1. Myth of visionary idea to start the company
HP – started a company w/o knowing what they would build.
large numbers of ideas, none of which were any good.
1st product were 8 oscilloscopes to Disney
Sony – when formed, spent weeks trying to decide what to
1st real product was a rice cooker.
Marriott – started w/an A&W root beer stand
Nordstrom – started as shoe store
3m – a failed corundum mine. Then went into Sand paper.
2nd president drew no salary for first 11 years.
Only GM, J&J, and Ford started w/a great idea.
MOST notable companies did not start w/visionary start.
Long race goes to tortoise, not the hare.
Westinghouse – Knew AC would win over DC.
First president (Kaufman?) didn’t create any products, but
started research department.
View the ultimate creation as THE COMPANY, not the product.
Packard – claimed organizational decisions far more
important to success than any products created.
“built company by design, calculator by chance”
2. Myth of great and charismatic leader
No evidence that it is required in formative stages of
Great companies come more from orientation to the
organization than to the products, and thus great products continue to emerge.
Time tellers vs. clock builders.
Difference between Harry Cone (Columbia) and Walt Disney.
Storming of the Magic Kingdom – resistance to takeover based
on culture and values of the company AS a company, rather than pure liquidation
value. SHAREHOLDERS did not want it sold off, even though it would be short
term, and tidy profit!
Fitzgerald. The test of a first rate intelligence is the
ability to hold two opposed ideas in the mind at the same time, and still
retain the ability to function.
3. More than Profits
Merck – victory over disease, NOT focused on profit first.
High ideals AND pragmatic approach, not OR.
Medicine is for the patient, for the people, NOT for the
Remember that, and profit will always appear.
Core ideologies – this is who we are, what we stand for,
what we are about.
Maximizing shareholder value has NOT been primary focus of
visionary companies. That comes into play, but is not primary.
Profit is not the point, but the course of outcome of
whatever core ideologies really are.
Packard – wanted to discuss WHY the company exists in the
People come together to accomplish something they could not
do on their own.
Doing something of value is what makes the company
profitable, rather than seeking profit.
Compared w/Texas Instruments, which had as principle focus as size and
growth and not any underlying WHY.
All goals of TI were growth focused. made
financial sales goals primary over underlying goals “bigger is better”
HP, instead chose fields that allowed technical
Philip Morris over RJR.
Morris has cult-like culture of dedication to smoking.
RJR would get out of tobacco if could make more money.
Nevermind moral aspects of tobacco – they had a HUGE culture
that bound the company together.
Across all visionary companies, they all had core values,
but there was not a single core value COMMON to each of them. It is the
presence and dedication to them that is common, not the actual topic of what
the content was.
Authenticity of ideology and alignment is more important
than the actual content of the ideology.
ergo, should put effort into
articulating what values really are, not what they “should” be.
are essential to the company surviving.
Constitution – “we hold these truths to be self evident.”
Purpose is broad, fundamental, and enduring. Not a whim or
Disney Land will never be completed so long as there is
imagination in the world.
HP will never say ‘there are no more contributions we can
Purpose is NOT product based.
e.g. “We exist to make cartoons for kids?” vs. “to use our
imagination to bring happiness to millions.”
4. Preserve the core, stimulate progress
The only sacred cow should be ideology of how it does
preserve ideology, yet leave everything else flexible in
order to preserve this.
“building jumbo jets” is non-essential to Boeing.
Don’t mix up culture, strategy, tactics, ops, products,
goals, competencies, policies, structures, reward systems, with ideology. Only
ideology should be stable to become a visionary company
The drive to progress is an INTERNAL force, not based on
mix of self confidence and self criticism.
bold goals, and self-improvement before external needs
HP – not just talk of HP way, but used religious promote
Disney – Disney university.
GE – continuous tech. innovation: 1st industrial
thread: ideology manifest through ACTION into continued
Must create TANGIBLE mechanisms aligned to preserve the
core, and stimulate progress
5. Big hairy, Audacious Goals (B-HAG)
engages people. Tangible. energizing. Focusing.
No long mission statements here… just unifying force and
Define destiniy in broad overarching terms
GE: “become #1 or #2 in every market we serve.”
Stimulate progress. generate momentum. level commitment.
MUST HAVE COMMITMENT to qualify as a B-HAG.
Hubris factor – an almost unreasonable confidence. Common
to visionary companies.
IBM – the international business machine corp. (… what was it before (1:16) )
BHAGs look more audacious from the outsiders.
Never occurs to insiders to NOT do what is proposed.
Citicorp – James Stillman – declared he would make it a
great national bank, even when had just a handful of employees.
Always have something to shoot for.
Key things are achievable that are not provable.
Zenith (McDonnald) vs Motorola (Paul Galvin).
Sony: “become THE company that changes the image of quality
of Japanese products”
BHAG is a goal, not a statement.
Should fall outside the comfort zone, but require great
So bold and exciting, that it stimulates progress well after
departure of any leader.
Must be consistent w/company’s core ideology.
6. Cult-like cultures
If you don’t accept and endorse the working values of the
company, then you will not ‘fit’ within the company.
Do NOT need a soft, comfortable environment.
DO need firm clarity what they are about, and what they are
trying to achieve.
Joining visionary companies is like joining tight night
You are either in, or out… no middle ground. Almost
Cult – a body of persons characterized by … great dedication
to something (rough)
- fervently held ideology
- indoctrination procedures
- accept only those who accept values and look (tightness of
IBM / Disney
Thomas J. Whatson (of IBM) – set about creating an org of
Never be satisfied. We sell service. Suits, marriage,
frown on alcohol.
IBM country clubs to encourage in-group socialization.
1979 – corp center that was almost a monastic retreat.
Institutionalize its beliefs the way a church does.
enforce servere tightness of fit.
Disney U. is a socialization/orientation process.
Fervently preserve core ideologies in concrete ways to
consistently send signals that reinforce those values.
MUST counterbalance cult-like culture w/BHAGS to stimulate
Can have cult-like culture of anything: of change, of
Try a lot of stuff, and keep what works
1890, J&J – physician complained of skin irritation to
the gauze, which led to talcum powder.
They put talck with their products, then people wanted to
JUST buy the talc, which became J&J baby powder.
1920 – Earl Ready – custom made band-aid, created for his
Then became band-aid.
1937 – Marriot, had 9 restaurants, trained in service.
Marriott shop #8 was by Hoover airport.
passengers wanted food between flights.
then arranged to deliver boxed lunches to the airlines.
then became Marriott business services – seized upon good
Evolutionary progress. (contrast w/BHAG)
bhag = clear, unambiguous goals, vs. work w/ambiguity
small, incremental steps vs. bold actions.
Darwin – variation and selection underpinning of species.
Nature makes LOTS of variations, and the best ones survive.
Multiply, vary, let the strongest live, and the weakest die.
Creationist perspective is traditional planning method
J&J tries lots of things, keeps the good, kills the bad.
“Failure is our most important product”
Wall mart, 1970-80: not from strategic plan, but trial and
error. Looks like foresight, but was actually trial/error.
“People Greater” – tried as a way to reduce shop-lifting.
Friendly to good customers, fearful to shoplifters that
someone was watching.
1914 – 3M – Michael knight. Insatiable curiosity.
Got a letter requesting lots of grit for a paper
McKnight – asked “why does Mr. Okie want all the samples of
you so often get to destination by stumbling, that can only stumble
when you are MOVING.
Evolution REQUIRES that you make mistakes.
Tape was a byproduct of 3M visitor who just happened to be
in a paint shop who overheard need for better masking tape before it was
Scotch tape was never ‘planned’ –
Make a little, sell a little, take small steps.
You just cannot tell which little things will become big.
So make many of them.
3M is “the mutation machine from Minnesota”
by 1990 over 40,000 products.
Norton, 3M competitor – never kept pace.
1913-1945 – Norton did nothing to foster innovation.
- give it a try, and quickly. When in doubt, vary, change,
feed opportunity, try something new, even if cannot predict outcome.fix try do adjust move act… just don’t sit still.
- accept that mistakes will be made.Cannot have a vibrant, self mutating experiment w/o lots of failures.dump the flops as soon as they are recognized.
- take small steps. Failure is easier to accept if it’s
small vs. huge endeavor.… ask for permission to conduct an experiment to get started in big
- give people the room they need.w/lots of room to act, you cannot tell what they will do. This is a GOOD
thing.Allow people to be persistent.Nobody thought 3M post-it notes were worth anything, but allowed to
- sponsor clock-makers.they light hot fire under people and stir vigorously.People at 3M had 15% of their time to do whatever they want.
Evolution is NOT the same as wanton diversification.
Core ideology ties them all together.
Preserve the core while stimulating evolutionary progress.
For any experiment:
- Does it work?
- Does it fit w/our ideology?
c.f. leadership and new science.
8 – Home Grown Management
1981 – Jack Welch led GE – leading master of corporate
He was NOT brought in from the outside… he started at GE
after school, as his first full time job.
GE performed as well under Jones (predecessor) as Welch’s
first 8 years.
Balanced responsibilities between profit, employees, and
Not just Welch, but GE that has the reputation… over a
century of high caliber CEOs.
Welch was selected over YEARs of grooming by predecessor.
Jones – created “roadmap for CEO succession”
Airplane test “CEO + candidate on a plane, both die. Who
should be CEO?”
Visionary companies are 6 times more likely to promote from
It’s not just the quality, but the continuity of quality
management and succession planning that has enabled visionary companies to
Company needs management succession and training processes
in place to succeed over long run.
Bringing in outsiders to the top risks altering the core…
promoting insiders is better.
What are you doing to ensure an easy transition when you
move up to greater responsibilities?
9: Good Enough, Never is
How can we do better tomorrow than we did today?
Never ending cycle of improvement. Can never coast the rest
of the way.
Extremely demanding of themselves.
Comfort is not the objective in visionary companies.
In fact, they are discomfort places – thrive on discontent.
Merc deliberately yielded market share when products became
Do not accept proposition of choosing between short or long
term success… must have both.
Consistently invested more in property, plant, and
management than competitors.
They paid less to share-holders, more back into the company.
Higher in R&D in every case.
Motorola: 40 hours/year, 1.5% to training. All managers get
- What mechanisms of discontent can you create that will
obliterate complacency, and bring about change and improvement from
- How can you give these mechanisms sharp teeth?
- What are you doing to invest for the future?
- Does your company adopt new innovations, new methods, and
new technologies, before the rest of the industry?
- Does your company continue to build for the long term,
even during tough 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.
Parable of black-belt.
Final test… essential question. What is true meaning of
- End of journey, reward for all of my hard work. Return in
- A symbol of distinction; and the highest achievement in
our art. Return in 1 year.
- The black belt represents not the end, but the beginning; the
start of a never ending journey of discipline, work, and the pursuit of an
ever higher standard. Yes.
10 – The end of the beginning
Vision, values, mission, purpose, aspiration, purpose, and
They are NOT essence of visionary company.
Statement may be good first step.
Must lead to setting goals, strategies, tactics, mechanism,
cultural norm, policies, pay systems, acct. systems, job design, etc.
Must be impossible to misunderstand ideology and vision.
Aalignment: all elements in co. work in concert towards
Never achieve… always striving
- Paint the whole picture.
- Sweat the small stuff.
- Cluster, don’t shot-gun.
- Swim in your own current, even if against the tide. 2:31:15Not ‘is it good’ but ‘is it appropriate for us?”
- Obliterate misalignments. The only sacred cow is core
- Keep the universal requirements while inventing new
methods.MUST have core ideology to become visionary company.
4 key concepts
- Be a clock builder, not a time-teller. An architect.
- Embrace the genius of the AND
- Preserve the core, stimulate progress
- seek consistent alignment.
Q&A – how to start?
- Pin down your core ideology.If circumstances would cause you to change X, then X is not your core
- What would world loose if company ceases to exist (absent
employee salaries, etc)
- Decide what kind of progress you want to stimulate.
- what should you obliterate that is blocking progress
Q – what if I’m not CEO?
Apply these techniques everywhere.
Q – are there people who can not build visionary company?
yes – those with no ideology, who don’t care about company
after they are gone. those w/o never ending urge to improve.
People have fundamental need to belong to something of
value, and to have a sense of connection with other people.