The lessons we can learn from the visionary companies through their enduring of success
The so-called visionary businesses have a lot to teach us. They’re businesses with long track-records for success and widely admired as the crown jewels of their industries. What is more, their success is enduring — they prosper even as great leaders retire and individual hit-products become obsolete.
To properly study and learn from these businesses, the authors first needed to identify them by surveying hundreds of prominent CEOs for the names of companies they considered visionary. The 18 most commonly mentioned firms — including such venerable names as the Walt Disney Company, Marriott Hotels, and Merck — were included in the analysis. The visionary companies were then paired up with comparison companies: companies that shared similar products and markets but which, while not being outright poor actors, were known as”visionary” far less often in the CEO survey.
Both groups of companies were then examined across their considerable life spans (the normal founding date lay in the 1890s for both groups). Based on massive amounts of information from interviews, annual reports, financial statements, news articles and lots of other sources, all elements of these corporations were studied, ranging from their ownership structures to their cultures.
To understand the extraordinary success of the visionary companies, consider this fact: if you had spent a dollar in their stocks in 1926, that dollar would have been worth $6,356 by 1990. Compare that to $955 if you’d spent in the comparison companies, and only $415 if you’d invested in the overall market, and you’ll see just how impressive the visionary companies’ performance is.
No wonder that all manner of Fortune 500 companies have been fascinated with the findings of the study.
Visionary companies are like machines that constantly produce great products and leaders.
Contrary to what most people believe, the achievement of a visionary company isn’t dependent on great thoughts.
The founder of Sony, for instance, had no particular idea of what products his company would make. He actually held a brainstorming session after founding the company to evaluate business ideas ranging from sweetened bean-paste to miniature-golf equipment.
Bill Hewlett and Dave Packard had no specific idea in mind when they found Hewlett-Packard (HP). They experimented with almost farcically diverse ideas, such as automatic urinal flushers and bowling foul-line indicators.
Hence, it appears that great ideas are not essential for the beginning of a visionary business.
Nor are high-profile, charismatic leaders. While visionary businesses did have superb individuals at the top of the organization, they were often down-to-earth, reserved and modest people.
But then, what’s the secret of enduring success? Many comparison companies had great ideas and strong leadership, yet they all fell behind the visionary companies finally. Why?
Instead of focusing on a single product or a single leader, the visionary companies studied assembled themselves into outstanding organizations that always churns out great ideas and wonderful leaders. The real creation of the founders wasn’t a product whatsoever but the company itself; constantly advancing independently of any one person or idea.
Consider a clock on the wall. Having one great idea or visionary leader is like getting a glimpse of that clock and being able to tell the time in that minute. But building a company that always generates great ideas and leaders is like building your own clock: a reliable machine.
Visionary companies are driven more by a core ideology than gains, but they still prosper.
Visionary companies have a higher purpose for their existence than to simply chase profits. Together with the firms’ core values — enduring tenets that guide their every choice — this purpose creates their heart ideologies: a set of stable principles that guides the company through generations, similar to the”truths” of the American Declaration of Independence.
Consider for example the pharmaceutical company Johnson & Johnson (J&J). In 1935, the CEO, Robert W. Johnson Jr., wrote out the provider’s core ideology in a document called”Our Credo,” which listed the company’s responsibilities: first to their customers, second to their workers etc. Finally, last and fifth on the list, after all of the additional responsibilities were fulfilled, Johnson said that shareholders should get”a fair return.”
Likewise, most visionary companies studied were not primarily after profit. Nevertheless, although some ideologies might seem soft or idealistic, visionary companies were able to find a way to stay pragmatic in their business decisions and make gains without ever wavering from their core ideologies.
A core ideology is important not only if visionary businesses prosper but also when they hit upon trouble. By way of example, when Ford faced a dire crisis in the 1980s, instead of merely fighting fires, its management team ceased to discuss and clarify what the company stood for and how they could espouse the values of the founder, Henry Ford. Ford’s comparison company, General Motors, made no such attempt.
Though every visionary firm studied had a core ideology, their content varied greatly. What counts is not the content of the ideology but rather an authentic ideology exists and is rigorously acted upon.
Visionary companies maintain their core ideologies while relentlessly stimulating progress and improvement.
The actual heart of what makes visionary companies so powerful is that while they jealously guard the permanence of the core ideologies, the indications of the core ideology are always open for progress and change. For instance, Wal-Mart’s drive to”exceed customer expectations” is a stable element of its core ideology, but the customer-greeters in the entrance to their shops are a practice that can change. Similarly, Boeing’s core ideology is to be a pioneer in the field of aviation, but building jumbo jets is a reflection of that ideology that can change.
This flexibility demonstrates how visionary companies refuse to abide by the so-called tyranny of the OR, whereby a business has to choose between staying true to its core ideology or stimulating progress. Instead, visionary companies utilize the genius of the AND — experimenting and growing — while still adhering to their core ideologies.
Visionary companies have their core ideologies to direct them, but they’re also persistent in their efforts to continually improve their products, business and organization. They never settle and never become complacent. Consider the founder of the Marriott Corporation, J. Willard Marriot, who lived by the slogan”Keep on being constructive, doing constructive things, until it is time to die… make every day count, to the very end.” This sounds rather depressing, but is also a great commitment to continuous progress.
Exactly like their core ideologies, this drive for progress is innate and unquestioned in visionary companies. Progress is stimulated both by placing bold objectives and by producing concrete mechanisms that encourage individuals to innovate and improve.
Visionary companies use big hairy audacious goals to stimulate progress.
To drive progress, visionary companies often set themselves extremely bold objectives — so-called big hairy audacious goals (BHAGs) — to which they commit utterly and totally. BHAGs are so ambitious that they often seem unrealistic, particularly to outsiders. Nevertheless, they are also clear and tangible enough to energize and focus the business.
A well-known illustration 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 daring commitment, but it did get the U.S. moving aggressively ahead.
Boeing place many BHAGs during its history, including its dedication to creating the 747 jet. Boeing pursued this goal single-mindedly, without ever even considering the potential for failure. The CEO said that they would complete the jet if it consumed the whole company, which it nearly did: at one point roughly 86,000 individuals — some 60 percent of their work — were laid off as earnings of the airplane did not meet expectations.
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 international status. The new name was audacious at the time: International Business Machines (IBM).
BHAGs often take on lives of their own. Just as the space program continued after Kennedy’s death, the visionary companies surveyed pursued their BHAGs even as new CEOs and directors came and went. Once a BHAG was attained, new ones were set — always in accord with the provider’s core ideology.
Visionary organizations are nearly cult-like — new recruits either thrive or leave.
Visionary organizations pursue their core ideologies so single-mindedly their corporate cultures are almost cult-like. By way of example, new employees quickly find themselves interacting primarily with their coworkers, and they’re invited to be secretive about the internal workings of their companies.
Employees frequently become fully immersed in the core ideology. Consider IBM, for example, where future supervisors in training would rise and sing songs from an IBM songbook:
“March on with I.B.M.,
Work hand in hand…”
Similarly, the Walt Disney Company expected its employees to live and breathe its core ideology of wholesome family fun. For instance, men with facial hair were not accepted as workers at theme parks, and anyone heard uttering a four-letter word in the presence of Walt Disney himself was fired immediately — no exceptions.
There is very little space in visionary companies for folks who don’t meet their tough expectations and criteria. New employees often find that they fit right in and flourish, or they perform badly, are unhappy and exit the organization quickly. In this respect, there are no compromises at visionary companies.
Conversely, because the employees are confident and can be counted on to adhere to the company’s core ideology, they can also be given the leeway to experiment. This stimulates progress and enables the enterprise to prevent the harmful group-think endemic in several cults.
Note however that visionary companies are not personality cults, centered around a charismatic CEO or founder but rather around the core ideology of the company. Though charismatic personalities can also drive passionate work, such”cults” invariably collapse when the person leaves.
Visionary companies don’t just talk — they take concrete actions to implement their worth.
While many companies claim to adhere to idealistic values, promote experimentation or adopt constant progress, very little is seen in training. The visionary companies studied, on the other hand, managed to translate their values into reality by creating concrete mechanisms that influenced the daily lives and decisions of workers.
3M did not merely say,”We want our employees to be more innovative.” Rather, it implemented several mechanisms to encourage this idea, one example was allowing workers to use 15 percent of the time on pet projects and dictating that 30 percent of each division’s annual sales must come from products less than four years old.
Likewise, visionary companies did not merely talk about constant improvement; rather, they created mechanisms to ensure it. Wal-Mart, for instance, spurred constant growth with so-called”Beat Yesterday” ledgers, which were used to compare each day’s sales to those of the year prior. Likewise Hewlett-Packard instituted a process of ranking its workers annually to stop those who gained a high status from just coasting.
The visionary companies also took concrete actions in the long term. They spent far more than comparison businesses in creating new technologies and business practices, training and developing their own human capital, as well as in encouraging research and development.
For instance, if Merck wanted to become a force in medical research, it deliberately modeled its labs on academic ones and enabled its researchers to publish their findings in academic journals — very unusual for private businesses at the moment. It also decided the product-development process ought to be driven by research instead of marketing as it had been in a number of other companies. This attracted top scientists to Merck’s labs.
Visionary companies are able to attain their phenomenal success by staying true to their core ideologies while still relentlessly pursuing progress. A company’s core ideology comprises its core values but also its purpose, meaning the reason it exists beyond profits or shareholder value. Visionary companies also stimulate constant progress by setting bold goals and by instituting grassroots mechanisms to realize their policies.