MBA1413 Must Read: Built To Last by Jim Collins

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Jim Collins, of course is the bestselling author of Good to Great, but this book was published in 1994. Bill to last examines what lies beneath 18 extraordinary companies. Companies that have had amazing success. But more importantly, he shares which principles and ideas have allowed them to be successful for a century. This book was a result of six years of research. Jim Collins teamed up with Jerry Perras and it's seen as a modern classic in today's business world. There is a ton of research done on this book, but he focuses in on 18 visionary companies. Companies like American Express, Motorola and Sony. What I want to share with you in this book are some lessons he extracts from these legendary businesses. Why are they so successful, why they continue to be successful after all these years, and how you can do the same. I know that sounds very big and grand, but Jim actually mentions in the book that these companies actually looked at each other when they were building their companies. They were saying, hey, if that company can do it, I can do it. They said this when they're in their early stages. So if you're in your early stages, take their lead and don't take these lessons for granted. So much to cover in today's lesson. So let's get into it. Let's get down to business Built the Last is a fantastic book to get some perspective on what makes a successful company. And this is why I want to start with this quote from the book from Jim Collins that says visionary companies pursue a cluster of objectives of which making money is only one and not necessarily the primary one. So Jim actually has this quote in this book because he wants to emphasize that these companies that are revolutionary, that have lasted decades, lasted because they weren't only about money. They weren't only about making a buck. Of course, profitability and making money is something they try to do, right? They try to achieve. They have to so they can continue to grow and sustain themselves. But in order to be a great company, you have to have other goals other than just making some money. Now, many people think that in order to be a great company, to make a difference in the world, to be significant, to be a game changer, to be a tastemaker, you have to come up with revolutionary ideas. And this is one of the biggest lessons in the book. He debunks this idea completely. He says you don't need a great idea to start a great business or a great company. In fact, you don't need any idea for that matter. Now you might be thinking, what? What do you mean? Well, he explains and says, it's not one singular idea that defines a company or defines your success. It takes a whole lot more than that. In fact, he says, it's just a whole bunch of different ideas, different experiments, seeing what works. A lot of people think I just need one good idea, one aha moment, one thing that's going to, like, really captures people's attention, and that's just not how business works. Business works with trial and error and seeing what works in the marketplace, seeing what works for your audience, trying different things, experimenting different things, tweaking, improving. For example, he mentions the founders of Sony. Before they started making electronics, they made mini golf equipment. That's an idea they tried. American Express started out as a mail company. Motorola started something completely different, which became obsolete. Which are battery eliminators. And even though Apple started out in the computer business, personal computing, and they made it easy to use, that was just one of their ideas. And it's not the most successful idea. The idea that took Apple to, to a whole new level and made it the most profitable company in the world was creating a phone. A phone is not in the same category as a computer. We might think they're the same things now because of what the iPhone did to our perception of a phone. But before the iPhone, a phone was a phone, a computer was a computer made calls and people barely text messaged with their cell phones. He goes a little deeper and says, the lesson here is that these companies, they didn't focus on one idea and just say this has to work. They focus on the process of coming up with new ideas constantly. Sometimes these ideas are going to be good, some of them will be bad. Apple had some duds in their history. People don't talk about it, but they had some products that just bombed. But just like in any other pursuit of greatness, whether you're trying to be a great writer or a great stand up comedian, some things won't land, some jokes will land and you have to refine your material, but overall you're trying different things and you're producing new ideas. The next thing I want to share from this book is this idea of ideology in your business. Your business has to have a core ideology or it won't be visionary. You have to have some core beliefs, the things that your company believes in, that thrives in, that really prioritizes. For example, Walmart's core ideology is to bring retail products to customers at the lowest prices possible. This is crystal clear to everybody and the company. Same thing goes with Amazon. Amazon's very big on providing the best deals possible, the lowest price possible. They're so frugal. It's a big part of their company values and it permeates everywhere to the point where they don't invest much in office space or office furniture. Till very recently, all Amazon employees desks were basically a wood door from Home Depot and four legs a slab of wood basically. And the whole idea, the whole ideology was, hey, we are about saving our customers money. Let's save some money in our office and so that we can pass on those savings to our customers. On the flip side, Apple is not frugal. Their core value is great design and great usability. So they won't put out a product that feels cheap or is not well designed. It's one of their core ideologies. And, and this drives the company. Everybody in the company sees that vision is a part of that culture and really can drive that forward. They make decisions based on that. They're not going to go cheap with materials because that's the priority of the company. Great design, great usability, quality product. They understand that they can charge more, that they can actually have a more expensive product because price is not one of their core values. It drives home this idea in the book where your core values are core priorities need to exist and you'd be a part of every product, every service that you offer. And all your team members, all your employees have to embody this. They have to understand this is what's important to us. This is what makes us us. This is what makes us different. This is why people come to us and buy our products and services, because we value this. And people who have the same values will resonate with us. And these revolutionary companies, these companies that have lasted lifetimes, totally understood this. Another thing he mentions in the book that was a bit controversial but I found very interesting. And he said that these companies, these visionary companies, they're like a cult. You're either in or you're out. So they have a very definitive culture in their business, in their company, where it's like, this is what we believe in, this is what we stand for. Either you're with us or you're against us. For example, you weren't allowed to say any colorful four letter words around Walt Disney. If you use one of these words, you would have been fired on the spot. No exceptions. So you could see how it's very black and white in certain things. I'm just conveying the research here that Jim Collins has added to this book. Now my own take on this is that there are merits to this. And the merit is that it's a very definitive culture. People understand where they stand. They understand what this company is all about. They understand if this is for them or not. Even from the get go, from starting at that company or even the interview, they understand quickly, hey, this place is for me or not. And he says the reason why this is so important to companies is because it creates a family like structure, almost like a cult. He says in these companies, which creates a sense of loyalty, a sense of belonging, a sense of tenure, people want to stay there for as long as possible. And this makes the company very strong. When you have people staying 10, 20, 30 years at the same company. That's a lot of momentum behind that company with all those employees. Now this is a very delicate topic or controversial topic because does this mean that you're not flexible or you're not inclusive to other people's ideas or ways of life? Personally, I think no. I think you can have this type of environment where you are inclusive, where you do accept everybody, but you have a few universal values that your company believes in and believes strongly about. They don't waver when it comes to this and often these values are aligned with the products. Obviously you know Disney is a family friendly brand with the theme parks and the cruises and the movies and therefore the four letter word rule is congruent. So I believe that it makes sense if obviously these core values are non discriminatory. They're clear and communicated to everybody from day one.

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Built to Last has so many great stories in this book. So many I can't even scratch the surface. In this short lesson, he talks about how to set big, hairy, audacious goals. In the book, he shares a story about how Boeing did that and how it almost made them go bankrupt. He talks about where Google stole the idea to allow their employees to dabble in projects they are interested in and why it was a crucial part of their success, as well as many examples of how to embed your core values in daily operations. Fantastic. Classic business book that you should pick up Built to Last by Jim Collins. Check it out. That's why it's on A must read episode here on the show. Thank you so much for listening to today's lesson. If you love what you hear, hit subscribe right now on whatever you're using to listen to this podcast. That way you never miss the next episode. Also, by hitting subscribe you have access to all our archive episodes. Over 1400 episodes. The only way for you to see all those episodes is to hit subscribe to. You can go to our back catalog and check out all the different lesson topics and themes that we covered over the last five years. Plenty for you to chew on when you have 10 minutes or so before I go. I want to leave you with this. As a small business, sometimes it's hard to relate to these huge companies like Apple and Boeing and Walmart. But understand that these companies started out small too. They had a handful of customers. They had one location. They had one product. We all start somewhere. And when people learn things along the way, we shouldn't just neglect them or just say, hey, that's not for me. Because that's a huge company. They could be of value. They've learned a lot of things along the way that you, maybe you haven't experienced yet that can help you prepare you for success. Don't do that because I used to do that. I used to dismiss, you know. Oh, that's a large company. That's not me. No, there's lots of lessons you can learn. Thank you so much for listening and I'll check you in tomorrow's episode. I'll see you then. Take care. Dear McDonald's, your breakfast menu fire tens across the board. I could be happy with anything even though I ordered the same thing every time. Thanks for not judging me. I'll try something new next time.

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