The Directed Life

Notes and excerpts from Jim Collins and Jerry Porras’ Built to Last: Successful Habits of Visionary Companies

Date read: 12/23/2022

The simple implicit question on every page of the book (author’s note):

Why on earth would you settle for creating something mediocre that does little more than make money, when you can create something outstanding that makes a lasting contribution as well?

The importance of applying the principals in the book to the individual (page xx):

Many have applied the yin and yang concept of “preserve the core/stimulate progress” to the fundamental human issues of self-identity and self-renewal. “Who am I? What do I stand for? What is my purpose? How do I maintain my sense of Self in this chaotic, unpredictable world? How do I infuse meaning into my life and work? How do I remain renewed, engaged, and stimulated?” … With the demise of the myth of job security, the accelerating pace of change, and the increasing ambiguity and complexity of our world, people who depend on external structures to provide continuity and stability run the very real risk of having their moorings ripped away. The only truly reliable sense of stability is a strong inner core and the willingness to change and adapt everything except that core … it is better to understand who you are than where you are going — for where you are going will almost certainly change. [emphasis mine]

The first myth of building a successful company: it takes a great idea to start a great company. (myths start on page 7)

Great companies are are a result of evolution more than strategic planning (page 9):

Visionary companies make some of their best moves by experimentation, trial and error, and opportunism … 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.

The “discover buildings” trap in research (page 14):

How do you know you haven’t merely discovered the management practice equivalent of having buildings? How do you know that you’ve discovered something that distinguishes the successful companies from the other companies? You don’t know. You can’t know — not unless you have a control set, a comparison group. [emphasis theirs]

The “trial by fire” feedback loop (illustrated on page 21): Research lends itself to concepts and frameworks which lend themselves to application in the real world which lends itself to research and the positive feedback loop continues.

Expansion of myth #1 (pages 26, 28):

Few of the visionary companies in our study can trace their roots to a great idea or a fabulous initial product.

If you are a prospective entrepreneur with the desire to start and build a visionary company but have not yet taken the plunge because you don’t have a “great idea,” we encourage you to life from your shoulders the burden of the great-idea myth.

Luck (page 29)

Luck favors the persistent.

Read Emerson and his essay “Compensation” (page 53).

Bill Allen quote on work at Boeing (page 61)

Man’s objective should be opportunity for greater accomplishment and greater service. The greatest pleasure life has to offer is the satisfaction that flows from … participating in a difficult and constructive undertaking.

Core Ideology = Core Values (essential and enduring principles) + Purpose (fundamental reason for existence beyond just making money) — definition from page 73

Set aside time for articulating your ideology — What is the reason for its existence? What would be lost from its lack of existence? (page 79)

The sacred cow tenet — quote from Thomas J. Watson Jr. (page 81):

The only sacred cow in an organization should be its basic philosophy of doing business.

Why progress? (pages 82–83):

The drive for progress arises from a deep human urge — to explore, to create, to discover, to achieve, to change, to improve … it’s a deep, inner, compulsive — almost primal — drive. 

Internal drive (page 84):

The drive for progress is an internal force … In a visionary company, the drive to go further, to do better, to create new possibilities needs no external justification. 

Biggest takeaway (page 89):

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.

Quote from Theodore Roosevelt (page 91):

Far better to dare mighty things, to win glorious triumphs, even though checkered by failure, than to take rank with those poor spirits who neither enjoy much nor suffer much, because they live in the gray twilight that knows not victory, nor defeat.

The power of constraints (page 93):

Boeing’s engineers made a significant breakthrough — the 727 — largely because they were given no other choice. [emphasis theirs]

The discipline required for being visionary (page 121):

Because the visionary companies have such clarity about who they are, what they’re all about, and what they’re trying to achieve, they tend to not have much room for people unwilling or unsuited to their demanding standards.

Micro-level translation: Because great leaders have such clarity about who they are, what they’re all about, and what they’re trying to achieve, they tend to not have much room for time, behaviors, and ideas which are unsuited to their demanding standards.

Former IBM CEO Thomas J. Watson Sr. had this plastered on a company wall (page 124):

Time lost is time gone forever.

Quote from former 3M CEO Richard P. Carlton (page 140):

Our company has, indeed, stumbled onto some of its new products. But never forget that you can only stumble if you’re moving.

American Express and float (page 143):

The mechanics of the traveler’s check gave American Express an unexpected bonus: Due to lost checks and delays, the company sold more orders than it redeemed each month, which created a cash cushion. According to Jon Friedman and John Meehan in House of Cards:

“Unintentionally, AmEx had invented the ‘float.’ … A mere $750 at the beginning, the float would eventually top $4 billion by 1990, generating $200 million in revenue.”

Evolutionary progress (page 144):

Evolutionary 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.

Renowned military theorist Karl von Clausewitz argued that detailed plans usually fail because circumstances inevitably change. (page 149)

Try enough things for long enough to get your desired outcome (page 163):

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).

Quote from 3M’s William McKnight (page 168):

The best and hardest work is done in the spirit of adventure and challenge.

Quote from William Faulkner (page 185):

Don’t bother just to be better than your contemporaries or predecessors. Try to be better than yourself.

Quote from J. Willard Marriot Sr. on success (page 186):

Discipline is the greatest thing in the world. Where there is no discipline, there is no character. And without character, there is no progress … Adversity gives us opportunities to grow. And we usually get what we work for. If we have problems and overcome them, we grow tall in character, and the qualities that bring success.

Discomfort as a driver (page 187):

Comfort is not the objective in a visionary company. Indeed, visionary companies install powerful mechanisms to create discomfort — to obliterate complacency — and thereby stimulate change and improvement before the external world demands it.

The power of a no-debt policy — extremely applicable at the micro level (page 189):

Sophisticated financial models have shown this policy [HP’s pay-as-you-go policy] to be totally irrational … But such models fail to account for the powerful internal effect of a no-debt policy: It enforces discipline. [emphasis theirs]

Course of action from the best managers — also extremely applicable at the micro level (page 192):

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.

Parable of the sensei and student working towards his black belt (page 200):

The sensei asks: “What is the true meaning of the black belt?”

“The black belt represents the beginning — the start of a never-ending journey of discipline, work, and the pursuit of an ever-higher standard,” says the student.

“Yes. You are now ready to receive the black belt and begin your work.” [emphasis theirs]

Quote from a scientist on the culture at Merck — but important advice for anyone passionate about something (page 204):

You have to want to do your science intensely.

True alignment (page 214):

Alignment means being guided first and foremost by one’s own internal compass, not the standards, practices, conventions, forces, trends, fads, fashions, and buzzwords of the outer world. Not that you should ignore reality — quite the contrary — but your company’s own self-defined ideology and ambitions should guide all of its dealings with reality.

The four key concepts to take away (page 217):

1. Be a clock builder — an architect — not a time teller.

2. Embrace the “Genius of the AND.”

3. Preserve the core/stimulate progress.

4. Seek consistent alignment.

Key thought exercise on core values (page 224):

If you awoke tomorrow morning with enough money to retire for the rest of your life, would you continue to live according to these core values?

Creating a vision-level BHAG (page 232):

A “vision-level” BHAG that … requires ten to thirty years of effort to complete … should not be a sure bet — perhaps only 50 to 70 percent probability of success … It should require extraordinary effort, and perhaps a little luck. In creating such a vision-level BHAG we suggest thinking about the following four categories: target, common enemy, role model, or internal transformation.

On the quality of Peter Drucker’s work (page 246):

We came away with immense respect for Drucker’s prescience. Read his classic works: Concept of the Corporation (1946), The Practice of Management (1954), and Managing for Results (1964), and you’ll get one heck of a jolt in seeing how far ahead of today’s management thinking he was.