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1-Page Summary of Built to Last

Overview

Companies that last have many things in common. They are visionary, they value their core ideology and make sure to preserve it, but at the same time they’re open to changes that will help them progress. The author is going to explain how those companies do this by examining several examples of such companies.

To study the most visionary companies, we first had to find them. To do this, the authors surveyed hundreds of CEOs for the names of their favorite visionary companies. Eighteen firms were mentioned more than any others, and they included such venerable brands as Disney and Merck. The 18 firms were then paired with other companies that shared similar products but weren’t called “visionary” quite as often by CEOs.

This study looked at two groups of companies, each with a long history. The first group was founded in the 1890s and the second group in the 1920s. Both groups were studied across all aspects to see how they’re similar or different from one another.

The visionary companies that were studied have outperformed the comparison companies and the general market by a long shot. If you had invested in their stocks, your investment would’ve been worth $6,356 compared to only $415 if you had just put it in the general market.

All kinds of companies (Fortune 500) have been interested in the findings from this study. These companies are visionaries and can teach us how to build successful businesses.

Big Idea #1: Companies that are forward thinking and constantly producing great products have leaders who are constantly creating new things.

Contrary to popular belief, visionary companies aren’t dependent on great ideas.

For example, the founder of Sony didn’t know what products he would make. He had a brainstorming session to evaluate business ideas ranging from sweetened bean-paste to miniature-golf equipment.

Bill Hewlett and Dave Packard experimented with many ideas before they founded HP. They tried out urinal flushers and foul-line indicators, among other things. It seems that great ideas aren’t necessary for the start of a visionary company; nor are high-profile, charismatic leaders. Visionary companies did have superb individuals at their helm, but those people were often down to earth and humble.

But then why are some companies more successful than others? Is it because of their ideas and strong leadership, or is there something else that they have in common? Many comparison companies had great ideas and strong leadership, yet they all fell behind the visionary companies eventually. Why?

Instead of focusing on one product or leader, visionary companies are constantly churning out new ideas and leaders. They build themselves into outstanding organizations that focus on the company itself, not just a single product or idea.

A clock on the wall is a good analogy for having one great idea or visionary leader. However, when you build an organization that constantly generates new ideas and leaders, it’s like building your own reliable clock.

Companies that are constantly innovating and creating new products will have visionary leaders.

Big Idea #2: Some companies are more driven by a core ideology than profits, but they still succeed.

Companies that are visionary have a higher purpose for existing than to just make money. They also have core values, which they use to guide their every decision. These values create their ideologies, or the “truths” of how they operate as a company and what drives them, similar to the American Declaration of Independence’s truths.

For example, Johnson & Johnson (J&J) has been around since the 1930s. It was founded by Robert W. Johnson Jr., who wrote out a list of responsibilities for his company in a document called “Our Credo.” The first responsibility listed is to customers, and the last one is that shareholders should get a fair return on their investment.