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Visionary companies are premier institutions - the crown jewels - in their industries, widely admired by their peers and having a long track record of making a significant impact on the world around them. The key point is that a visionary company is an organization - an institution. All individual leaders, no matter how charismatic or visionary, eventually die; and all visionary products and services - all "great ideas" - eventually become obsolete. Indeed, entire markets can become obsolete and disappear. Yet visionary companies prosper over long periods of time, through multiple product life cycles and multiple generations of active leaders.

18 visionary companies in this study:
American Express
General Electric
Johnson & Johnson
Philip Morris
Procter & Gamble
Walt Disney

12 Myths Shattered

Myth 1: It takes a great idea to start a great company.
Reality: Starting a company with a "great idea" might be a bad idea. Few of the visionary companies began life with a great idea. In fact, some began life without any specific idea and a few even began with outright failures. Furthermore, regardless of the founding concept, the visionary companies were significantly less likely to have early entrepreneurial success than the comparison companies in our study. Like the parable of the tortoise and the hare, visionary companies often get off to a slow start, but win the long race.

Myth 2: Visionary companies require great and charismatic visionary leaders.
Reality: A charismatic visionary leader is absolutely not required for a visionary company and, in fact, can be detrimental to a company's long-term prospects. Some of the most significant CEOs in the history of visionary companies did not fit the model of the high-profile, charismatic leader - indeed, some explicitly shied away from that model. Like the founders of the US at the Constitutional Convention, they concentrated more on architecting an enduring institution than on being a great individual leader. They sought to be clock builders, not time tellers. And they have been more this way more than CEOs at the comparison companies.

Myth 3: The most successful companies exist first and foremost to maximize profits.
Reality: Contrary to business school doctrine, "maximizing shareholder wealth" or "profit maximization" has not been the driving force or primary objective through the history of the visionary companies. Visionary companies pursue a cluster of objectives, of which making money is only one - and not necessarily the primary one. Yes, they seek profits, but they're equally guided by a core ideology - core values and sense of purpose beyond just making money. Yet, paradoxically, the visionary companies make more money than the more purely profit-driven comparison companies.

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 be visionary. Core values in a visionary company don't even have to be "enlightened" or "humanistic," although they often are. The crucial variable is not the content of a company's ideology, but how deeply it believes its ideology and how consistently it lives, breathes, and expresses it in all that it does. Visionary companies do not ask, "What should we value" They ask, "What do we actually value deep down to our toes"

Myth 5: The only constant is change.
Reality: A visionary company almost religiously preserves its core ideology - changing it seldom, if ever. Core values in a visionary company form a rock-solid foundation and do not drift with the trends and fashions of the day; in some cases, the core values have remained intact for well over one hundred years. And the basic purpose of a visionary company - its reason for being - can serve as a guiding beacon for centuries, like an enduring star on the horizon. Yet, while keeping the core ideologies tightly fixed, visionary companies display a powerful drive for progress that enables them to change and adapt without compromising their cherished core ideals.

Myth 6: Blue-chip companies play it safe.
Reality: Visionary companies may appear straitlaced and conservative to outsiders, but they're not afraid to make bold commitments to "Big Hairy Audacious Goals" (BHAGs). Like climbing a big mountain or going to the moon, a BHAG may be daunting and perhaps risky, but the adventure, excitement, and challenge of it grabs people in the gut, gets their juices flowing, and creates immense forward momentum. Visionary companies have judiciously used BHAGs to stimulate progress and blast past the comparison companies at crucial times in history.

Myth 7: Visionary companies are great places to work, for everyone.
Reality: Only those that "fit" extremeley well with the core ideology and demanding standards of a visionary company will find it a great place to work. If you go to work at a visionary company, you will either fit and flourish - probably couldn't be happier - or you will likely be expunged like a virus. It's binary. There's no middle ground. It's almost cult-like. Visionary companies are so clear about what they stand for and what they're trying to achieve that they simply don't have room for those unwilling or unable to fit their exacting standards.

Myth 8: Highly successful companies make their best moves by brilliant and complex strategic planning.
Reality: Visionary companies make some of their best moves by experimentation, trial and error, opportunism, and - quite literally - accident. What looks in retrospect like brilliant foresight and preplanning was often the result of "Let's just try a lot of stuff and keep what works." In this sense, visionary companies mimic the biological evolution of species. We found the concepts in Charles Darwin's Origin of Species to be more helpful for replicating the success of certain visionary companies than any textbook on corporate strategic planning.

Myth 9: Companies should hire outside CEOs to stimulate fundamental change.
Reality: In seventeen hundred years of combined life spans across the visionary companies, we found only four individual incidents of going outside for a CEO - and those in only two companies. Home-grown management rules at the visionary companies to a far greater degree than at the comparison companies (by a factor of six). Time and again, they have dashed to bits the conventional wisdom that significant change and fresh ideas cannot come from insiders.

Myth 10: The most successful companies focus primarily on beating the competition.
Reality: Visionary companies focus primarily on beating themselves. Success and beating the competitors comes to the visionary companies not so much as the end goal, but as a residual result of relentlessly asking the question "How can we improve ourselves to do better tomorrow than we did today" And they have asked this question day in and day out - as a disciplined way of life - in some cases for over 150 years. No matter how much they achieve - no matter how far in front of their competition they pull - they never think they've done "good enough."

Myth 11: You can't have your cake and eat it too.
Reality: Visionary companies do not brutalize themselves with the "Tyranny of the OR" - the purely rational view that says you can have either A OR B, but not both. They reject having to make a choice between stability OR progress; cult-like cultures OR individual autonomy; home-grown managers OR fundamental change; conservative practices OR BHAGs; making money OR living according to values and purpose. Instead, they embrace the "Genius of the AND" - the paradoxical view that allows them to pursue both A AND B at the same time.

Myth 12: Companies become visionary primarily through "vision statements."
Reality: The visionary companies attained their stature not so much because they made visionary pronouncements (although they often did make such pronouncements). Nor did they rise to greatness because they wrote one of the vision, values, purpose, mission, or aspiration statements that have become popular in management today (although they wrote such statements more frequently than the comparison companies and decades before it became fashionable). Creating a statement can be a helpful step in building a visionary company, but it is only one of thousands of steps in a never-ending process of expressing the fundamental characteristics we identified across the visionary companies.

One of the most important steps you can take in building a visionary company is not an action, but a shift in perspective. The success of visionary companies - at least in part - comes from underlying processes and fundamental dynamic embedded in the organization and not primarily the result of a single great idea or some great, all-knowing, godlike visionary who made great decisions, had great charisma, and led with great authority. Think more in terms of being an organizational visionary and building the characteristics of a visionary company.

Profitability is a necessary condition for existence and a means to more important ends, but it is not the end in itself for many of the visionary companies. Profit is like oxygen, food, water, and blood for the body; they are not the point of life, but without them, there is no life.

One way to keep core ideology at the top of people's minds: write a series of essays (emails, memos, blog posts) to employees about "who and why we are." In thirty one essays, a Motorola executive discussed the importance of creativity, renewal, total customer satisfaction, quality, ethics, innovation, and similar topics; not once did he write about maximizing profits, nor did he imply this was the underlying purpose - the "why" of it all.

A key step in building a visionary company is to articulate a core ideology (core values plus purpose). Core values are 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. Purpose is 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.

The single most important point to take away from this book is the critical importance of creating tangible mechanisms aligned to preserve the core and stimulate progress. This is the essence of clock building.

5 specific methods to preserve the core and stimulate progress:
BHAGs: Commitment to challenging, audacious - and often risky - goals and projects toward which a visionary company channels its efforts (stimulates progress)
Cult-like Cultures: Great places to work only for those who buy into the core ideology; those that don't fit with the ideology are ejected like a virus (preserves the core)
Try a Lot of Stuff and Keep What Works: High levels of action and experimentation - often unplanned and undirected - that produce new and unexpected paths of progress and enables visionary companies to mimic the biological evolution of species (stimulates progress)
Home-grown Management: Promotion from within, bringing to senior levels only those who've spent significant time steeped in the core ideology of the company (preserves the core)
Good Enough Never Is: A continual process of relentless self-improvement with the aim of doing better and better, forever into the future (stimulates progress)

-A BHAG should be so clear and compelling that it requires little or no explanation. Remember, a BHAG is a goal - like climbing a mountain or going to the moon - not a "statement." If it doesn't get people's juices going, then it's just not a BHAG.
-A BHAG should fall well outside the comfort zone. People in the organization should have reason to believe they can pull it off, yet it should require heroic effort and perhaps even a little luck - as with the IBM 360 and Boeing 707.
-A BHAG should be so bold and exciting in its own right that it would continue to stimulate progress even if the organization's leaders disappeared before it had been completed - as happened at Citibank and Wal-Mart.
-A BHAG has the inherent danger that, once achieved, an organization can stall and drift into the "we've arrived" syndrome, as happened at Ford in the 1920s. A company should be prepared to prevent this by having follow-on BHAGs. It should also complement BHAGs with other methods of stimulating progress.
-Finally, and most important of all, a BHAG should be consistent with a company's core ideology.

Cult-like cultures reflect the process of building an organization that fervently preserves its core ideology in specific, concrete ways. The visionary companies translate their ideologies into tangible mechanisms aligned to send a consistent set of reinforcing signals. They indoctrinate people, impose tightness of fit, and create a sense of belonging to something speacial through such practical, concrete items as:
-Orientation and ongoing training programs that have ideological as well as practical content, teaching such things as values, norms, history, and tradition
-Internal "universities" and training centers
-On-the-job socialization by peers and immediate supervisors
-Rigorous up-through-the-ranks policies - hiring young, promoting from within, and shaping the employee's mindset from a young age
-Exposure to a pervasive mythology of "heroic deeds" and corporate exemplars (for example, customer heroics letters, marble statues)
-Unique language and terminology (such as "cast members" at Disney, "Motorolans") that reinforce a frame of reference and the sense of belonging to a special, elite group
-Corporate songs, cheers, affirmations, or pledges that reinforce psychological commitment
-Tight screening processes, either during hiring or within the first few years
-Incentive and advancement criteria explicitly linked to fit with the corporate ideology
-Awards, contests, and public recognition that reward those who display great effort consistent with the ideology; tangible and visible penalties for those who break ideological boundaries
-Tolerance for honest mistakes that do not breach the company's ideology ("non-sins"); severe penalties or termination for breaching the ideology ("sins")
-"Buy-in" mechanisms (financial, time investment)
-Celebrations that reinforce successes, belonging, and specialness
-Plant and office layout that reinforces norms and ideals
-Constant verbal and written emphasis on corporate values, heritage, and the sense of being part of something special

1) "Give it a try and quick!" For 3M, unlike Norton, the modus operandi became: When in doubt, vary, change, solve the problem, seize the opportunity, experiment, try something new (consistent, of course, with the core ideology) - even if you can't predict precisely how things will turn out. Do something. If one thing fails, try another. Fix. Try. Do. Adjust. Move. Act. No matter what, don't sit still. Vigorous action - especially in response to unexpected opportunities or specific customer problems - creates variation. Had McKnight not asked why Okie sent his cryptic letter requesting grit samples, or had Dick Drew not impulsively promised a solution for two-tone paint jobs, or had Spence Silver not done the experiment that textbooks said could not work, or had Art Fry not tried to solve his church choirbook problem, then 3M wouldn't be a visionary company.
2) "Accept that mistakes will be made." Since you can't tell ahead of time which variations will prove to be favorable, you have to accept mistakes and failures as an integral part of the evolutionary process. Had 3M nailed Okie and Drew to the wall (or fired them) for the failed car wax business, then 3M probably wouldn't have invented Scotch tape. Remember Darwin's key phrase: "Multiply, vary, let the strongest live, and the weakest die." In order to have healthy evolution, you have to try enough experiments (multiply) of different types (vary), keep the ones that work (let the strongest live), and discard the ones that don't (let the weakest die). In other words, you cannot have a vibrant self-mutilating system - you cannont have a 3M - without lots of failed experiments. As former 3M CEO Lewis Lehr put it: "The secret, if there is one, is to dump the flops as soon as they are recognized....But even the flops are valuable in certain ways....You can learn from success, but you have to work at it; it's a lot easier to learn from a failure." Keep in mind J&J's paradoxical perspective that failures and mistakes have been an essential price to pay in creating a healthy branching tree that has not once posted a loss in 107 years. At the same time, keep in mind a lesson from the chapter on cult-like cultures: A visionary company tolerates mistakes, but not "sins," that is, breaches of the core ideology.
3) "Take small steps." Of course, it's easier to tolerate failed experiments when they are just that - experiments, not massive corporate failures. If you want to create a major strategic shift in a company, you might try becoming an "incrimental revolutionary" and harnessing the power of small, visible successes to influence overall corporate strategy. Indeed, if you really want to do something revolutionary, it might be best to ask simply for permission to "do an experiment." Recall Americal Express's incremental steps in financial services that eventually became the primary strategic pillar of the company, and how William Dalliba used small experiments to incrementally revolutionize the company into travel services. Keep in mind the image of "twigs and branches." Or consider the image of "seeds and fruit" used by Sony to convey the concept of small, idiosyncratic problems as the starting point of great big opportunities.
4) "Give people the room they need." 3M provided greater operational autonomy and maintained a more decentralized structure than Norton - a key step that enabled unplanned variation. When you give people a lot of room to act, you can't predict precisely what they'll do - and this is good. 3M had no idea what Silver, Fry, and Nicholsen would do with their 15% "discretionary time." In fact, the visionary companies decentralized more and provided greater operational autonomy than the comparison companies in 12 of 18 cases. Allow people to be persistent. Although the Post-it clan had trouble convincing other 3Mers that their weird sticky little notes had merit, no one ever told them to stop working on it.
5) Mechanisms - build that ticking clock! The beauty of the 3M story is that McKnight, Carlton, and others translated the previous four points into tangible mechanisms working in alignment to stimulate evolutionary progress.

It is extremely difficult to become and remain a highly visionary company by hiring top management from outside the organization.

-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 mechanisms sharp teeth
-What are you doing to invest in 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 Does your company reject doing well as an end goal, replacing it with the never-ending discipline of working to do better tomorrow than it did today

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