Last week I started a mini-series inspired by Jim Collins, who spoke at the World Business Forum for which I had been invited to guest-blog (see my recap post of the Forum, the best bits from the speakers, and my souvenir photo of the Bloggers Hub).  My last post relayed nuggets of wisdom Collins’ has learned from scaling rock faces; today’s post is about what he learned researching businesses.

Collins is probably most well-known as the author of the book, Good to Great, which contrasts companies which “made the leap to great results” with those which remained simply good or mediocre.  It is an excellent text on what enables companies to achieve superior performance and I hear it referenced all the time by business leaders aspiring to greatness.  But before Good to Great, Collins (along with Stanford prof Jerry I. Porras) wrote Built to Last:  Successful Habits of Visionary Companies and it’s served as my bible on business success.

Like Good to Great, Built to Last is based on an extensive and intensive research project.  Collins and Porras studied 18 companies which met the following criteria

• premier institution in its industry
• widely admired by knowledgeable businesspeople
• made an indelible imprint on the world in which we live
• had multiple generations of chief executives
• been through multiple product (or service) life cycles
• founded before 1950

Companies such as 3M, American Express, Sony, and Walt Disney made the cut and earned the label “visionary.”

Collins and Porras chose the term “visionary,” rather than simply “successful” or “enduring,” “to reflect the fact that they have distinguished themselves as a very special and elite breed of institutions.  They are more than successful.  They are more than enduring.  In most cases, they are the best of the best in their industries, and have been that way for decades.  Many of them have served as role models – icons, really – for the practice of management around the world.”

These visionary companies attained extraordinary long-term performance as measured by long-term cumulative stock returns.  And they’ve “woven themselves into the very fabric of society” – think 3M’s Post-It notes and Disney’s “happiest place on earth.”

The authors’ research found these companies share common management attributes and approaches – two in particular stand out to me:

1. BHAGs (Big Hairy Audacious Goals) – BHAGs are clear and compelling goals which serve as a unifying focus point of effort.  But more than goals, they are “huge, daunting challenges – like a big mountain to climb” (there’s another rock-climbing reference!)

Collins and Porras use the missive President Kennedy issued in 1961 as an example: “this Nation should commit itself to achieving the goal, before this decade is out, landing a man on the moon and returning him safely to earth.”  GE’s “To become the #1 or #2 in every market we serve and revolutionize the company to have the speed and agility of a small enterprise” was just as bold in its context.

What strikes me about BHAGs is they aren’t corporate-speak which supplicates company lawyers but fails to inspire everyone else.  And yet, they aren’t “yea, rah, rah” rallying cries which sound bold but don’t produce any action.

BHAGs can be distinguished from most corporate goalstatements because:

• a. They’re tangible, energizing, and highly focused
• b. People “get it” right away; it takes little or no explanation
• c. They stimulate progress and create momentum

I keep these attributes in mind as I work with clients on their brand strategies.  We work on developing platforms which inform, inspire, and inject a bias for action.

2. core ideology and drive for progress – Visionary companies preserve the core and stimulate progress.

Collins and Porras argue the importance of “core ideology”— “a set of precepts that plant a fixed stake in the ground: ‘This is who we are; this is what we stand for; this is what we’re all about.”  For example, Sony’s core ideology was created out of post-war Japan, when its founders created a “prospectus” to outline its role in resurrecting its country as a world leader.  One of the company’s “purposes of incorporation” was “to establish a place of work where engineers can feel the joy of technological innovation, be aware of their mission to society, and work to their heart’s content.”

At the same time, the Built to Last authors explain, “if a company just sits still or refuses to change, the world will pass it by.” So visionary companies tap the internal urge for progress to create new possibilities and always go further.  It was this internal drive which urged Sony to prove it possible in the 1950’s to commercialize transistor-based products when no other companies had done so and later to introduce the culture-changing “time-shifting” in the form of a VCR.

The key is to balance the two:  core and progress. “A visionary company carefully preserves and protects its core ideology, yet all the specific manifestations of its core ideology must be open for change and evolution.”

I see this balance get lost in the fast-paced innovation-driven nature of today’s business – in the pursuit of growth, too many companies fail to stay true what is core to their business.  They’re more focused on riding the latest wave of technology or the newest fashion trend and so they make compromises or allow distractions and lose their true north.  So I work with my clients to get crystal clear on what their core is and then apply that core to meet new challenges and seize new opportunities.

As noted earlier, these are only two of the many gems of wisdom I’ve learned from Built to Last.  The whole book is treasure trove of insights about extraordinary organizations which I reference and try to apply on a daily basis.  I encourage you to get a copy — I’m sure yours will end up as dog-eared and highlighted as mine.

related posts:

• climbing to the top of business, part one
• the man behind walkman
• five favorites on friday — favorite business books

About 15 years ago, my husband and I decided to give rock-climbing a try.  Many of our dates nights were spent at the climbing wall on Manhattan’s Upper West Side where we learned the basics of belaying and body contortion.  We also took our altitude pursuits outdoors a few times, once in Joshua Tree, the other in Banff where we got up to a 5.5 or 5.6 (or so our very encouraging guide claimed.)

Although it’s been years since we hung up our climbing shoes, I still remember the high I got from standing on top of a rock I just scaled or touching the top pinion of the wall.  The moments of terror and the tests of will getting there were forgotten as I looked out from those high vantage points and felt a sense of real accomplishment.  For an “achiever” like me, it was that moment of completion which motivated me.

Collins explained why rock climbing is so significant to him:

1. the unforgiving nature of gravity – Collins explained that for most leaders, particularly when you’re young, you can talk your way out of incompetencies – make excuses, compensate.  But “gravity doesn’t care.”  Like rock climbers, leaders must perform in “unforgiving settings,” navigating a “continuous series of the not normal.”

In business, there are “big fast moving forces all facing a lot of gravity.” The ability to think clear-headedly when there are big risks involved is a skill leaders must develop.

For Collins, the side of a rock 100 feet off the ground is a good place for acquiring the skill — and testing it.

2. trusting your partner with your life – In rock-climbing, the climber is usually belayed by a partner – that is, one end of the climbing  rope is fixed to the harness of the climber and the other to the belayer.  The belayer’s job is usually simply to make sure that the climber has the right amount of rope by letting out or pulling in excess rope. But when the climber falls (and it’s definitely a “when” not an “if”), the belayer is the only thing keeping him/her from dying.  With the rope friction applied by the belayer, the fall is caught and the climber is safe.

“Far more important than what climb you’re doing is who you’re climbing with,” says Collins. For him, the dependency between the climber and belayer speaks to one of the most important business principles:  First who…then what.

In “Good to Great,” Collins explains, “We expected to find that the first step in taking a company from good to great would be to set a new direction, a new vision and strategy for the company, and then to get people committed and aligned behind that new direction.  We found something quite the opposite.  The executives who ignited the transformations…first got the right people on the bus (and the wrong people off the bus) and then figured out where to drive it.”

Collins found “who” is more important than “what” because:

• a. with the right people, you can more easily adapt to a changing world
• b. the problem of how to motivate and manage people largely goes away
• c. if you have the wrong people, it doesn’t matter whether you discover the right direction, you still won’t have a great company.

Collins’ conclusion “great vision without great people is irrelevant” is most clearly understood at the bottom of a huge mountain to climb – who are you going to trust to get you to the top?

3. failure vs. fall-ure – Collins talked about the Iliad (in addition to being a rock climbing fanatic, he’s also a voracious reader, reading 100 books a year!).  He explained that Hector, not Achilles, is his hero of the story because even though Hector lost the battle, he fought with great honor and lost with great nobility.

Collins differentiates between failure and fall-ure:   failure is letting go, giving up, not trying hard enough; fall-ure is battling with everything you have and still falling.  In rock climbing, as in business, you can always walk away from a fall feeling good about it if you’ve fought your best fight.

(If you want to learn more from Collins’ unique perspective as a rock climber and business guru, check out Hitting the Wall: Realizing that Vertical Limits Aren’t — an inspiring and insightful piece he wrote back in 2003.)

Collins’ insights flesh out my understanding of great rock climbing and great business.  I’ve always been driven by goals and so rock-climbing – and my career and consulting practice — have been about making it to the top.   I’m glad for the reminder that getting to the top matters, but how you climb matters too.

related posts:

• five favorites on friday: favorite brand books
• riding the headwinds of business
• six themes from the world business forum

What a day!  The World Business Forum featured phenomenal speakers and drew over 4,000 attendees from 60+ countries.  I’m so honored to have been invited to attend as a guest blogger.

I tweeted the best bits from today as they rolled off the speakers’ tongues and will be doing the same tomorrow morning (follow me: deniseleeyohn) but here are six of my main takeaways so far:

1.  Leadership is an art

Jim Collins, author of Built to Last, Good to Great, How the Mighty Fall:  Level 5 leaders share a special brand of humility – they have absolute burning ambition for the cause and company (not themselves) combined with the will to do whatever it takes (as long as it doesn’t breach the core values)

Bill McDermott, Co-CEO of SAP:  Leaders have followers – they set high expectations and are resolute in face of adversity — when others day it can’t be done, they say it can and they make it happen

Jack Welch, former CEO of GE, current founder of the Jack Welch Management Institute:  lead change before you have to – complacency is the biggest danger we have – change is happening all around us – be on the offense

Carlos Brito, CEO of InBev:  Dreaming big and dreaming small take same amount of energy, so dream big!

Charlene Li, author of Open Leadership:  You do have to be centralizing and controlling in terms of how open you’re going to be

Li:  Create a culture of sharing

Joseph Grenny, author of Influence:  The Power to Change Anything:    2 problems of leadership:

• 1. what should we do (strategy)
• 2. how do I get everyone to do it (influence)

Grenny:  Greeny’s law of leadership – there’s no strategy so brilliant that people can’t render it worthless

Grenny:  Influencers succeed where the rest of us fail because they over-determine success –  instead of focusing on one thing they need to do to get person to change; they marshall a critical mass of 6 sources of influences

2.  Success is not what we think it is

Les Hinton, Dow Jones & Company:  success requires seeing past your own operations and beyond the competition – leaders shouldn’t be bound by their own assumptions of their products or even peers or competitors

Collins:  Greatness is not a function of circumstance (not entirely) – if’s first and foremost a conscious choice and discipline

Collins:  It’s not about profit for X — being useful in a way that society values

Collins:  Don’t worry about whether going to be successful; ask how you can be useful

3.  Be wary of common pitfalls

Collins:  definition of hubris — outrageous arrogance that inflicts suffering on innocent

Collins:  It’s hubris to come in with less passion on day 1000 than on day 1

Collins:  Never confuse power with leadership – I can get you to do anything if I put a gun to your head but it doesn’t mean I have led

Welch:  Don’t celebrate successes; celebrate who’s doing their job

4.  Having the right team is critical

Collins:  If you allow growth in complexity to exceed your ability to have all key seats filled with the right people to execute brilliantly in that growth, you will fall

McDermott:  You can tell the best CEOs from their executive secretaries – if you can’t manage your own house, how can you expect to run a company

McDermott:  the best leaders hire over their heads every time

Welch:  The main job of a CEO is developing talent – the team that fields the best players wins

Brito:  Great people:

• make great companies
• attract more of the same
• will push you to be better
• like meritocracy (and they see through it if you’re not fair)

Brito:  You have to be the coach – people are not the responsibility of the HR dept

Brito:  We want owners vs. professionals or executives – owners make better decisions

David Gergen, former Presidential advisor:  Human resources are most valuable thing you have in company

5.  Leadership requires honesty and perseverance

Collins:  Just because our intentions are noble and good doesn’t mean our decisions are good and wise

Collins:  the Stockdale principle (named after Admiral Stockdale top ranking officer at Hanoi Hilton):  never confuse the need for unwavering faith that you will prevail in the end on one hand with the discipline to confront the most brutal facts

Collins:  Building greatest never happens in a single moment; it happens only by turning the flywheel in consistent intelligent direction and keeping pushing

Collins:  Don’t focus on career, focus on building pockets of greatness at every step

Welch:  Face reality as it is not as you want it to be

Welch:  Searching for a better way every day is a game-changing way to do business

6.  Why we do is more important than what we do

Collins:  if your enterprise went away, who would care? – what un-fillable hole would it leave? You have to have an answer to that question otherwise someday you WILL go away

McDermott:  you need a compelling vision for your business – why do you exist and why should people care?  SAP’s purpose is to make the world run better

Brtio:  We don’t have vision or mission, just a dream:  Be the best beer company in the world

notes and quotes from other conferences I’ve recently attended:

• best bits from Dine America
• keys to compelling customer experiences

In light of it being summer and time for some fun, I’m devoting each Friday in August to a post about my favorite brand resources.  Over the next few weeks, I’ll include recommendations for favorite articles, blogs, and podcasts on my favorite topic, brand — today, it’s 5 of my favorite brand books.

By limiting the list to 5, I have to exclude some really great books — but from those I do include on the list, you’ll get a flavor of some of the resources that have shaped my thinking and practice of brand building. And perhaps, you’ll want to check them out yourself.

#1.  Building the Brand-Driven Business: Operationalize Your Brand to Drive Profitable Growth
by Scott Davis and Michael Dunn –  the inspiration and education that led to my focus on “brand as business.”  Written by my friends and colleagues at Prophet, the brand consulting firm, this outlines the tenets of how to operationalize your brand.

#2.  The Brand Gap: Expanded Edition
– by Marty Neumeier — a provocatively simple primer on brands and how to bridge the gap between brand strategy and execution.  It’s written in “the visual language of the boardroom,” so the content is particularly memorable and impactful.

3.  Built to Last: Successful Habits of Visionary Companies
– By Jim Collins — Before Good to Great, Collins wrote this seminal text on the habits of companies that experience long-term corporate success.  Although the book rarely uses the term “brand,” I found the vision and values ascribed to these “visionary companies” aligns with the values and attributes that anchor my definition of a brand.

4.  Eating the Big Fish: How Challenger Brands Can Compete Against Brand Leaders (Adweek Book S.)
– by Adam Morgan — instructional and inspirational.  This book discusses how “challenger brands” (hungry, aggressive, and savvy second- or third-rank brands) successfully compete against their market leaders.  The “8 Credos of Challenger Brands” serves as a manifesto for all brands.

5.  Managing Brand Equity
– by David Aaker — the first brand book I ever read.  Like a great text book, it taught me the fundamentals of brand management.  The framework for understanding, measuring, and implementing brand equity was eye-opening to me back in the day, and I continue to refer to it today.

Enjoy — and please let me know what some of your favorite brand books are!

P.S.  I realize this post might seem overly promotional, like I’m shilling for book authors or publishers.  And the truth is, because I am an Amazon Affiliate, if you buy one of these books after clicking on one of the links above, I get a whopping 4% commission on the sale (woo hoo!)  But please know I’m not doing this for commercial purposes — as always, I’m simply trying to share some of my knowledge in an effort to be helpful to my you.

Today my series on brand value creation comes to a close with a look at companies’ Learning and Growth.  Previous posts have examined how brands create value for companies from the Customer, Financial (2 posts) ,  and Internal Business Process perspectives.

The Learning and Growth quadrant of the Balanced Scorecard asks, “To achieve our vision, how will we sustain our ability to change and improve?”  The results produced by a strong brand relative to this quadrant may be the most difficult to quantify, but they are perhaps the most significant.   Here are 3 ways a brand creates value by impacting an organization’s Learning and Growth:

1.  When the “brand as business” management approach is engaged, the purpose and values of the organization are clarified.   Using the brand as the North Star for the business, your company not only adapts to outside changes appropriately but also create its own changes and use them to its advantage.

• Patagonia provides an example of a company which uses its brand — their “philosophies” — to be prepared for change. Yvon Chouinard, the company’s founder and owner, says, “What good does having a fixed set of written philosophies accomplish when everything else in the business world is so dynamic?…The answer is that our philosophies aren’t rules; they’re guidelines.  They’re the keystones of our approach to any project, and although they are ‘set in stone,’ their application to a situation isn’t…We have made many mistakes during the past decade, but at no point have we lost our way for very long.  We have the philosophies for a rough map, the only kind that’s useful in a business world whose contours, unlike those of the mountains, change constantly and without much warning.” (emphasis mine)

2.  Your brand can help you actually change the way business is done if you adopt a bold and differentiated brand platform.  Jim Collins, in his book Built to Last, describes how “Bill Hewlett and David Packard envisioned HP as a role-model corporation, known for progressive personnel practices, innovative and entrepreneurial culture, and an unbroken string of products that make a technical contribution.”  So they instituted many practices to manifest this bold vision – for example:

• HP introduced a profit-sharing plan which paid out the same percentage to the janitor as to the CEO and created a catastrophic medical insurance plan at a time when such actions were virtually unheard of.
• Beginning in the 1950’s, HP forsook the hiring of engineers from industry and recruited less experienced but more talented graduating seniors from respected engineering schools.
• Self-imposed rigorous standards led HP to bypass high-volume markets like IBM-compatible personal computers for a period of time because of its commitment to reject me-too or copycat new products in favor of those representing a technological contribution.

Clearly the “HP Way,” as the brand’s tenets became known, drove that organization’s learning and growth.

3.  Your brand can fuel the development of a robust organizational culture, by explaining why you do what you do in a way that gives more meaning to your relationships with customers and stakeholders alike.   After dissecting the factors that have driven the success of some of greatest organizations in recent history, including Apple and the Walt Disney studio, management author Warren Bennis concludes in his book Organizing Genius, “[They] think they are on a mission from God…they believe they are doing something vital, even holy…their clear, collective purpose makes everything they do seem meaningful and valuable.”  Your employee’s work can be transformed into more than churning out products; stakeholders can see themselves are more than functional cogs in the company wheel.  Rather, they can see themselves as contributing to something that has more substantive and lasting impact.

This motivates them embrace and execute change more effectively.  As the consultants who contributed to the late 1990’s turnaround of Best Buy explain, continuous improvement and growth flow naturally out of an emotionally satisfying culture:  “’Why is this important?   What’s in it for me?  Can I be successful?’ To be ready for change, people must develop a compelling conviction that there are positive answers to these questions,” they state.

So a strong brand increases an organization’s ability to change and improve — thus creating long-lasting and far-reaching value.

I hope this series on Brand Value Creation has been a good one for you.  By running it, my intent has been to make the case that brands produce substantial positive results for business.  And, perhaps more importantly, to present a different point of view on what a brand is:  what a company does and how it does it.