street Journal Reporter to most likely take disciplinary action against them. It violated its own value “respect and concern for the individual” (Collins p 72).
• P&G with its product source in timber has faced and expect P&G to face further concerns about its forestry practices and the impact.

Initiatives to support the core values

• Established and invested in its in-house training and development center early in history (Collins p 183).
• Set a goal in 1919, “to reach a point where it could provide steady employment for its workers by revolutionizing the distribution system bypassing wholesalers and going straight to retailers” (Collins p 103). P&G achieved this goal in 1923 in spite of the push back from inside the company (Collins p 104).
• P&G established a rigorous and robust on-boarding process for its new hires to ensure alignment to its core values, understand its history, brands and all expectations (Collins p 132).
• 1850’s – William Procter and James Gamble introduced the concept of continuous improvement which aligned with preserve the core and stimulate progress (Collins p 186).
• 1887 – introduced profit sharing for workers (Collins p 133).
• 1892 – introduced employee stock ownership plan (Collins p 133).
• 1915 – introduced “comprehensive sickness, disability, retirement, life insurance plan (Collins p 133).
• 1931 – established that P&G brands competed to avoid complacency (Collins p 187).
• Progress and results are important and so is how results are obtained (Collins p 80).
• “William Procter and James Gamble’s most significant contribution was not hog fat soap, lamp oils, or candles, for these would eventually become obsolete; their primary contribution was something that can never become obsolete: a highly adaptable organization with a ‘spiritual inheritance’ of deeply ingrained core values transferred to generation after generation of P&G people” (Collins p 30).

3M – Founded 1902

Ideology (Collins p 68)

• “Innovation; ‘thou shalt not kill a new product idea’
• Absolute integrity
• Respect for individual initiative and personal growth
• Tolerance for honest mistakes
• Product quality and reliability
• Our real business is solving problems”

Challenges

• Mining operations failed, only one ton of material sold (Collins p 256).
• The journey to identify what’s next lasted months (Collins p 150).
• 1907 to 1914, 3M experienced quality problems, low margins, excess inventory, cash flow challenges (Collins p 151).
• 1924 entered “automotive wax and polish,” costly mistake and exited the market (Collins p 153).
• Most recent from September 5, 2022, Yahoo Finance, veterans continue their lawsuit over earplugs provided to them in combat. Now 3M is spinning off the troubled company to limit its liability.  This lawsuit continues that was started years ago.

Initiatives to support the core values

• “3M rejected the conventional business wisdom that a small growing company should concentrate on one line of business; a focused strategy simply didn’t fit with the type of innovative company 3 Mers wanted to build” (Collins p 215).
• 1914 – “the company began tinkering and experimenting with product improvements that kept the company viable – just barely” (Collins p 151).
• 1914 – 3M’s first lab was setup in a storage room corner, with a sink, glue bath, invested $500 (Collins p 151).
• The focus of McKnight (CEO), was on building an organization. “..create an organization that would continually self-mutate from within, impelled forward by employees exercising their individual initiative” (Collins pp 151, 152).
• Understood mistakes would be made by people but recognized mistakes “are not as serious in the long run as the mistakes management will make if it is dictatorial and undertakes to tell those under its authority exactly how they must do their job. Management that is destructively critical when mistakes are made kills initiative and it’s essential that we have many people with initiative if we are to continue to grow” (Collins pp 152, 153).
• 3M institutionalized the process to discover new products called “variation and selection. If it is good, we want it; if it is not good, we will have purchased our insurance an peace of mind when we have proved it impractical” (Collins p 153).
• Early CEO’s “created a company – a mutation machine – that would continue to evolve independent of whoever happened to be chief executive” (Collins p 155).
• Stimulate progress is supported by 3M processes that encourage it.
• 1916 – profit sharing program introduced; 1937 – expanded to nearly all employees (Collins p 158).
• 15% Rule – tech people to spend their time on personal projects (Collins p 156).
• 25% Rule that was increased to 30% in 1993 for new products introduced over the past 4 years (Collins p 156).
• William McKnight “understood that it is far more important to know who you are than where you are going, for where you are going will certainly change as the world about you changes” (Collins p 221).
• “3M doesn’t define its purpose in terms of adhesives and abrasives, but as the perpetual quest to solve unsolved problems innovatively” (Collins p 226).
• 3M has a core ideology element of innovation; the importance is how the ideology is believed and lived out within the organization (Collins p 226).

Merck Founded 1891

Ideology (Collins p 69)

• “We are in the business of preserving and improving human life. All our actions must be measured by our success in achieving this goal.
• Honesty and integrity
• Corporate social responsibility
• Science-based innovation, not imitation
• Unequivocal excellence in all aspects of the company
• Profit, but profit from work that benefits humanity”

Challenges

• Began as a chemical manufacturer and transformed into drug-making company (Collins p 236).
• Research requirements, long periods of time and investment.
• Federal Government regulation for pricing models, state requirements
• FDA approval

Initiatives to support the core values

• 1920’s – George Merck state a core value, “medicine is for the patients; not for the profits” (Collins p 16).
• 1930’s – “Build research capability so capability so outstanding that it could ‘talk on equal terms with the universities and research institutions’” (Collins p 205).
• 1950’s – “Transform itself into a fully integrated pharmaceutical company….” (Collins p 205).
• 1950’s – Merck strategy “yield market share as products became low-margin commodities thus forcing itself to produce new innovations in order to grow and prosper” (Collins p 188).
• 1970’s – “To establish Merck as the preeminent drug maker worldwide in the 1980’s” (Collins p 205).
• 1980’s – “To become the first drug maker with advanced research in every disease category” (Collins pp 206).
• 1990’s – “Redefine the pharmaceutical paradigm” (Collins p 206).
• Published Values and Visions: A Merck Century – stressed throughout its history that Merck operated its business by its ideology (Collins p 47).
• Developed and gave away Mectizan for river blindness.
• Leaders at Merck understood and are guided by to know who you are than where you are going. It is understood that leaders die, products come and go, markets change, technologies are dynamic and change, management theories shift but your core ideology must remain (Collins p 221).

Boeing – Founded 1915

Ideology (Collins p 68)

• “Being on the leading edge of aeronautics; being pioneers
• Tackling huge challenges and risks
• Product safety and quality
• Integrity and ethical business
• To eat, breathe, and sleep the world of aeronautics”

Challenges

• Boeing gambled in 1930’s when it began military plane production.
• In 1952, Boeing had no experience in commercial aircraft when it developed, produced the 707, previous attempts were complete failures, 80% of your business is with the US Air Force, commercial airlines in US and Europe have zero interest in a commercial jet from Boeing, no other airline company has demonstrated that there is a market for jets (Collins pp 91, 92, 167).
• At the end of WWII, Boeing laid off about 85% of its workforce, investment for jet prototype, $15 million (Collins pp 91, 92).
• History of taking risks – pinnacle with 747 in 1965. This was done without leaders knowing the ROI for the investment (Collins p 62).
• 1969 to 1971 Boeing laid-off nearly 60% of its workforce (Collins p 100).
• Boeing 737 Max, 2 crashes, grounded in 2019 for 20 months, blamed on – flight control system, “fierce competition with rival Airbus, pressure to cut costs, speedup production, fines to date $2.5 billion, Boeing’s reputation damaged (https://www.cnbc.com/2022/01/24/the-737-max-may-be-back-but-boeing-is-still-trying-to-get-back-on-course.html).

Initiatives

• Central to Boeing’s ideology is significant risk taking (Collins p 67).
• Created discomfort for itself with a planning process called ‘eyes of the enemy.’ Assigned manager to develop a strategy to destroy Boeing as if employed by a competitor (Collins p 188).
• “Boeing held itself to aircraft design safety standards that far exceeded it competitors’ not because the market demanded it, but because Boeing’s ideology demanded it” (Collins p 215).
• “Become the dominant player in commercial aircraft and bring the world into the jet age” (Collins p 232).

Through the Built to Last blog series, many of the companies in this category by Jim Collins were covered.  For those not covered, each has its own story.  Some are in the news that appear to detour away from preserving their core values, most notably J&J and The Walt Disney Company.  It is apparent based on history – return to their core ideology or face possible decline or irrelevancy.

Through the lens of today, the conditions – economic, political, and social may appear unprecedented and maybe they are, time will tell.  One fact remains through history and demonstrated by companies in business for 76 years to 210 years, the basis for a company to be built to last remains:

• Preserve the core
• Stimulate progress
• Clock build
• Not time telling

All the best to you toward that end.

Unplanned wake up calls may be coming at you now.  If missed, the implications could be far worse than a missed call at a hotel.

What do wake up calls look like today for you personally, your business or employer?  Wake up calls signify something important.  In the past at a hotel – a business meeting or for me – get to the client.  Today’s unplanned wake up calls most likely will carry greater sense of urgency or significance.

Your wake-up call may be internal to your company as a leader, employee or external from investors, shareholders, banks, government, customers, markets or industry competitors.  The call may be about

• Revenues are flat or in decline.
• Overall profits are down, what are the trends for specific products?
• Stock price is down and trend continues.
• Expense trends are most likely up, increasing.
• Employee turnover, great resignation.
• Supply chain issues increasing, delays and or canceled orders increasing.
• Regulations.
• Competitors’ recent developments that will impact your business.
• Market share trends.
• Productivity is not where it needs to be.
• No clear sense of direction and more difficult to admit, our strategy was not on target.
• Invested $1.5 billion in R&D and nothing to show for it. I researched two companies and this is the case for each of them.
• What do you think, do you have others to add?

Ignoring any wake-up call could be an issue in the short-term or long-term.  Missed wake-up calls have a negative impact on us.  Important thing to do:

• Answer the call.
• Develop a response.
• Own it.
• Develop an action plan.
• Be decisive.
• Execute the plan.
• Review.
• Adjust accordingly.

Part of Innovation Advantage LLC overall analysis is to conduct a pivot analysis.  The Pivot Analysis takes into account your existing business, its current state and asks the question, pivot to what is out there as an opportunity, how to leverage and gain momentum, improve results.

As leaders in business or employees, regardless of size, to miss your wake-up call could develop into something more serious.  Your best path forward, answer the wake up call on the first ring and act.

All the best.

Decide now to examine, plan, then execute. Johnson & Johnson, General Electric and Ford began their built to last journey with an existing product.  These three companies’ leaders understood that the products were a vehicle for the company.  Products as a vehicle for the company makes the company more likely to be built to last.   Let’s review how these companies’ leaders began their journey.

Johnson and Johnson (J&J) – all information from J&J Website/Our Story

Robert Wood Johnson started his career as a pharmaceutical apprentice in the family’s pharmacy in 1861.

• 1873 – Co-founded his own company with George Seabury – medicated plasters.
• 1876 – Robert visited the World’s Fair, heard Dr Joseph Lister on antiseptic surgery. This redirected his career.
• 1886 – Robert with his two brothers began J&J, mass produced sterile surgical supplies. The products were sutures, absorbent cotton gauze.  Corporate social responsibility was initially practiced.
• 1888 – Products were not enough to impact the industry. The company published Modern Methods of Antiseptic Wound Treatment for doctors.  A training publication and sales guide for products.
• 1890 – J&J pioneered employee benefits.
• 1932 – Robert Wood Johnson II, son of founder, as president increased wages, reduced work hours, created new jobs. This was during the great depression.
• 1935 – Robert II believed business more than profits.
• 1943 – Seventy years after starting, J&J published a declaration of its value system, Our Credo, formal statement of corporate social responsibility to consumers, employees, community before its stockholders.

The J&J clock building (focused on the organization) was firmly established, its organization shaped to endure a number of challenges.  These will be reviewed in the next blog.

General Electric (GE)

Founders include, Thomas Edison (45); Elihu Thompson (35); Charles Coffin (48).  In 1892 the founding of GE started with Edison’s DC System and had to change to Westinghouse’s AC System (Collins p 27).

According to Collin’s research, company’s core ideology is a foundation to a built to last strategy.  GE’s core ideology was established early.

• “Improving the quality of life through technology and innovation.
• Interdependent balance between responsibility to customers, employees, society and shareholders.
• Individual responsibility and opportunity.
• Honesty and integrity” (Collins p 69).

Collins’ research of visionary companies (those built to last) invested early and significantly in “new technologies, management methods, innovation industry practices” (Collins p 183).

GE’s leadership through its early development invested in a number of initiatives to ensure the organization was built to last.  An example for GE in 1956, “GE published and distributed, Some Classic Contributions to Professional Managing. The purpose was designed to spread powerful management ideas throughout the ranks of GE” (Collins p 194).  Secondly, GE instituted a process called “work out.” “Groups of employees meet to discuss opportunities for improvement and make concrete proposals.  Upper managers are not allowed to participate in the discussion, but must make on-the-spot decisions about the proposals in front of the whole group – he or she cannot run, hide, evade or procrastinate” (Collins p 188).  A core GE value is to promote from within.  GE’s history demonstrated this back to 1922.  Collins’ research of companies built to last showed this is one consistent value of nearly all 18 companies.

• 1913 – Charles Coffin, first chairman – GE Research Lab (Collins p 28, 29).
• 1922 – Gerald Swope – moved into home appliances, introduced the idea of “enlightened management with balanced responsibilities to employees, shareholders and customers” (Collins p 170).
• 1950 – Ralph Cordiner – restructured, decentralized, initiated management by objective, created management training program (Collins p 170).
• 1964 – Fred Borch – invested in jet aircraft engines and computers (Collins p 170).

It is evident that building a company to last takes time, energy and commitment from multiple leaders.  While the core values established the guiding principles, promote from within ensured constant adherence to them.  However, the leaders at GE made missteps.  These will be highlighted in the next blog.  One thing, GE continues to operate for over 130 years.

Ford Motor Company

In 1903, Ford began but not with the Model T.  The Model T came after the Models A, B, C, F, K.  Ford was one of 502 companies in the US founded between 1900 and 1908 to manufacture autos (Collins p 27).  Why did Ford continue and nearly all the others disappear?  According to Collins, Ford wove its company into the “fabric of society” with the Model T and later with the Mustang (Collins p 4).  Henry Ford’s mechanical interest began at 12 and by 15 developed his first steam engine which led to an apprenticeship (Ford Website).

• 1891 – employed at Edison Illuminating Company, Chief Engineer by 1893. Thomas Edison became a lifelong friend and mentor (Ford Website).
• 1899 – resigned from Edison Illuminating Company and organized the Detroit Automotive Company, 18 months later it filed bankruptcy (Ford Website).
• 1901 – Henry Ford established his second company, Henry Ford Company (Ford Website).
• 1903 – Henry Ford and 12 others established the Ford Motor Company, first sale July 15, 1903 (Ford Website).
• 1907 – Henry Ford stimulated his company with this objective, “to democratize the automobile. To build a motor car for the great multitude. It will be so low price that no man making a good salary will be unable to own one and enjoy with his family the blessing of hours of pleasure in God’s great open spaces…everyone will be able to afford one and everyone will have one” (Collins p 97).
• Up to 1907, there were over 30 companies in the automobile market with no clear leader. Eventually, Ford rose to number one then fell because it achieved its goal and failed to set another (Collins p 97).
• 1914 – Instituted $5 Day, doubled the existing pay, reduced the hours per shift from 9 to 8, employee retention improved, allowed Ford employees to purchase Fords. The 8-hour shift allowed for 3 shifts per day instead of 2.  Increased pay, less hours, increased free time, contributed to the beginning of middle class in the US (Ford Website).
• 1916 – Henry Ford, “I don’t believe we should make such an awful profit on our cars. A reasonable profit is right, but not too much.  I hold that it is better to sell a large number of cars at a reasonably small profit.  I hold this because it enables a larger number of people to buy and enjoy the use of a car and because it gives a larger number of men, employment of good wages.  These are two aims I have in life” (Collins pp 52, 53).  A label developed from Ford’s statement – the 3 P’s, People, Products, Profit.  From 1908 to 1916 Ford lowered prices on the Model T by 58% (Collins p 53). Henry Ford early in the Ford journey demonstrated his clear ideology.  This would be revisited later in Ford’s journey at a critical time which will be highlighted in my next blog.
• 1918 – After WWI, Ford hired disabled veterans establishing Ford as one of the first companies to hire disabled veterans and adapt work environments (Ford Website).
• 1930 – Moving Forward outlined Ford’s industrial and social theories, 27 years after the company’s start.

How does your company’s story compare to J&J, GE or Ford?  Are the company’s core values documented and available to all?  Is your mindset, products or services being a vehicle for the company?  This mindset has demonstrated a distinguishing characteristic for built to last companies according to Collins’ research.

The building of a company to last with existing products or services then and now would be different.  However, your company if not built to last can be and the starting point is the organization itself, its core values that are unchanging and timeless, and leadership that holds them secure through any circumstances.

The current circumstances that your company possibly experiences could be a challenge.  Most of the 18 companies identified in Collins’ Built to Last book detoured from their core values.  However, they righted the ship and continued.  The next blog will review some of the detours and how the leadership restored the direction of the company.

 

All the best.

The end of the globalization era will take time to develop.  It does appear to be underway according to the article.

If so, how will it impact your company’s short-term and long-term, your existing business and what’s next – innovation, the company’s future revenues and profits?

Certainly, the global supply chain has been stressed over the past 2 years with COVID and it continues.  It will only increase with the Russia Ukraine War.  COVID caused companies to reconsider their manufacturing footprint and now increased awareness with the isolation of Russia in financial markets and operations will escalate this re-evaluation further.  Will companies and governments reconsider their models to be more home based than a global footprint?  If so, there are many implications to this decision for investments, investors, operations, staffing, political and governmental implications.

Here is the link to the article by Larry Fink, BlackRock, founder.

Business leaders need to be decisive, action oriented or possibly fall behind.

All the best.

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.

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.

One key element to understand, the existing business and what’s next – innovation is inseparable.

Did you take the built to last self-assessment shown in my previous blog?   The self-assessment includes some elements that Jim Collins presented in his book Built to Last.

Here is the self-assessment in my previous blog.

Jim Collins identified 18 visionary companies that he recognized as built to last.  The 18 companies began in 1812 to 1946.  The research behind these was extensive as he explained in his book.

• “100 books
• Over 3,000 individual documents (articles, case studies, achieve materials, corporate publications, video footage)
• Reviewed over sixty thousand pages of material, the actual number is probably closer to one hundred thousand pages
• Filled three shoulder height file cabinets
• Four bookshelves
• Twenty megabytes for financial data and analysis”
• The team that conducted the research and completed the book numbered over 30
• Copy writes for book are 1994, 1997 and 2002, total pages 342

Consider what corporations face today that were not present then or as developed as in 2021.

• Global scale for most businesses, supply chain, customers, employees, operations, sales and marketing
• Technological changes and the pace of change
• Inflation the highest since 1990
• Cyber threats to steal your data on customers, employees, IP, financial resources, hold hostage any organization for financial gain
• Possibly expanding government regulation
• Political correctness
• Social media
• Work from home or choose not to work creating labor shortages, increasing labor costs
• 24/7 news reporting, apps on phone reporting constant business information
• Climate change
• Pandemic

Do these make built to last a more challenging proposition today?

There were also 18 comparison companies, one for each of the 18 visionary companies.  Is there a comparison company to yours?  How do you compare?

Do you think your company is built to last?  What would you base your answer on?

For this blog series, I will attempt to provide information for you to determine if your company has what it takes to be built to last.

The list below includes the 18 visionary companies and 18 comparison companies that Jim Collins completed in his research for the book Built to Last.

Visionary	Year Began	Comparison	Year Began
Citicorp	1812	Chase Manhattan	1799/1877
Proctor & Gamble	1837	Colgate	1806
Philip Morris	1847	RJR Nabisco	1875
AMEX	1850	Wells Fargo	1852
J & J	1886	Bristol-Myers Squibb	1887
Merck	1891	Pfizer	1849
General Electric	1892	Westinghouse	1886
Nordstrom	1901	Melville	1892
3M	1902	Norton	1885
Ford	1903	GM	1908
IBM	1911	Burroughs	1892
Boeing	1915	McDonnell Douglas	1920
Walt Disney	1923	Columbia	1920
Marriott	1927	Howard Johnson	1925
Motorola	1928	Zenith	1923
Hewlett-Packard	1938	Texas Instruments	1930
Sony	1945	Kenwood	1946
Wal-Mart	1945	Ames	1958

As you review the lists of companies, you will recognize some and not others.  Some have come and gone.  We can start on a macro view of the visionary companies.  What are some elements, characteristics, issues that they experienced and still operate?

• Founders came and went
• Multiple generations of leadership
• Product life cycles begin and end
• Recognized as a leader in its industry
• Admired by others
• Impact their local community and globally
• They failed and rebooted
• Faced cash-flow problems
• Layoffs of a significant number
• Stock price declines
• Experienced significant profit losses
• Lived through business collapse, depressions, recessions
• Near bankruptcy
• Lawsuits from stockholders, customers, employees, governments
• Products/service an integral part of global society
• Touched the lives all over the world
• Managed business startup to continuing operations after 50, 100, 150, 200 years
• A great place to work
• Started with a plan, an idea
• Started without a plan, a general idea
• Do whatever to pay the light bill

Any of these in your history?  How did you manage through them? How did your company come out?  What have you learned?  What changed as a result?

There is no formula to ensure that your company is built to last.  Why are companies that are over 200 years old still operating?  Let’s examine some specific reasons.  This will be the topic in the next blog.

The year 2022 is upon us all – Happy New Year.

We are all on a journey to build our company, all the best.

Is the only purpose for discovering opportunities to increase revenues and profits?

Is there a process for any employee to identify an opportunity and develop it?

Discovering opportunities is more than just revenues and profits.  Discovering opportunities unleashes the potential creativity of all employees, your internal experts, who are your eyes and ears in your markets and industry.  Discovering opportunities creates a culture of entrepreneurship, trust, management seeing employees’ potential to contribute to the long-term durability of the company.  This has played out in a number of examples that contributed to companies being built to last.

2022 Budgets, strategies, departmental plans are most likely completed.  Is there an opportunistic element for 2022?

With all the 2022 planning, can you determine if your company or employer is built to last?  Is the existing business going to be strong, viable, relevant to the market, to fund the operations and provide all the resources for what’s next?  The what’s next is your future revenues and profits, customer requirements met, anticipated customer requirements met.  If not opportunistic or built to last, what needs to change?

The next blog series is on “built to last.” Jim Collins published this book in 1994 with new editions in 1997 and 2002.  Consider all the differences then and now.

Jeff Bezos in an article published November 16, 2018, thinks Amazon will fail and go bankrupt (Source: https://www.investopedia.com/news/why-jeff-bezos-saying-amazon-will-ultimately-fail/).  Jeff Bezos explained this to employees at an internal meeting.

At any of your companies or employers, has this statement ever been made?

If it could happen at Amazon, could it happen anywhere?

Does this mean Amazon’s compass heading is in decline now or in the future?

The existing business then is not built to last.

Is the threat internal or external?

Do the shareholders question him, seek new board members or what action should they take?

Is Amazon worth fighting for?

The book, Built to Last, by Jim Collins, researched elements of companies that have existed since the 1800’s.  The Innovation Advantage LLC blog will examine these companies with a perspective of 1994 to 2002 and through the lens of now.

To develop possibly your interest in built to last, take a self-assessment for your company or employer.  Do any of the elements listed exist where you work?  If so, how are they demonstrated?

• Visionary
• Operate with a core ideology, values, purpose.
• Make goals that capture people to excel, stimulate progress.
• Achieve goals.
• Broad range of objectives.
• Opportunistic, experiment, trial and error, these are an element of strategy, planning.
• With senior leadership changes, company continues to thrive.
• Are senior leaders promoted from within or from the outside?
• Overcome obstacles, setbacks, failures, self-inflicted mistakes, resilient, sustained long-term performance, made an imprint on the world around your company.
• Focus on yourself, how to achieve more, better results daily.
• A drive for progress that embraces change, innovation.
• It is a great place to work.

These are a few points to review for yourself.  Built to Last by Jim Collins reviewed these characteristics and more for the 18 “visionary companies” in the research.  These 18 companies began between 1812 and 1945.

For companies that are 77 to over 200 years old, does it take more than optimization projects/improve productivity to be built to last?

We are all on a journey to make our company or employer to be “built to last.”  It is a journey built on a framework that has multiple moving parts.  We will examine this as we move forward through this blog series.

All the best Discovering Opportunities and the journey to be “Built to Last.”

The Discovering Opportunities’ topics covered to date are all within a business, industry or market.  The opportunities maybe external to your company but when you look for them, they are there.  For business leaders, large or small companies, your employees are potential experts to discover these opportunities.

With the current economic, political, social, pandemic, population shifts, education challenges, tensions between countries/government, central banks, inflation, interest rates, stock market ups/downs – you name it for the US and globally – if you are business as usual, you may want to reconsider.

The external characteristics for discovering opportunities – demographics, change in perception, meaning, mood and new knowledge were defined by Peter Drucker in 1985 in Innovation and Entrepreneurship.  Again, the approach for this blog is “then” and “now.”

Demographics – “change in population, its size, age structure, composition, employment, education status, income (p 88).”  Drucker stated that these are the most predictable.

Change in perception, meaning, mood – simply stated, Drucker discussed the “glass half full/glass half empty” for perception.  The facts don’t change – their meaning does.  I think today a possible reference for this is “spin” to a certain perspective regardless of the facts.  It switches conversation to glass half empty/glass half full.  Drucker cited a number of examples in 1985 that today some would not be openly discussed because of the perception you or your company could be labeled.  I will review some of the topics then and what is now possible perceptions.

New Knowledge – then, the “superstar” for opportunities and entrepreneurs, received the publicity, funding, what people considered when they think of innovation.  Let’s be clear, innovation is this but much more.  Knowledge based innovation initiatives can be technical, scientific as well as social based.  Key elements of discovering opportunities – knowledge based are different from the others because “time span, casualty rate, predictability are factors for development and delivery.”  The lead times are longer because of the requirements to be developed from the knowledge, then products, process for manufacture or delivery of service into a global market/supply chain.  This longer lead time applies to non-technical, non-scientific knowledge as well.  Drucker cited a number then of new knowledge examples and I will highlight some from now.

Demographics

Your business, industry or market may be dependent on an understanding of demographics.

One example cited by Drucker, those who plan to retire between 2050 and 2060 (Drucker used 2030 year) are in the workforce now and are in their 30’s and 40’s.  He narrowed his analysis on the group in 1985 and most likely for now, “the occupation group that they will stay in until they retire or die (p 88).”  This may be true for some now but not all.  I provided data for the age group of 30’s and 40’s to total population.

Income, another important data point for demographics is the other statistic that I reviewed.  It is the population and per capita income from 1968 to 2020.  Is your business dependent on consumers’ income overall or their discretionary income?

Source: https://www.census.gov/data/tables/time-series/demo/income-poverty/historical-income-people.ht

Drucker highlighted the following demographic predictions.

1938 – US population would peak around 140 million in 1943/1944 and then slowly decline (p 91).  The current population in US is over 332 million and counting (Source: https://www.census.gov/popclock/).

1972/1973 – prediction by experts that participation of women in the workforce (then over 33 million) would continue to decline (p 91).  The current number of women in the workforce is over 75 million (Source: https://www.dol.gov/agencies/wb/data/lfp/civilianlfbysex)

Drucker cited Black Death as one example of demographic catastrophe and now in the modern era, there is COVID.  While COVID is not on the scale of Black Death (nearly 136 million throughout its history (Source: https://worldmedicinefoundation.com/health-news/bubonic-plague-death-toll-how-many-people-died-from-the-black-plague/), we observed in the US the impact across many areas in the economy.  More will be learned as COVID issue remains in the news.  The point here – change is upon us all, good or bad.  During this period of change, are there opportunities for your business?  I believe that there are and my search continues.  Are you searching?  For business leaders, I expect that many are trying to develop a go forward strategy.

The age structure within the population is an important factor to understand.  How long have we heard about the aging population of the US and now globally?  Population shifts are underway, state-to-state because of remote work options that could impact your business.  Employment pre-COVID and post-COVID most likely will continue to be different.  In April 2020 there were 20.5 million pink slips.  In August 2021 4.3 million American quit their jobs (Source: https://time.com/6106322/the-great-resignation-jobs/).  15% of the workforce plans to quit their job between September 2021 and December 2021 (Source: https://www.resumebuilder.com/1-in-7-workers-are-quitting-this-fall/)

Change in Perception, Meaning, Mood

How many of you have considered this area and pursued business opportunities?  I have not.  My research into changes in perception, meaning, mood was a learning experience for me.  Some characteristics of change in perception according to Drucker are (pp 104 to 105):

“Change in perception, the facts do not change, meaning does.”  Meaning changes from glass half full to glass half empty.  An example is “working class to middle class.”

The perception may not be explained by sociologists or economists.  Change in perception is a fact, may not be quantifiable or if it is your opportunity to leverage for revenues, profits, growth or affect may be too late.

It appears perception in our world today is promoted daily from social media, media in general and some of the population takes its cues.  Now polls are a popular instrument today.  It seems polls are done to shape perception positively or negatively.

An important element to determine about change in perception for Drucker, is it a fad or permanent?  If a fad, its life cycle is short, 1 or 2 years.  You could invest in something that is not sustainable.

If a change in perception is determined to be permanent or more than a fad, the process to leverage needs to be simple, small and specific (p. 106).

Some “then” examples from 1985 include:

Health – perception in 1985, glass half empty.  Today, does perception remain the same?  Equipment for home use is advertised constantly, new products are introduced regularly, now with videos, support, tracking apps on phones, apps for all things tech.

COVID pre and post perception for social distancing, social isolation – now what is perception – football games, no masks, no social distancing but go into stores, doctors’ offices, medical facilities – signs remain to social distance, masks required.  Vaccine mandates or no mandates in states.  What are the facts vs perception? The glass half empty seems to apply.

In 1985, Drucker also cited the perception around African American population, American Feminists and the Ford Motor Company Thunderbird.  In a previous blog, I highlighted his observation about the Edsel and Thunderbird.  Drucker pointed out the success of the Thunderbird was due to a perception change.  The automobile market was defined by income group but segmentation shifted to lifestyle (pp. 99 to 104).  Your product, your service, how is the market divided?  Is it different now than 5 or 10 years ago?  Is there a perception change in your business, industry or market?

New Knowledge

In the past 50 years what new products or services have been discovered and capitalized on that started with new knowledge?   What new products/services for your company?

New knowledge opportunities’ characteristics are long lead times, higher failure rates, can be technical, scientific, social, non-technical, non-scientific.  All knowledge may not be available, delays completion, increases risks.  Drucker presented that the timeframe for new knowledge ideas to develop is 25 to 35 years.

Some examples of New Knowledge from the past

• Light bulb, was the new knowledge needed for the electric power industry
• Airplane, two knowledge roots are gas engine and aerodynamics
• Computers, the knowledge-based requirements were “a scientific invention, the audion tube, a major mathematical discovery, binary theorem, new logic, the design concept of the punch card, concepts of program and feedback (p 112).”
• Newspapers, telegraph and high-speed printing

Now examples – a limited few

• EV, batteries
• Space travel for all – incremental knowledge, NASA developed, now private business leads
• Stealth, a brief history of the new knowledge needed
  • 1940’s – Jack Northrop’s YB-49 flying wing, smooth surfaces, rounded edges, no tail, no fuselage. YB-49 cancelled in 1949
  • 1960’s – Pyotr Ufimtser, Russion physicist developed a theory on electromagnetic waves but was ignored
  • 1970’s – current military aircraft vulnerable to radar. In 1974 DARPA and Air Force began a major effort for stealth. Contracts awarded in 1975
  • 1981 – F117 made its first flight, Lockheed
  • 1981 – Northrop awarded contract for what would become B-2
  • 1982 – Northrop BSAX demonstration, Tacit Blue first flight that made a total of 135 test flights. This became the B-2 with its first flight July 1989
  • Initial trade-offs for stealth aircraft were speed and aerodynamics
  • These were overcome in 1997 with the F-22 and in 2006 with the F-35

Source: https://www.airforcemag.com/article/History-of-Stealth-From-Out-of-the-Shadows/

The Discovering Opportunities’ Blogs (a total of 6) were done to demonstrate that opportunities are in the marketplace and an approach for you to think and find them.  The blogs were based on the concepts from Peter Drucker’s book, Innovation and Entrepreneurship.  There are two major categories for discovering opportunities, those within a business, industry or market and those outside.

However, you search for opportunities it requires a process, support by leadership (time, resources, patience, involvement, direction) and hard work.  For any opportunities your current employees are potential experts.

Change is upon every business, big or small, what are you waiting for to discover opportunities that could impact your revenues and profits?  Innovation Advantage LLC could help.

All the best in your discovering opportunities’ journey.

Let’s examine two elements of this – then and now.

Peter Drucker in Innovation and Entrepreneurship wrote in 1985 on discovering opportunities.  Change in industry and market structure opens up opportunities for innovation, increased revenue and profits.

The “then” scenario to industry or market structure change in 1985 had some indicators that Drucker shared (p 76, 83 to 85).

• Change allows opportunity for innovation.
• “Requires entrepreneurship from every member of the industry.”
• The question, what is our business – should be asked.
• Rapid growth, higher growth than in economy or population which will lead to structure change.
• In rapid growth scenario, the lens for leadership to “define and segment” the market can’t be based on past information, it is historic, no longer valid and the company will miss an opportunity.
• The way business is done is changing rapidly.

What does industry change look like?  Drucker examined several industries and the steps of change can run for decades.  Drucker looked at Automotive, Securities, American Health Care, Phone Service, Insurance for Art and American Physician Practices.  Drucker’s evaluation of change and response covers the period of 1900 to 1985.  These same industries continue to change offering up more opportunities for innovation and companies to grow and expand.

For example, if you consider the automobile in 1985 to 2021, what changes in the industry or market are there?  A significant change in the automotive industry is technology. Technology is the key advertising concept now versus the past of horsepower, fuel efficiency, style, performance, safety, luxury seats and more.

Another example of an industry or market structure change – steel industry.  The past steel manufacturing plants required a significant investment and increased market consumption of steel. In 1965 Nucor entered the steel manufacturing industry and the results were dramatic.  Before 1965 Nucor did not produce any steel.  Nucor led the mini-mill shift and in 30 years made more profits than any other American Steel Company (Collins, Good to Great, 2001, p 76).  In 2021 Nucor continues to improve with the first half earnings in 2021 exceeding the record full year diluted earnings in 2018. In Q3 2021 Nucor is expecting another record quarter.

From Drucker’s guidelines in 1985 are any still valid today for your company?  Since we are at the year 2021, what drives industry and market structure change now? How has your industry or market structure changed because of:

Technology

• Internet – dialup to broadband
• Browsers
• Windows
• Wireless
• Digital – many things digital in the past, just no way to move it around the world
• Cloud
• AI
• VR
• IP
• Cyber security, risk, hacks
• Landline, cell phone, smart phone
• Email
• Apps
• Media – live streaming, social media
• E-commerce

Operations

• Efficiency, productivity, performance
• Quality
• Global Customer needs
• Global Customer expectations
• Globalization of operations
• Globalization of supply chain
• Global manufacturing
• Remote work

Companies/products

• Retail
• Amazon
• Apple – iPod, iPhone, iPad, Mac
• PC’s – all other manufacturers with Windows, Office
• Additive manufacturing
• Manufacturing 4.0
• All companies are now to a degree technology companies
• Changing business models
• SaaS

What applies to your company, what are the ones missing?  Once an opportunity is identified then what?  Here is a process collected from various sources.

• Start small across all startup aspects.
• Have a broad approach for ideas, in this case more is better because many will not develop.
• Due diligence.
• Present to an open-minded decision-making group with the CEO as the lead.
• Pilot – go/no go
  • Be flexible
  • Decisive
  • Entrepreneurial in approach
  • Right people, right seats
  • Defined expectations
  • Budget
  • Deadlines
  • Ensure all necessary technology, knowledge is available, affordable – don’t get cart before the horse, learn from the light bulb invention
• Scale.
• Commercialize – integrate into the existing business, retain some team members from initial phase.
• All of this supported directly by a senior executive.

The existing business and what’s next/innovation are inseparable.  The existing business continues to develop within the industry or market structure amidst change.  Both the existing business and what’s next/innovation are to support the future.  The future is funded by the existing business and by discovering opportunities that will become the existing business of the future through innovation.

How is your company, your employer doing with discovering opportunities, developing to commercialization and the turnover to the existing business operations?  This is the fourth in the series of discovering opportunities.  The series provides slices of the discovering opportunities pie that should be a focus for every company, large or small, every executive.  The entire corporation’s personnel are potential experts to discover opportunities.

The blog series on discovering opportunities is an important aspect for Innovation Advantage’s strategy.  While some success is realized, a continued focus remains.

All the best in discovering opportunities.  Next up Discovering Opportunities – Demographics.