Book: Building your Companies Vision

"Building Your Company's Vision" by James C. Collins and Jerry I. Porras.

Briefing Document: Building Your Company's Vision

Source: Excerpts from "Building Your Company's Vision" by James C. Collins and Jerry I. Porras (Harvard Business Review, Adapted from Built to Last)

Main Themes:

This article outlines a framework for creating a lasting company vision, composed of two key elements: Core Ideology and Envisioned Future. The central argument is that enduringly successful companies balance preserving their core values and purpose with stimulating progress and change.

Key Ideas & Facts:

• Vision as a Framework for Continuity and Change: Vision provides guidance on what core elements to preserve and what future to strive towards. The dynamic of "preserving the core while stimulating progress" is essential for long-term success.
• Core Ideology: Defining Who You Are
• "Core ideology defines the enduring character of an organization- a consistent identity that transcends product or market life cycles, technological breakthroughs , management fads , and individual leaders." It is something to be discovered, not invented, by looking inside the company.
• Core Values: The essential and enduring guiding principles. These values are intrinsically important and require no external justification.
• "Core values are the essential and enduring tenets of an organization . A small set of timeless guiding principles, core values require no external justification; they have intrinsic value and importance to those inside the organization."
• The article emphasizes that only a few values can be truly core (3-5).
• Companies should not change core values in response to market changes, but rather change markets if necessary, to remain true to their core values.
• The "Mars Group" is a recommended method for identifying core values: "Imagine that you've been asked to re-create the very best attributes of your organization on another planet but you have seats on the rocket ship for only five to seven people. Whom should you send?"
• Core Purpose: The organization's fundamental reason for being. It should reflect people's idealistic motivations, not just product lines or customer segments.
• "Core purpose, the second part of core ideology, is the organization's reason for being. An effective purpose reflects people's idealistic motivations for doing the company's work. It doesn't just describe the organization's output or target customers; it captures the soul of the organization."
• Purpose should last at least 100 years and should not be confused with specific goals or business strategies. It's a guiding star, forever pursued but never reached.
• The "five whys" is presented as a method for discovering purpose: Start with "We make X products or We deliver X services," and ask "Why is that important?" five times.
• Maximizing shareholder wealth is not an effective core purpose; it's a "substitute" for a true, inspiring purpose.
• Envisioned Future: What You Aspire To Be
• The envisioned future consists of two parts: a 10-to-30-year Big, Hairy, Audacious Goal (BHAG) and a vivid description of what it will be like to achieve that goal.
• BHAGs: Ambitious plans that energize the entire organization and require significant effort over a long period.
• "A true BHAG is clear and compelling, serves as a unifying focal point of effort, and acts as a catalyst for team spirit . It has a clear finish line, so the organization can know when it has achieved the goal ; people like to shoot for finish lines."
• The article describes four categories of BHAGs: target BHAGs, common-enemy BHAGs, role-model BHAGs, and internal-transformation BHAGs.
• Vivid Descriptions: Paint a picture of what it will be like to achieve the BHAGs. Make the goals tangible and engaging.
• "Think of it as translating the vision from words into pictures, of creating an image that people can carry around in their heads. It is a question of painting a picture with your words." Passion, emotion, and conviction are essential.
• Distinguishing Core Ideology from Envisioned Future: It's crucial not to confuse core purpose (which can never be completed) with BHAGs (which are reachable within 10-30 years). Core purpose is the "star on the horizon," while the BHAG is the "mountain to be climbed."
• Authenticity and Discovery: Core ideology is discovered, not created. Companies should not confuse values they think they should have with the values they truly hold. "You discover core ideology by looking inside. It has to be authentic. You can't fake it."
• Alignment and Implementation: Building a visionary company requires "1% vision and 99% alignment." Creating alignment throughout the organization is critical.
• The "We've Arrived Syndrome": Beware of complacency after achieving a BHAG; it's essential to set new audacious goals to maintain momentum.
• If it's not core, change it!: Once a company is clear about its core ideology, anything that is not part of it should be open to change.

Examples Highlighted in the Article:

• Hewlett-Packard (HP): Core ideology of respect for the individual, affordable quality, and making technical contributions for humanity.
• 3M: Core purpose of solving unsolved problems innovatively.
• Sony: Goal to change the poor-quality image of Japanese products worldwide.
• Walt Disney: Core purpose to make people happy.
• Merck: Core Values of Opportunity based on merit, corporate social responsibility, excellence in all aspects of the company, and science-based innovation.
• Nordstrom: Core Value of service to the customer above all else.

Cautionary Notes:

• Avoid creating generic, uninspiring vision/mission statements that lack a direct link to preserving the core and stimulating progress.
• Don't confuse core competence (strategic capabilities) with core ideology (what you stand for).
• Don't try to "get people to buy into" core ideology; instead, attract people who are already predisposed to share your values.

This document should give you a solid overview of the core principles presented in the excerpt. Good luck!

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