Let's start the whole journey with something interesting: the myth of building a successful company:
Myth 1: It takes a great idea to start a great company
Myth 2: Visionary companies require great and charismatic visionary leaders.
Myth 3: The most successful companies exist first and foremost to maximize profits.
Myth 4: Visionary companies share a common subset of "correct" core values. (Reality: There is no "right" set of core values for being a visionary company. Indeed, two companies can have radically different ideologies, yet both visionary.
Myth 5: The only constant is change.
Myth 6: Blue-chip companies play it safe. (Visionary companies may appear conservative to outsides, but they are not afraid to make bold commitments to "Big Hairy Audacious Goals".
Myth 7: Visionary companies are great places to work, for everyone.
Myth 8: Highly successful companies make their best moves by brilliant and complex strategic planning. (What looks in retrospect and preplanning was of the result of "Let's just try a lot of stuff and keep what works.")
Myth 9: Companies should hire outside CEOs to stimulate fundamental changes.
Myth 10: The most successful companies focus on beating the competitors (Visionary companies focus primary on beating themselves)
Myth 11: You can't have your cake and eat it too (Visionary companies do not brutalize themselves with the "Tyranny of the OR")
Myth 12: Companies becomes visionary primarily through "vision statements".
With the listed myths, I have no hesitation to continue this book. In fact, these myths are the issues that bother entrepreneurs now and then. So, this book unlocked and dug into details on the myth with proven data and analysis. Thumbs up!!!
Next, the best part... how the author choose and filter companies to study:
1. What companies should we study?
2. Avoiding the "Discover Buildings" Trap.
3. History and Evolution
4. Crates of Data, Months of Coding, and "Tortoise Hunting"
5. Harvesting the Fruits of our Labor
6. Field Testing & Application in the Real World
With the series of myth and filtering in choosing the company, this book itself already showed its value. The main thing about visionary companies is all about core ideology. This ideology itself is the combination of core values (not to be confused with specific cultural or operating practices and not to be compromised for financial gain or short term expediency) + purpose (not to be confused with specific goals or business strategy). After finishing the whole book, you and I will know how fragile our company is: Core value was not set and not initiated despite running business for several years! So audacious! LOL...
With this new edition, the author adds on a new chapter on conceptual framework that defines vision, adds clarity and gives practical guidance for articulating a coherent vision within an organization. For those who have read this book or better still, for those who are new to this book, kindly get this latest version. This chapter is so valuable and gives plenty of insights to readers. Although a bit repetitive, a final reminder with all sorts of examples will further clarify the core ideas of this whole book.
For a full rating of 10, I have no hesitation to rate this book at 10/10. There is nothing to complain about this book. The author and the team of researchers really put in enormous efforts to provide an insightful and detailed perspective on how to build a visionary company. Well, as mentioned above, is this book still applicable in today's high technology world? The answer is yes! The theory of "stimulating progress while preserving core" will be there regardless of how the world changes. Full thumbs up to this book!!!
Last but not least, I tried to excerpt some nice quotes from this book. In the end, I found too much info that I needed for future references. As such, unlike the usual quotes, I will categorize below as some valuable notes:
The core value need no rational or external justification. Nor do they sway with the trends and fads of the day. Nor even they shift in response to changing market conditions.
In the early stages, most visionary companies just tried to get off the ground and make a go of it and their ideology became clear only as the company evolved.
Specific methods of preserving the core and stimulating progress:
1. Big Hairy Audacious Goals
2. Cult-like Culture
3. Try a Lot of Stuff and Keep What Works!
4. Home-grown Management
5. Good Enough Never Is
Framework for diagnosing your own organization:
1. Has it made the shift in perspective from time telling to clock building?
2. Does it reject the "Tyranny of the OR" and embrace the "Genius of the AND"?
3. Does it have a core ideology - core values and purpose beyond just making money?
4. Does it have a drive for progress - not part of the core ideology?
5. Does it preserve the core and stimulate progress?
6. Is the organization in alignment, so that people receive a consistent set of signals to reinforce behavior that supports the core ideology and achieves desired progress?
Few points as you consider BHAGs:
1. Clear and requires little or no explanation. A BHAG is a goal- like climbing a mountain or going to moon - not a "statement." If it doesn't get people's juices going, then it's just not a BHAGs.
2. A BHAG should fall well outside the comfort zone: it should require heroic effort and perhaps even a little luck.
3. A BHAG should be bold and exciting in its own right that it would continue to stimulate progress even if the organization's leaders disappeared.
4. A BHAG has the inherent danger that, once achieved, an organization can stall and drift in the "we've arrived!" syndrome. A company should be prepared to prevent this by having follow-on BHAGs.
5. A BHAG should be consistent with a company's core value.
"Visionary" does not mean soft and undisciplined. They tend not to have much room for people unwilling or unsuited to their demanding standards.
An analysis of the visionary versus comparison companies:
1. 11/18 pairs, the evidence shows stronger indoctrination into a core ideology through the history of the visionary companies.
2. 13/18 pairs, people tend to either fit well with the company and its ideology or tend to not fit at all.
3. 13/18 pairs, the evidence shows a sense of belonging to something special and superior.
We found that the visionary companies were significantly more decentralized and granted greater operational autonomy than the comparison companies.
Evolutionary progress differs from BHAG progress in two key ways. First, BHAG progress involves clear and unambiguous goals, evolutionary progress involves ambiguity (by trying lots of different approaches to stumble onto something that works). Second, BHAG involves bold discontinues leaps, evolution progress usually begins with small incremental steps or mutations, often in the form of quickly seizing unexpected opportunities that eventually grow into major and often unanticipated strategic shifts.
It might be far more satisfactory to look at well-adapted visionary companies not primarily as the result of brilliant foresight and strategic planning, but largely as consequences of a basic process - namely, try a lot of experiments, seize opportunities, keep those that work well (consistent with the core ideology) and discard those that don't.
We're not saying that evolutionary progress equals to wanton diversification, or even that a focused business strategy is necessarily bad. Wal-Mart for example remain resolutely focused on one industry- discount retailing - while simultaneously stimulating evolution within that narrow focus. Nor are we saying that the concept of "stick to the knitting" makes no sense. The real question is: What is the "knitting" in a visionary company? Our answer: Core ideology.
Across seventeen hundred years of combined history in the visionary companies, we found only four individual cases of and outsider coming directly into the role of chief executive.
It is not the quality of leadership that most separates the visionary companies from the comparison companies. It is the continuity of quality leadership that matters - continuity that preserves the core.
If you're involved with an organization that feels it must go outside for a top manager, then look for candidates who are highly compatible with the core ideology. They can be different in managerial style, but they should share the core values at a gut level.
P&G already had the best people, the best products, the best marketing muscle. So, why not pit the best of P&G against the best of P&G? If the marketplace doesn't provide enough competition, why not create a system of internal competition that makes it virtually impossible for any brand to rest on its laurels?
Managers at visionary companies simply do not accept the proposition that they must choose between short-term performance or long-term success. They build first and foremost for the long term while simultaneously holding themselves to highly demanding short-term standards.
If you are involved in building and managing the company, we urge you to consider the following questions:
- What "mechanisms of discontent" can you create that would obliterate complacency and bring about change and improvement from within, yet are consistent with your core ideology? How can you give these mechanism sharp teeth?
- What are you doing to invest for the future while doing well today? Does your company adopt innovative new methods and technologies before the rest of the industry?
- How do you respond to downturns? Does your company continue to build for the long term even during difficult times?
- Do people in your company understand that comfort is not the objective - that life in a visionary company is not supposed to be easy?
Bill Hewlett, "marketing people must play a secondary role in the question of product definition."
A particular revealing example of HP following its own vision and not falling into prey to management fads and fashions of the day came in the 1970s, when the "learning-curve/market-share" theory of corporate strategy swept American business.
Keep in mind that the only sacred cow in a visionary company is its core ideology. Anything else can be changed or eliminated.
After you drafted a preliminary list of the core values, ask this questions: "If the circumstances changed and penalized us for holding this core value, would we still keep it?" If you can't honestly answer yes, then it's not core and should be dropped.
Suppose in 10 years quality doesn't make a difference and the only thing that matters is sheer speed and horsepower, but not quality. Quality stay off the list as core value. Quality stayed in the current strategy and remained in place as mechanism for stimulating progress, but it did not make the list of core values. Remember, strategies change as market conditions change, but core values remain intact.
A company should not change its core values in response to market changes, it should change markets- if necessary in order to remain true to its core values.
Can you envision these core values being equally valid for you 100 years from now as they are today? Would you want to hold these core values, even if at some point one or more of them became a competitive disadvantage? If you were to start a new organization tomorrow in a different line of work, what cores values would you build into the new organization regardless of its industry? The last three questions are particularly important, as they make the crucial distinction between enduring core values that should not change and practices and strategies that should be changing all the time.
Whereas you might achieve a goal or complete a strategy, you cannot fulfill a purpose; it is like a guiding star on the horizon - forever pursued, but never reached. Yet while purpose itself does not change, it does inspire change. The very fact that purpose can never be fully realized means that an organization can never stop stimulating change and progress in order to live more fully to its purpose.
One powerful method for getting at purpose is the "Five Whys." Start with the descriptive statement, "We make X products" or "we deliver X services," and then ask "why is that important?" five times.
None of the core purposes discussed in this chapter fall into the category "maximize shareholder wealth." A key role of core purpose is to guide and inspire.
One way to get at the purpose that lies beyond just maximizing shareholder wealth is to play the "Random Corporate Serial Killer" game.
If you woke up tomorrow morning with enough money in the bank that you would never need to work again, how could we frame the purpose of this organization such that you would want to continue working anyway? What deeper sense of purpose would motivate you to continue to dedicate your precious creative energies to this company's efforts?
As Peter Drucker has pointed out, the best and most dedicated people are ultimately volunteers, for they have the opportunity to do something else with their lives.
You do not "create" or "set" core ideology. You discover core technology. It is not derived by looking to the external environment; you get at it by looking inside. It has to be authentic. You can't fake an ideology. Nor can you just "intellectualize" it. Do not ask, "What core value should we hold?"
Core ideology need only be meaningful and inspirational to people inside the organization, it need not be exciting to all outsiders.
The task is to find people who already have a predisposition to share your core values and purpose, attract and retain these peoples, and let those who aren't disposed to share your core values go elsewhere.
Core competence is a strategic concept that captures your organization's capabilities - what you are particularly good at - whereas core ideology captures what you stand for and why you exist.
A BHAG should not be a sure bet - perhaps only 50-70% probabilities of success - but the organization must believe "we can do it anyway." It should require extraordinary effort, and perhaps a little luck. Four targets in creating BHAG: target, common enemy, role model, internal transformation.
Purpose is the organization's fundamental reason for existence, which like a star on the horizon can never be reached; it guides and inspires forever. A BHAG, on the other hand, is a specific goal which, like a specific mountain to climb, has a specific time frame and can be achieved. Whereas identifying core ideology is a discovery process, setting the envisioned future is a creative process.
In thinking about envisioned future, beware the "we've arrived syndrome" - complacent lethargy that arises once an organization has achieved a BHAG and fails to replace it with another.
Creating alignment, which is a key part of our ongoing work to help companies transform themselves into visionary companies, requires two key processes: 1. developing new alignments to preserve the core and stimulate progress, and 2. eliminating misalignments - those that drive the company away from the core ideology and those that impede progress toward the envisioned future.
