76 pages • 2 hours read
Jim CollinsBuilt to Last: Successful Habits of Visionary Companies
Nonfiction | Book | Adult | Published in 1994A modern alternative to SparkNotes and CliffsNotes, SuperSummary offers high-quality Study Guides with detailed chapter summaries and analysis of major themes, characters, and more.
Chapters 5-6Chapter Summaries & Analyses
Chapter 5 Summary: “Big Hairy Audacious Goals”
Visionary companies propel progress through daring objectives known as BHAGs (Big Hairy Audacious Goals), as articulated by Collins and Porras (93). While all companies set goals, BHAGs distinguish themselves by their daunting, challenging, and seemingly impossible nature. These audacious goals motivate employees, fostering a sense of purpose that propels the company forward. Crucially, BHAGs must align with a company’s core ideology to yield a positive impact. Collins and Porras illustrate this concept with the case of Philip Morris, which in 1961 set a BHAG to dominate the tobacco industry, rising from 6th to 1st place in profitability over the next decade. However, the authors caution that companies should carefully consider subsequent BHAGs before completing the first, as these goals lose their motivational force once achieved.
However, setting a BHAG does not guarantee progress; unwavering commitment from all company levels is essential. The Walt Disney Company exemplifies this, consistently setting and surpassing seemingly unattainable goals, from creating a feature-length animated film to building an amusement park. In contrast, Columbia Pictures, driven solely by profit without aspirational goals, has faced a troubled history of scandals and internal conflicts. Collins and Porras acknowledge the delicate balance between confidence and hubris in setting BHAGs, emphasizing that what may seem audacious to outsiders appears achievable to those within the organization.
The authors stress that the success of BHAGs lies not in the leader’s whims and motivation but in the goal itself, allowing companies to maintain momentum through leadership changes. While their examples predominantly focus on corporate settings, BHAGs are effective across various organizational levels, particularly in entrepreneurial and small business contexts. To be effective, BHAGs must be clear, immediately compelling, and daring enough to motivate even through leadership transitions. Importantly, these audacious goals must align with the company’s core ideology. For example, despite already experiencing financial difficulties, Boeing took on the BHAG of expanding from military aircraft to dominate the commercial aircraft market. This goal aligned with its core ideology of pioneering in aviation. However, despite time and financial constraints, Boeing maintained their commitment to quality, demonstrating that BHAGs and core ideologies work synergistically to create and sustain visionary companies. A robust core ideology provides organizational stability, allowing the company to progress. However, continual progress is equally essential as, without it, a company would cease to exist.
Chapter 6 Summary: “Cult-Like Cultures”
Collins and Porras debunk the myth that visionary companies are universally ideal workplaces. While it is true that poor performers are generally unwelcome, even high achievers may not flourish in these environments due to a misalignment with the company’s core ideology. The authors attribute this to a tight fit between employees and their company’s ideology; visionary companies demand dedication to their core values. These organizations are not lenient; they impose high expectations on employees regarding time, performance, and commitment to the company’s principles. Visionary companies exhibit cult-like characteristics, emphasizing fervently held ideologies, indoctrination, and elitism. This “cultism,” as termed by the authors, cultivates employee loyalty to both the company and its core beliefs.
Using terms like “cult-like” might carry a negative connotation, but Collins and Porras argue the opposite. Lacking a term beyond “culture” to describe visionary companies’ unique working environments, they coin “cultism” to emphasize practices creating a nearly cult-like devotion to core ideologies—notably, 11 out of 18 visionary companies employed indoctrination tactics more extensively than their counterparts. Furthermore, 13 out of the 18 displayed greater alignment among employees and ideologies and a stronger sense of elitism. Visionary companies tend to adopt cult-like practices more extensively than their competitors.
IBM is a prime example, with former executives describing the working atmosphere as “cult-like.” From strict dress codes to rigorous training programs and country clubs for internal socializing, IBM employed tactics to foster a distinct sense of identity among employees. While some likened these practices to brainwashing, IBM executives argued it was a way to exclude those who did not align with their values. However, by the 1990s, IBM had phased out many cult-like practices and moved away from some core values. At this point in their history, the company struggled mightily.
Disney and Procter & Gamble also exhibit elements of cultism through specific language use, obsession with secrecy, and incentivizing employee commitment through stock and profit sharing. The authors caution against creating a “cult of personality” around a leader, emphasizing that visionary companies foster fanatical devotion to the company itself through practices like ongoing training programs, internal training centers, and promoting socialization among employees outside of work.
While acknowledging the inherent risks of cult-like cultures, Collins and Porras argue that if these practices serve to “preserve the core,” they must be balanced with a continuous pursuit of progress. Despite their seemingly exclusionary nature, these cultures can enhance diversity by uniting people from various backgrounds over shared goals. The authors assert that visionary companies effectively manage a delicate balance, exercising firm ideological control over core values while simultaneously encouraging individual autonomy. Through indoctrination into the company’s core ideology, visionary companies instill trust in employees to preserve the core, even when allowed to act independently.
Chapters 5-6 Analysis
In this segment, Collins and Porras delve into two out of six visionary companies’ strategies for driving progress: adopting audacious goals and establishing cult-like organizational cultures. The discussion of “cultism” in these chapters has faced scrutiny in the years following publication, with some readers finding the company culture the authors encourage to be inappropriate.
Collins and Porras assert that 14 visionary companies embraced Big Hairy Audacious Goals (BHAGs) more than their counterparts. The appendix specifies these companies as American Express, Boeing, Citicorp, Ford, General Electric, IBM, Marriott, Philip Morris, Procter & Gamble, Sony, Wal-Mart, and Disney. The authors conducted their analysis based on available information, acknowledging varying levels of corporate transparency. Despite potential data limitations, the assessment focused on three criteria: the utilization of BHAGs, the audacity of BHAGs, and the historical pattern of BHAGs. Each company received a rating on a 1-3 scale for each criterion, with 3 indicating substantial evidence, 2 indicating moderate evidence, and 1 indicating minimal to no evidence supporting the criterion.
In the findings, 3M, Johnson & Johnson, and Nordstrom were on par with their comparison companies in employing BHAGs. Notably, Hewlett-Packard emerged as the sole visionary company to utilize BHAGs less than its competitors. However, four company pairs exhibited a marginal one-point difference, which warrants consideration as a standard deviation rather than conclusive evidence favoring visionary companies in BHAG usage. This narrows the count to 11 visionary companies unequivocally leveraging BHAGs for progress stimulation, slightly below the initially claimed 14. Employing rating scales to scrutinize data carries inherent flaws, particularly susceptibility to researcher biases. While one potential remedy involves multiple researchers independently evaluating the same data and averaging the scores, the authors offer no indication of such an approach. The use of rounded numbers raises further questions about the method’s precision. Interestingly, the authors spotlight Philip Morris, General Electric, and Ford as exemplars of BHAG utilization for progress. However, these three companies only scored one point higher than their respective comparison companies in the authors’ data.
Collins and Porras employed a similar approach to assess cultism within companies, utilizing rating scales encompassing indoctrination, tightness of fit, and elitism. The authors offer detailed specifications for each scale, emphasizing the importance of cultivating an intense loyalty and dedication consistent with the company’s ideology. For indoctrination, they scrutinized processes like orientation programs, ongoing ideological training, internal publications reinforcing ideology, encouragement for employees to predominantly socialize with peers, corporate songs, cheers, mythology, pledges, affirmations, unique terminology, and the practice of hiring young talent and promoting from within. “Tightness of fit,” defined as the degree to which individuals align with the company’s ideology, was gauged through methods such as recognition and rewards for ideological alignment, penalties for non-alignment, tolerance for unrelated mistakes, harsh punishments for ideology violations, rigorous screening processes during hiring and early employment, strong loyalty expectations with corresponding penalties, strict behavioral controls, and the solicitation of employee buy-in through either monetary or time-based commitments (240). The concept of elitism, indicating a company’s historical reinforcement of a sense of being unique and superior, was evaluated through evidence of verbal and written reinforcement, obsessive secrecy, celebrations of belonging and uniqueness, use of nicknames and exclusive terminology, an emphasis on the company as a familial unit, and isolation through company-owned resources limiting employee interaction with others.
This comparative analysis yields more tangible results, showcasing 14 visionary companies employing cultish methods more than their counterparts. Only four companies reached a tie with their competitors, and in no instance did the comparison company outshine the visionary counterpart. Indoctrination policies received unanimous scores of 2 (medium) or 3 (high) for nearly all companies in both lists, signaling widespread efforts to educate employees about company policies and culture. However, the reliability of these results is in question, given that some cultism criteria hinge on the company’s ideology. In previous data, the authors highlight that four comparison companies lacked a substantial ideology, securing the lowest possible score of 4 on the rating scale. The highest-rated comparison companies achieved only an 8 out of 12, and their average was a 6.4, while visionary companies averaged 10.5 out of 12 in overall company ideology, emphasizing a significant gap. The intrinsic link between the authors’ cultism evaluation and company ideology weakens the causal connection between cultish behaviors and progress stimulation. It becomes plausible to argue that the driving force is not a cult-like culture but rather a robust core ideology. Among the four comparison companies scoring an 8 on core ideologies, one tied with the visionary company for cultism, while two came within a three-point range of the visionary company. This does not dispute Collins and Porras’s data but underscores the need for rating scales to singularly evaluate aspects, as incorporating a company’s core ideology unintentionally skews results in favor of visionary companies.
Collins and Porras dissect two critical methods employed by visionary companies for progress stimulation: audacious goal-setting and the establishment of cult-like company cultures. Their analysis of BHAGs reveals that contrary to the claim of 14 visionary companies employing them more than counterparts, only 11 unequivocally did. Their methodology, employing a rating scale without indication of cross-researcher validation, raises bias concerns. The evaluation of cultism is more detailed, relying on three scales: indoctrination, tightness of fit, and elitism. However, the close link to company ideology weakens the causational link between cult-like behaviors and progress. With visionary companies scoring significantly higher on ideology, the methodology inadvertently tilts results in their favor. While the data is not necessarily inaccurate, it underscores the importance of precise evaluation metrics to draw robust conclusions.
