Books that changed my life 7 – Built to Last
Built to Last had a major influence in my life. Back in 1998 it introduced me to the whole idea of being a "visionary" company, which I’ve been trying to apply to brands ever since. [Jerry Collins has since gone on to write a more recent book, "Good to Great", but I’ve stuck to the original].
Drawing upon a six-year research project at Stanford, Collins and Porras took eighteen truly
exceptional and long-lasting companies and compared each with a direct competitor (e.g.P&G vs. Colgate; Hewlett Packard vs. Texas Instruments) to highlight what set them apart. As you can see below, the results comparing stock market returns of visionary vs. non-visionary are pretty compelling. Furthermore, in a follow-up study of the visionary companies done by Fast Company 10 years after the book came out, total shareholder
return was 206% versus just 32% for the comparison companies. Not all the visionary companies had done well, but overall, the results were still good.
In the book, Collins and Porras introduce two powerful concepts which have become some of the most often used (and mis-used) tools in brand and business strategy. I’ll talk about how these two tools can help in brand and business strategy, and then highlight the potential pitfalls.
The first idea is the BHAG: a "big, hairy, audacious goal". This deserves credit for its name alone, which is refreshingly wacky in a business world that is often so serious. The role of a BHAG is to force a company (or brand) to set a goal which is wild and un-achievable. The idea is then that the leaders of the business transform the company to achieve the goal.
Examples from the book are:
– GE: To become no. 1 or no. 2 in every market we serve, and to have the agility and speed of a small enterprise
– Sony (back in 1950’s): Change the worldwide image of Japanese products as poor quality
The second key tool is the Core Purpose, which is a reason to exist beyond pure profit (the CEO of a financial services company I explained this to had a bemused look on his face, and genuinely had no comprehension of there being anything else than profit). The idea here is that companies who are successful over the long run have a deeper reason to exist that keeps them ahead, in addition to the need to deliver short-term results alone. A quote from the book I really like is:
"Profit is a necessary condition for existence, but it is not the end in itself. Profit is like oxygen, food and water for the body; they are not the point of life, but without them, there is no life."
Examples of Core Purpose from the book:
– 3M: to solve unsolved problems innovatively
– Wal-Mart: To give ordinary folk the chance to buy the same things as rich people
Now, like any instrument, such as a piano or camera, the effectiveness of a BHAG or Core Purpose depends on the person using it. In the wrong hands, they can produce terrible results, as they often do.
On the BHAG front, over zealous leaders can whip themselves up into a frenzy of wild ambition and set super stretchy targets. But then then forget one tiny little point, which is putting in place the resources, structure, culture and rewards system to give the business even a chance of getting to that goal one day. The result is a nightmare of under-performance, sapping energy not creating it. So, if you’re going to go the BHAG route, make sure you have the support needed to give the team a chance of at least getting close to it. One major factor that helps leaders set a BHAG and then move towards it is of course a crisis, or "burning platform" as this is sometimes called. The business is in such a mess, that there is almost nothing to loose, and radical action is the only solution.
For the Core Purpose the big risk, as in a lot of brand visioning work, is falling into predictable and safe language. What you end up with is a bland vision, not a brand vision. This is really hard, especially when working with a big team of people. The best chance you have of a core purpose that really adds value and inspires is to craft it with a small team people and keep some edge. I do like the one below created by Nike. That little bit with the asterisk makes all the difference somehow, and gives it this edge. Its very simple, but it has emotional pull for me, and the idea of inspiring people, whatever shape or size, does feel more Nike than Adidas (more German technology).