Built to Last by Jim Collins | Book Summary and PDF

In the Built to Last PDF summary, you will learn:

  • A powerful paradox that will stimulate progress in your business
  • 2 components that preserve your “core”
  • 3 components that stimulate progress
  • Examples of enduring companies and the attributes that make them last
  • Strategic Action Guide to apply to your life and company

Download Built to Last PDF Summary here

Background

Jim Collins’ Built to Last is a book about the successful habits of visionary companies. It is grounded in solid research conducted by the author to figure out what makes companies such as Johnson & Johnson, Walmart, Marriot, Disney, and Hewlett Packard last for decades. What drives them to become so great that they continue to endure for decades and even centuries?

Why You Should Read Built to Last

As a starting entrepreneur, you are probably thinking about having the perfect idea or product to get your company started. The fundamental idea of the book is not about that, rather it is about getting started where you are.

You are building a great and visionary company — that is going to be your main focus as far as the book is concerned. The ideas will come and go. They will evolve as times change. No big company was built on one great idea.

Understanding this, how then do you go about building a great company? Here is where an important paradox comes in.

The Paradox: Preserve the Core and Stimulate Progress

You’re going to have a core and preserve it. The paradox is in making sure that while the core is preserved or stays intact, progress should be stimulated. Both requirements should be done or satisfied. It’s both or nothing.

But what is the core really, and what does it take to preserve it?

5 Key Concepts that Build Enduring Visionary Companies

I. Preserving the Core: Components that Stay Intact

     1.  Ideology

This component covers both the purpose and values of the company.

  • Purpose – a short, clear and simple summary of what the company is all about. It gives meaning to why such company exists.
Company Purpose
Make your purpose clear

Here are some examples for illustration.  

Company

Core Purpose

Walt Disney “Bring happiness to millions”
Merck “To save and improve lives of people around the world”

The key to a company purpose: Make it simple and precise.

Also, the purpose is not something you are ever done with. It is like your guiding star. Disney’s purpose of “bringing happiness to millions” is something that’s not done but is always happening.

A purpose is always going to be a goal that’s never fulfilled but always keeps us motivated to do our very best.

  • Values

Company values
What are your values?

The key to understanding values: You don’t have to copy the values of some other companies.

What it means to have a core ideology composed of values:

  • It is crucial for the values to be authentic, to be about who you really are as a company.
  • Believe strongly in those values, rather than trying to come up with the best possible values.
  • It’s about being true to your own unique values that you want your company to imbibe.
  • As an entrepreneur, you want to be clear on how authentic those values are to yourself or to the company that you’re trying to build.
  • Don’t look for perfect values because there are none.

Ask yourself: What values do I believe in?

Once you determine them, go after them. The core value becomes your identity.

If you look at the values of other companies, you will find a whole spectrum.

Examples:

  • Walmart is about frugality.
  • Apple is all about simplicity and design.
  • Marcus is about service.

Your authentic values don’t have to be exactly unique from other people’s values, but they have to be your own.

     2. Company Culture

Company culture
What makes your culture?

Some of the great companies that have been built to last already have cult-like cultures.

EXAMPLE: The Nordstrom Culture

This great company culture is defined by the following 3 things:

  • Indoctrination process

Nordstrom employees get together for 7 a.m. meetings. This is a chance for them to chant affirmations such as “I can do it!” and “I will do it for Nordstrom.” This is all part of the indoctrination process for Nordstrom employees.

  • Tightness of fit

The company has a practice of rewarding employees if they are within the fit, and penalizing those who are not within the fit.

Over time, as this practice continues, the people who fit within the culture will filter themselves in while the people who don’t will filter themselves out.

Download Built to Last PDF Summary here

  • Elitism

This refers to the company’s internal belief that they are elite. To create that mindset, they express elitism in their internal communication, but not necessarily in customer communication.

While they have a high regard for customer service, their belief that they are elite remains internal. Such cult-like culture exists and is a very important and powerful component of great companies such as IBM, Disney, and others.

II. Core Components that Stimulate Progress

While we understand core ideologies such as company purpose and values, and company culture that will not change over time, there are also things that must evolve over time.

1. Big Hairy Audacious Goals (BHAGs)

Set big goals
Set big goals

The first things that will change or evolve over time are your goals, referred to here as Big Hairy Audacious Goals, or BHAGs for short.

Guide to Creating Your BHAGs:

  • They have to be clear
  • Compelling
  • You have to be 100% committed to them
  • The goals charge you up

An Example: President John F. Kennedy’s Audacious Challenge

One good example of a BHAG happened here in the United States. This is not something that happened in an organization or a company per se, but a challenge or a goal initiated by President John F. Kennedy in 1961.

He said we should plan. “I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the earth.”

Looking at the question, what made this a BHAG?

  • Clear – It specifically aimed to get men to land on the moon and get them back safely. It also stated a deadline.
  • Compelling – At that time when the Cold War was at its peak, the goal was quite compelling.
  • Committed – Kennedy expressed seriousness in getting it done before 1970.
  • Charged people up – The idea of getting a man on the man on the moon charged the whole nation.
  • Bold – It was bold, almost to the point where it was unreasonable. It was beyond the comfort zone. No man had ever tried landing on the moon.

It is therefore really powerful that we have big, hairy, audacious goals or BHAGs. We have to create them for our company in order to stimulate progress.

2. Never Good Enough

“Never good enough” is another big concept that can stimulate progress, meaning we’re never done. We are always challenged to get out of the comfort zone.

Comfort is not the end goal of a company that’s built to last, nor for any ambitious entrepreneur. We want to keep doing great things.

It’s the Journey, Not the Destination (A Lesson from a Karate Teacher)

There is a story of a karate student who went up to his teacher and said, “I think I’m ready for black belt.”

The teacher said, “What does the black belt mean to you?”

To this the student replied, “The black belt, to me, means the end of the journey.”

“You’re not ready for black belt. Go home and come back to me a year later,” said the teacher.

The student waited for a year and went back to his teacher. The teacher again asked, “What does the black belt mean to you?”

He replied, ”It means that I have achieved the highest honor, the highest distinction.”

“You’re not ready yet. Come back a year later.”

Although disappointed, he came back a year later where, again, the teacher asked him, “So what does the black belt mean to you?”

Finally, the student said, “Well, it is the beginning of a journey — an endless journey of progress and improvement and of becoming better and better.”

That’s when the teacher said, “Now you are ready to be a black-belter. You finally realized that it’s all about the journey and not the destination.”

Download Built to Last PDF Summary here

What Makes Walmart Great

Walmart’s founder Sam Walton started a ledger for his executives. It featured tables comparing sales numbers between previous year and current year under the same dates. With this he asked them to beat the numbers from the previous year.

This became his motto: “Always beat the last year.”

The ledger became known as the “Beat Yesterday” ledger. It helped stimulate progress because it put the management team in a mindset of being “never good enough.”

We’re going to be “uncomfortable.” We’re going to be stepping out of our comfort zone. That’s what we’re supposed to do.

3. Keep on Trying

Walmart’s Evolution

Walmart’s story tells us that Sam was in no way a guy who had this big strategic vision about the company and who had everything figured out. It was an evolutionary process. Read his biography and you will realize that the whole Walmart concept had evolved as an event.

One thing that was great about Sam Walton: He did not worry about making mistakes.

  • He was always trying new things.
  • Ran a lot of experiments; a lot of them failed.
  • But for the ones that worked, he would bet the farm on them because he knew they worked.

Even Hewlett Packard bet on a lot of experiments.

Try 100 little experiments, and out of them maybe 5 or 6 will succeed. The remaining will fail, but that should not keep us from trying again. We’ll do so because we want to find those 5 or 6% that will work or succeed. Then we will bet and put a whole lot of money on those things.

Download Built to Last PDF Summary here

Johnson & Johnson’s Journey

In the 1890s, Johnson & Johnson was the supplier of medical goods such as gauze, antiseptic, and medical plasters.

One time they found out that the doctors were complaining about patients getting rashes through the use of those supplies. To address the problem, one of the directors for Johnson & Johnson sent the doctors some talcum powder. The doctors used them and saw great results.

Slowly, however, the patients started asking for this talcum powder. They started wanting to buy it directly.

Initially, company only sold it with the gauze, but eventually patients wanted to buy them off the counter. Soon Johnson & Johnson started selling the talcum powder. Though the company started out as a medical supplies company, soon 44% of its business came from consumer goods.

This is a way many great companies evolve. In order to be like them —

  • Keep on trying new things and will keep on failing or succeeding.
  • Build back on the things that succeed.
  • Discard the things that fail and then keep on figuring them out.

Therefore, just keep trying.

Key Takeaway

It’s very important to understand the paradox of preserving the core and stimulating progress. Understand that your core ideology (values and purpose) along with your company culture will not change, but the factors that stimulate progress will make you continue to push forward, to change, and to evolve.

Visit www.jimcollins.com to learn more about the book’s author.

Strategic Guide:

1) Define your Ideology

  • State your core purpose. Make it simple and precise.
  • List down the unique values you believe in.

2) What specific culture would you like to establish in your company?

3) Create your BHAGs (Big Hairy Audacious Goals):

Built to Last PDF Summary

We will never send you spam. That is my promise to you. Powered by ConvertKit

Related Readings:

  1. Good to Great by Jim Collins
  2. Essentialism by Greg McKeown
  3. The Magic of Thinking Big by David Schwartz
  4. Little Bets by Peter Sims – a really interesting book if you want to further understand the “Keep on Trying” concept
>