The 3 Critical Things That Make a Visionary Company
They have long track records for success and are widely admired as the crown jewels of their industries. What’s more, their success is enduring – they prosper even as great leaders retire and hit products become obsolete.
But what is it that makes them so successful? And what is it we can learn from them? In their classic book Built to Last, Jim Collins and Jerry I. Porras identified and studied 18 visionary companies to determine exactly what makes them so successful. Following are the three most important characteristics they all share.
1. Visionary companies aren’t about an individual idea or leader.
Contrary to what most people believe, the success of a visionary company is not dependent on a single great idea or person.
When he was just starting out, the founder of Sony had no specific idea as to what products his company would make. He actually held a brainstorming session after founding Sony to evaluate business ideas ranging from sweetened bean paste to miniature golf equipment. Bill Hewlett and Dave Packard were similarly experimental at HP’s founding. They played with almost farcically diverse ideas, such as automatic urinal flushers and bowling foul-line indicators.
Visionary companies don’t rely on high-profile, charismatic leaders either. They may have superb individuals at the top of the organization, but those people are often down-to-earth, reserved, and modest.
So then, if it’s not leaders or ideas, what is it that ensures success? Collins and Porras found that instead of focusing on a single product or a single leader, visionary companies built themselves into outstanding organizations that constantly churn out great ideas and great leaders. The real creation of the founders was not a product at all, but the company itself; constantly advancing independent of any one person or idea.
2. Visionary companies are about more than just profits.
Visionary companies have a higher purpose for their existence than chasing profits. What they’ve got is a set of stable principles that guides the company through generations, much like the “truths” of the American Declaration of Independence. This ideology should include not only the purpose of the company, but also its core values, which serve to guide the company’s decisions along the way.
Consider for example the pharmaceutical company Johnson & Johnson (J&J). In 1935, the CEO, Robert W. Johnson Jr., wrote out the company’s core ideology in a document called “Our Credo,” which listed the company’s responsibilities. Many CEOs would be concerned first and foremost about generating profits for the company’s stockholders, but Johnson Jr. stated the company’s first responsibility was to their customers and second to their employees. It was only in fifth and last place, after all the other responsibilities had been fulfilled, that Johnson included the thought that shareholders should receive “a fair return.”
A core ideology is important not only when visionary companies prosper but also when they hit upon trouble. For example, when Ford faced a dire crisis in the 1980s, instead of just fighting fires, its management team stopped to discuss and clarify what the company stood for and how they could embody the values of the founder, Henry Ford. It was this recalibration that helped them navigate through the crisis while others foundered.
3. Visionary companies set Big Hairy Audacious Goals (BHAGs)
To drive progress, visionary companies often set themselves extremely bold objectives – so-called big hairy audacious goals (BHAGs) – which they commit to utterly and completely. BHAGs are so ambitious that they often seem unrealistic, especially to outsiders. Nevertheless, they’re also clear and tangible enough to energize and focus the organization.
A well-known example of a non-corporate BHAG is the one set by John F. Kennedy in 1961 when he proclaimed that the U.S. would take a man to the moon and back safely by the end of the decade. At the time, this was an almost ludicrously bold commitment, but it did get the U.S. moving vigorously forward.
Similarly, Thomas J. Watson Sr., the founder of the Computer Tabulating Recording Company, set a BHAG by renaming his company – which sold coffee grinders and butcher scales – to reflect his ambition for global status. The new name was audacious at the time: International Business Machines (IBM).
BHAGs often take on a life of their own. Just as the space program continued after Kennedy’s death, the visionary companies studied pursued their BHAGs even as new CEOs and directors came and went. Once a BHAG was achieved, new ones were set – always in line with the company’s core ideology.
We’re curious: do you work for or are you building a visionary company? What do you think are the building blocks of enduring success? Tell us in the comments.
Find out what other factors, like a cult-like esprit de corps and encouraging experimentation, set visionary companies apart. Check out Collins’ and Porras’ Built to Last or read the summary in blinks.