Business musings

Articles and thoughts about Jim Collins

09
Jul

Have you ever wondered exactly what corporate values and purpose are or how to go about defining them for your organisation?

Based on our own experience and drawing on research from Jim Collins, Jerry Porras and Nikos Mourkogiannis, amongst others, our short guide gives you the low down on exactly what values and purpose are, why they matter to an organisation, and how to work with your people to create them. Real world examples from a wide range of organisations, businesses and charities (such as Google, Help for Heroes, Volvo, P&G, the RNLI, and more) are included, along with practical exercises for you to work through.

To find out more, view the SlideShare below.

Photograph of two information leaflets from WaterAid. One is almost A4 in size, the other is approximately the size of a DL envelope. Both are plain blue in colour with white writing that reads first in big lettering, "Fifty two million pounds a month," then in smaller lettering underneath, "We're going to keep asking until every household does it."£52 million a month—that’s not a small figure by any standard. And yet, as stated on a couple of leaflets that have dropped through our door during the last year or so, that’s the figure that WaterAid are aiming to raise.

This figure is even bigger when you consider that for the last financial year (2011/12), WaterAid raised £55.8 million in income—for the whole year! This target moves that figure to every single month.

You may remember that I’ve previously written about Jim Collins and Jerry Porras’ concept of BHAGs (Big, Hairy, Audacious Goals). Well, WaterAid, this goal is certainly Big, Hairy and Audacious. And I commend you for it.

Big, hairy, audacious—and achievable

Although big, hairy and audacious, it is also somewhat brilliant in its simplicity. Reading the leaflets that bear this slogan, we discover that WaterAid are not looking to raise this figure in large, one-off, lump sums but rather they are looking for every household in the country to give just £2 a month. £2 a month—that’s not a lot to ask. And, on it’s own, this goal wouldn’t be that ambitious. But getting every single household in the country to donate, now that’s a different ball game. And yet, for every additional household that does donate, WaterAid gets a little bit closer to their goal.

The charity’s audaciousness does not end at their fundraising either. Their overall vision is…

…of a world where everyone has access to safe water and sanitation.

At present, “one in eight people do not have access to safe drinking water and two in five people do not have adequate sanitation”—there’s still a long way to go.

But WaterAid have a plan. In their 2009-2015 Global Strategy, they explain their ambition as follows:

…by 2015 a further 25 million people will have access to safe water, improved hygiene and sanitation as a direct result of our work; and…by influencing the policies and practices of governments and service providers we will have reached a further 100 million people.

Match this against figures from their annual reports and we discover that, although there is still some way to go to fulfil this ambition, WaterAid is in fact well on their way.

In 2009/2010, Wateraid reached 940,000 people with safe water and 1.24 million people with sanitation. In 2010/11, these figures grew to 1.5 million and 1.6 million people respectively. And in 2011/12, they reached 1.6 million people with safe water and 1.9 million people with sanitation. That’s a total of 8.78 million people over three years.

Assuming the same performance again over the next three years, WaterAid will reach 17.56 million people by 2015. Admittedly that’s somewhat shy of their goal of 25 million people but given growth in their figures of somewhere between 7% and 60% each year, it’s seems safe to assume that such growth will continue. Reaching 25 million people therefore no longer looks that unachievable.

What can we learn?

Such figures continue to support Collins and Porras’ original assertion that organisations who set themselves big, hairy, audacious goals go on to achieve them on a surprisingly consistent basis.

It can be daunting to set such ambitious goals, especially publicly. What if we don’t achieve them? What if we embarrass ourselves? What will everyone say? As organisations, we fear our failure and fear the repercussions of falling short of our self-imposed mark. And yet, we need to dare to fail in order to succeed.

Unlike commercial organisations who often intentionally withhold their vision due to its commercially sensitive nature, charities frequently declare their intentions publicly for an effective charity is “accountable to the public and others with an interest in the charity in a way that is transparent and understandable.” Typically, this means that charities publish both their vision and their strategy in the public domain.

For non-profit organisations, such public declarations are, in many ways, imperative. Charities cannot succeed without funding and funding cannot be obtained without demonstration of impact and ambition. Vision supports both. Necessarily, charities must be ambitious in both the work they do and the funds they raise. WaterAid epitomises this behaviour and demonstrates that it works.

In the same way as WaterAid’s impact has grown over the last three years, so also has their income. Total income has steadily increased from £45.6 million in 2009/10 to £55.8 million in 2011/12. That’s an increase of almost £10 million annually in the midst of an economic downturn. And it isn’t all due to increased grants—donations and gifts have also increased from £32 million to £35.9 million annually over the last three years.

WaterAid shows us that vision provides motivation, structure and the drive to achieve. They may not achieve their goal of getting every household in the country to donate £2 a month but how much more will they accomplish than if they never asked?

Similarly, it is hard today to conceive of a world in which absolutely everyone has access to safe water and sanitation but shouldn’t this be something toward which we all strive nonetheless?

As one of our clients once said, “Vision enables you to aim for the stars and clear the fence.” I wholeheartedly agree with this perspective. And, as I’ve said before, by aiming for the stars, I believe that whether you reach them or not, you will certainly clear a fence or three along the way—fences that you may not otherwise have cleared had you not created a vision in the first place.

Vision also cascades to create strategic alignment. As we see from WaterAid’s 2009-2015 Global Strategy, their vision has clearly informed their four aims for 2015. Rather than continually having to ask, “What are we trying to achieve?” the presence of a long-term vision has ensured the only question that remained was, “How are we going to achieve it?” And with their six year strategy, WaterAid have ensured that even this question has been answered. Every single person in the organisation is therefore able to go about their work knowing that, with each and every action, they are taking one step closer to the stars.

I’m confident that WaterAid’s overall vision is unlikely to change but I also hope that, having publicly declared the objective, they continue to pursue their fundraising ambitions too. £52 million a month is not a small figure and it is no small task to encourage every household to donate. But WaterAid boldly declared that, “We’re going to keep asking until every household does it,” and I hope that they do.

I worry the campaign may be a marketing slogan—yet another way to spin regular giving—but I hope it is not. WaterAid have already proven that they’re both ambitious and capable of achieving their goals. This is a culture to be proud of and one to nurture. With the drive and ongoing determination to actively pursue goals such as these, WaterAid will continue to make a difference every single day.

WaterAid and its partners use practical solutions to provide safe water, effective sanitation and hygiene education to the world’s poorest people. They also seek to influence policy at national and international levels. To find out more about the charity, visit www.wateraid.org

21
May
Posted by Debbie Stocker, stored in: Leadership  Performance Improvement  Psychology  

Last week, I wrote about how nothing breeds success like failure but ended on a crucial question: How? How do we affirm failure correctly and effectively? How do we encourage perseverance and daring? How do we embrace failure and turn it into success?

My reading around failure has uncovered several suggestions and I would love to add a few of my own.

1. Stop the denial

Failure happens—fact! You will fail; if not today, then tomorrow, next month or next year. Your failure may be big or small, catastrophic or common, but the one thing I can guarantee is that you will experience it.

We need to stop hiding from failure, avoiding it and denying it. As individuals and organisations, it’s ok to admit failure and to put it right. Starbucks has even adopted this as part of their customer service ethos: “Your drink should be perfect, every time. If not, let us know and we’ll make it right.”

At a deeper level, we also need to “acknowledge that some people—even ambitious people, smart people, talented people, tenacious people, good people—experience failures that turn out to be more than mere bumps on the road to success.”

Before we can turn around failure of any form, we must “strive for transparency,” both within our organisations and in the interactions we have with one another.

2. Disown failure as an individual identity

Did you know that in 18th century English, failure as an identity did not exist in our language? Scott Sandage points out that “the usage ‘he is a failure’ or ‘I feel like a failure’ was unknown; people spoke of going into business and ‘making a failure of it’. The striver was still responsible for paying for (and learning from) his own mistakes—but the shop or the counting house was the failure, not the person.”

Such depersonalisation makes failure much easier to face. It also enables objectivity and more effectively facilitates learning. Further, this perspective is a much closer reflection of the truth. We rarely fail entirely alone or entirely through our own fault—usually, circumstance is much more complex than that.

3. Exempt ourselves and others from the obligation to succeed

Closely related to failure as an identity is the pressure to succeed. Real or perceived pressure to ensure that we don’t let others down, disappoint or fail to meet expectations. None of us should be living in fear of the consequences of our failure for, if this is the case, we will never have the courage to try.

Those who experience failure can be ostracised and may experience emotions such as shame and humiliation. High profile failures, such as that of Gerald Ratner, reveal the stigma that can be attached to failure. For some the effect of this stigma is extreme. A study on the relationship between debt and suicide in Japan showed that some consider suicide preferable to their financial failure—in one 52-year old debtor’s words: “Bankruptcy means you’re a loser for life.”

Although it is inevitable that certain failures will, and should have, consequences, we need to ensure that these consequences are not permanent and nor are they terminal. We need to create a culture in which failure does not engender blame and retribution but that consequences are fair and representative of the action.

Similarly, we need to take down the pedestals upon which we place others and accept that they, like us, will fall. Second, third, fourth, or even one hundredth chances should be available to all.

4. Set realistic expectations

Success is rarely instantaneous but, in a culture that craves instant gratification and “admire[s] instant…effortless brilliance,” this is all too easy to forget.

We need to recognise that success takes time and there will be failures along the way. As organisations and as individuals, we need to set realistic expectations about what is is possible to achieve. In the words of Aza Raskin, former Creative Lead for Firefox, “Your first try will be wrong. Budget and design for it.”

5. Understand the failure spectrum

As I mentioned in my last article, failure is nuanced. At one end of the spectrum is failure that forms “an essential part of a [learning] process” but at the other is failure with “dark” and catastrophic consequences. We need to be able to recognise the different types of failure and employ effective strategies for each.

Within our organisations, we need to create processes, systems, cultures and budgets that allow for and encourage “intelligent” failure.

However, where catastrophic or abject failure is a risk, multiple failsafes should be built in. All too often, “individuals can be quite adept at picking up on hints of failure in the making [but] organisations typically fail to process and act on their warnings.” Such failure is not to be encouraged. At whatever point on the spectrum failure lies, “leaders…must shape cultures that are open both to the possibility of failure and the need to learn when problems do occur.”

6. Create a learning culture

I love this tip from Richard Watson on Fast Company: “Try to fail as often as possible but never make the same mistake twice.” We need to create organisational cultures that both accept and learn from failure. Prototyping, agile methodologies, even basketball or piano practice, do not involve doing the same thing over and over again. Rather, they require that we “learn from [our] failure and try again differently.”

We also need to ensure that we learn from our failures as quickly as possible. Aza Raskin tells the story of Paul MacCready’s efforts to solve the problem of human-powered flight. Whilst others were spending upwards of a year building planes that were destroyed within a matter of minutes and could not easily be rebuilt, MacCready set out to “build a plane that could be rebuilt in hours not months.” Such an approach enabled him to rapidly iterate and the “relearn cycle went from months and years to hours and days.” Suffice to say, it was MacCready’s planes that claimed Henry Kremer’s rewards for turning his dream of flight into reality.

7. Dare to do things the wrong way

Sometimes, in order to achieve success, we need to dare to do things wrong. Sir James Dyson suggests “initiat[ing] a failure by doing something that’s very silly, unthinkable, naughty, dangerous. Watching why that fails can take you on a completely different path.” In creating the Dyson vacuum cleaner, the conventionally shaped cyclone simply wouldn’t work; it was only when Dyson tried “the wrong shape” that he discovered his key to success. “It was wrong-doing rather than wrong-thinking. That’s not easy, because we’re all taught to do things the right way.”

Alberto Alessi describes this as “danc[ing] on the borderline between success and disaster.” He points out however that “working close to the borderline is very risky, because you cannot see it with your eyes. It is not clearly drawn or marked. You can only feel it by using sensibility and intuition…One step more, and you risk falling into the not-possible area.” Dare to do things the wrong way but do so wisely.

8. Aim for fallure not failure

In Hitting the vertical wall: realizing that vertical limits aren’t, Jim Collins tells the story of attempting to complete an on-sight climb of a route known as the Crystal Ball. A challenging climb, Collins found himself exhausted only three moves away from the crystal. He gave up and let go. In his words, he “failed in [his] mind.”

Learning from his disappointment, Collins went on to discover what he has coined climbing to “fallure, not failure”. When climbing to fallure, you may still fall but you do not choose to do so. Mentally and physically, you give it your all, until either you conquer the rockface or it conquers you.

Collins applies this idea to life and to business. “Going to fallure in life is scary, but not dangerous. Whether it be starting a business or publishing a book or trying an exciting new design, fallure rarely means doom. And most important, [fallure is] the only way to find your true limit.”

9. Know when to quit and when to push on through

Closely related to fallure is the need to know when to quit and when to push on through. Seth Godin talks about the idea of “the dip”—the slog that occurs between learning and mastery. Often such dips need to be beaten and perseverance will lead to success. However, what looks like a dip can also be a “dead end.” We need to be able to recognise the difference.

Similarly, fallure should be used wisely and must be combined with our understanding of the failure spectrum and its risks. Collins later relates the story of the time he convinced another, less experienced climber, to continue climbing a cliff named Cynical Pinnacle even though a storm was approaching. His partner’s rope lodged in a crack and they found themselves trapped “with the temperature in the fifties and dropping, [and] facing a full early-spring front.” Fortunately, both men lived to climb another day but it should be said that continuing to fallure in the midst of a perilous and dangerous situation is sheer folly.

10. Learn the skills to handle failure

Daniel Ostrower, in a comment on Jamer Hunt’s article, pointed out that a “special set of skills (both emotional and intellectual) is required to diagnose and learn from failure.” He argues that, “Not everyone can do it, and even those that can will have more difficulty in certain situations than others.” While I agree that handling failure can be difficult, I wonder whether it is possible to learn skills that would enable us to handle it more effectively. Through studies, such as that of Life after business failure, we can begin to understand the processes that occur and uncover strategies for dealing with failure more effectively.

It should also be said that learning from failure is a process. Business failure involves loss and the psychological effects of such have been likened to those of grief. Just as grieving is a process, so is recovering from failure. Failure can be painful and we need to allow ourselves “time to recover from the hurt”. Only when we have done this, can we engage in “critical reflection,” examining the reasons for the failure and learning to move beyond them.

Michael Jordan—a final word

To return to where we began this journey, Michael Jordan has had astounding success but it has been founded on hard work, dedication, perseverance and failure. In another famous Nike advert, he says:

Maybe it’s my fault. Maybe I led you to believe it was easy when it wasn’t…Maybe it’s my fault that you didn’t see that failure gave me strength—that my pain was my motivation. Maybe I led you to believe that basketball was a God-given gift and not something I worked for—every single day of my life.

Maybe I destroyed the game.

Or maybe, you’re just making excuses.

 

 

Michael Jordan was never shooting to lose but that didn’t mean he never missed. We need to dare to fail in order to succeed. As organisations and as individuals, if we allow ourselves to be paralysed by our fear of missing, we will never take the shot that wins or loses us the game.

What can you dare to fail at today?

And for those of you who like the research…

Collins, J. (2003). Hitting the wall: realizing that vertical limits aren’t. Jim Collins

Hunt, J. (2011). Among six types of failure, only a few help you innovate. Fast Co.Design

McGregor, J. (2007). Gospels of failure. Fast Company

Raskin, A. (2012). You are solving the wrong problem. Aza Raskin

Salter, C. (2007). Failure doesn’t suck. Fast Company

Salter, C. (2007). Failure doesn’t suck – part 2. Fast Company

Sandage, S.A. (2012). Get back in the saddle. Times Higher Education

Ucbasaran, D., Shepherd, D., Lockett, A. & Lyon, J. (2012). Life after business failure: the process and consequences of business failure for entrepreneurs. CSME Working Paper.

Watson, R. (2008). Celebrate failure. Fast Company

West, M. (2003). Dying to get out of debt: consumer insolvency law and suicide in Japan. The John M. Olin Center for Law & Economics Working Paper Series, 03-015.

Wylie, I. (2007). Failure is glorious. Fast Company

 

At a recent event held by Warwick Business School, Professor Mark Taylor, Dean of WBS, described an effective vision as needing to be:

Out of reach but not out of sight

In other words, you should be able to visualise your organisation achieving its vision but it should not be possible for your organisation to reach out and take hold of the vision straight away. True vision is a balance between these two ideas.

If you cannot picture or imagine your organisation achieving its vision, no matter how hard you try, it is likely that this ‘out of sight’ vision is either the wrong vision for your organisation—one that does not fit with your organisation’s passions, purpose, values and beliefs—or it is so over-ambitious as to be unachievable. Vision of this kind will help no one. It may lead you in entirely the wrong direction and it is unlikely to ever be achieved. It certainly will not benefit your organisation over the long-term.

On the other hand, a vision that is within reach and can easily be grasped tomorrow, within the next month, the next year, or even the next five years, is not really a vision. Vision should be a future-oriented goal that is exciting, inspiring, motivating and more than a little stretching. It should challenge you to achieve more and to push your organisation beyond its comfort zone. Without this kind of vision, you are merely dealing with the day-to-day, month-to-month and year-to-year—reacting to your future, rather than creating it.

Warwick Business School certainly stand by the Dean’s assertion. Their vision is:

To be the leading university-based business school in Europe

And they describe their mission as:

  • To produce and disseminate world-class, cutting edge research that is capable of shaping the way organisations operate and businesses are led and managed.
  • To produce world-class, socially responsible, creative leaders and managers who think on a global scale, regardless of the size of their organisation.
  • To provide a return on investment for our students and alumni over their entire careers.

Hopefully they also have a vivid description of what it will look like for them to achieve their vision and measures of success that will enable them to know when they have become the leading university-based business school in Europe.

Out of reach but not out of sight is also a perfect description for an element of vision that Jim Collins and Jerry Porras coined BHAGs—”pronounced BEE-hags and shorthand for Big, Hairy, Audacious Goals.” Warwick Business School’s vision is certainly a big, hairy, audacious goal!

Four approaches to creating a BHAG

For those of you who read my earlier article that introduced the vision framework created by Collins and Porras, you will already be familiar with BHAGs. Something I chose to leave out of this article however was the fact that Collins and Porras also believe that there are four “approaches” or “broad categories” into which all BHAGs fall: target, common enemy, role model and internal transformation. As we shall see, Warwick Business School have chosen a target BHAG.

Targeting

Much as the word ‘target’ implies, a target BHAG involves “setting a clear, definable target and aiming for it,” in the same way as an archer or marksman would aim to hit their chosen target.

For Collins and Porras, a target BHAG can be either qualitative (such as Ford Motor Company’s vision to “democratize the automobile” in the early 1900s and the 1960s NASA moon mission) or quantitative (such as Walmart’s vision in 1990 to “become a $125 billion company by the year 2000—which, incidentally, it achieved and exceeded!)

Typically, quantitative targets are likely to be financial or may involve an increase in physical size. Qualitative targets, on the other hand, are typically “defined in terms of taking the company to an entirely new level of overall prestige, success, dominance, or industry position.” Warwick Business School’s BHAG would fall into this category. Whilst their undergraduate programme has already been ranked #1 in the UK in 2010, their vision is to become the leading university-based business school not only in the UK but also in Europe, and to lead in quality for their research, graduates and programmes—a new level of prestige, success, position and potentially dominance, all in one!

Common enemy

Common enemy BHAGs involve David versus Goliath motivation and “a goal focused on defeating a common enemy.” Collins and Porras cite the examples of Nike’s 1960s mission to “Crush Adidas” and Honda’s 1970s response of “Yamaha wo tsubusu! (We will crush, squash, slaughter Yamaha!)”. When interviewed by Collins and Porras in 1990, an anonymous board member of Nike even remarked: “Our idea of a perfect day is to get up in the morning and throw rocks at our competitors.”

Typically, common enemy BHAGs are set by companies striving to become number one and, as evidenced by the comments above, they tap into the motivation to fight and to win. Common enemy BHAGs can therefore also be useful if your organisation is struggling against the force of its competitors: “they can transform an organization whose back is against the wall and that is concerned about its very survival.” And, as “people don’t like to ‘just survive’, they like to win,” common enemy BHAGs can take your organisation beyond surviving to overcoming and to even coming out on top.

However, as Collins and Porras observe, common enemy BHAGs can have their drawbacks: “…it is difficult to spend your entire life ‘at war.’ And what do you do when you’ve defeated the enemy and become number one? What happens when you are no longer David, and have become Goliath?” Beware the “we’ve arrived syndrome” and ensure that you create another BHAG as soon as you’ve achieved your last!

Role model

Role model BHAGs do what they say on the tin: they involve selecting a role model (usually another business, organisation or person) and seeking to emulate their traits and success. Although less common than target or common enemy BHAGs, Collins and Porras believe that role model BHAGs suit up-and-coming organisations and they found that they were “usually set by promising small to mid-sized companies with bright prospects in their industries.”

Examples of role model BHAGs include that of Giro Sport Design, which as a young company in the early 1990s sought to “be to the cyclying industry what Nike is to athletic shoes and Apple is to computers.” In the 1940s, Stanford University similarly desired to “become the Harvard of the West.”

Collins and Porras are quick to point out however that role model BHAGs are only effective to the degree that the role model you select “generates powerful images for [your] company members. Sometimes, the images generated may be so complex that they do not mean the same thing to all members and, as such, don’t provide the integrative force required of an effective mission.” To this end, be sure to select an identifiable and easily understood role model for this type of BHAG.

Internal transformation

Last but not least, internal transformation BHAGs differ somewhat from common enemy, role model and, to a degree, target BHAGs, in that they are focused internally rather than externally. Internal transformation BHAGs seek to transform your company from within. Such transformation could, in turn, lead to increased sales and external success but it is not the focus.

For this reason, Collins and Porras suggest that internal transformation BHAGs are suited to “large, established organizations” or “old organizations that need to dramatically change themselves in order to remain competitive and healthy (or, sometimes, to regain their health).” They cite the example of General Electric which, in 1986 and to cope with the inefficiencies of its size, stated that: “In addition to the strength, resources and reach of a big company, which we have already built, we are committed to developing the sensitivity, the leanness, the simplicity and the agility of a small company. We want the best of both…[a] big-company/small-company hybrid.” If your organisation could benefit from radical revitalisation, an internal transformation BHAG may be for you.

What’s your big, hairy, audacious goal?

We’ve already seen that…

  • Warwick Business School want to become the leading university-based business school in Europe.
  • Walmart exceeded their goal for the year 2000 and just keep growing—in their last fiscal year, they reported net sales of $443.9 billion, an increase of 5.9% over the previous year.
  • NASA achieved their vision of “landing a man on the moon and returning him safely to earth.”
  • The year after they established their vision, Honda “so thoroughly defeated Yamaha that Yamaha later publicly apologized to Honda for having claimed that it would dominate Honda.”
  • Giro Sport Design (now known as Giro) have grown from creating the first ventilated, lightweight cycling helmet in 1985 to now being a world leader in equipment for cycling, skiing and snowboarding with goods that “are worn by millions of riders around the world” and showcased at events such as the Tour de France.
  • And time will tell for General Electric. Having taken a thorough beating in the financial crisis as General Electric’s financial services division plunged the company into the red, we will now find out whether the giant really does have the agility of a small company as it seeks to return to what it knows best (making stuff) and turning its fortunes around.

So, following that inspiration, what is your big, hairy, audacious goal for the future of your organisation?

Although many of the examples above involve corporate giants, BHAGs are in fact for everyone. In its early days, Giro was a single product start-up in which the founder, Jim Gentes, “stocked inventory in his bedroom, used his garage as a manufacturing plant, and expanded by trading a helmet with his neighbour for use of his garage.” From such humble beginnings has come great success!

And even if world domination is not your thing, BHAGs can be a powerful motivator for the goals that you do wish to achieve. Collins and Porras even note that there is a special case for BHAGs in start-up companies in which it is more than enough to set the big, hairy, audacious goal of “reach[ing] a point where survival is no longer in question.”

Whether you need to take on your competitors, emulate an organisation that you admire, strive for an out of reach target or transform your company from within, BHAGs can be incredibly powerful motivators. Their success does not even have to be measured by whether or not you achieve the BHAG itself because you will accomplish so much more along the way.

One of my favourite quotes comes from Louise Keeney, Director of Bondeye Optical, who when we were working with them described this perspective on vision as, “Aim for the stars and clear the fence.” Setting a BHAG is very definitely aiming for the stars but, whether you reach the stars or not, you will certainly clear a fence or three along the way—fences that you may not otherwise have cleared had you not created a vision in the first place.

And, as the examples above show and research has continually supported, those companies who set themselves big, hairy, audacious, out of reach but not out of sight goals do in fact achieve them on a surprisingly consistent basis.

So, what are you waiting for? Set a big, hairy, audacious goal today and find out what your organisation really could achieve in the next 10 to 30 years!

And for those of you who like the research…

Collins, J.C. & Porras, J.I. (1991). Organizational vision and visionary organizations. California Management Review. 30-52.

Collins, J.C. & Porras, J.I. (1996). Building your company’s vision. Harvard Business Review

For anyone familiar with vision, values and purpose, chances are that you’ve heard of Jim Collins and Jerry Porras.

Two square photographs: on the left is a headshot of Jim Collins (wearing a navy suit, blue shirt and red tie); on the right is a headshot of Jerry Porras (wearing a black suit, white shirt, blue tie and glasses)

Built to Last (written by both Collins and Porras) and Good to Great (written by Collins) have been described by The Economist as “the Harry Potters of management literature”. Built to Last was a fixture on the BusinessWeek best seller list for more than six years and Good to Great (which has been translated into 35 languages) was, in 2008, the bestselling business book of all time.

For this reason, Collins and Porras cannot be ignored and they have been credited with being “largely responsible for a revival of interest in the ‘visioning thing’ in the mid-1990s”.

That is not to say however that the pair are without their critics, in part due to the fact that “almost half of the visionary companies on [their] list have slipped dramatically in performance and reputation.”

In an in-depth article published in 2004, Fast Company examined both sides of the argument—namely, have the companies on Collins and Porras’ list failed because they stopped applying their principles or did other events and the wider business context simply change?—and essentially ended up sitting on the fence:

There’s this one big rub about management books…The world they seek to describe is so complex, so tumultuous, often so random as to defy predictability and even rationality…And all this jumble and chaos mean…that for every management theory, there is an equal and opposite theory that makes just as much sense…Perhaps BTL readers would do well to follow the title of chapter seven: Try a Lot of Stuff and Keep What Works. Now there’s some business advice worth taking.

Personally, I love Collins and Porras’ work and believe that we can learn a great deal from their insights. Yes, critical thinking must be applied to every text and it’s important to learn from later events but that’s not to say that works authored by Collins and Porras are lacking in value.

Matt and I have put their approach to building vision to the test (both ourselves and with our clients) and we believe it works. I agree that no theory or book should ever be taken as gospel but, in our experience, Collins and Porras’ philosophy is a great place to begin the journey of articulating vision, values and purpose. At the very least, it provokes lively discussions within management teams and their organisations, stimulates the discovery of valuable insights and provides food for thought. All of these are worthy outcomes and if such experiences lead to strategic alignment, a unified focus and motivated people, then I believe their philosophy offers much that we can learn from.

A little history…

Collins and Porras’ first attempts to create a framework that defined organisational vision seem to be documented in their 1991 research paper, Organisational Vision and Visionary Organizations. This framework consisted of a ‘Guiding Philosophy’ (in which purpose was driven by core beliefs and values) and a ‘Tangible Image’ (in which mission led to the creation of a vivid description).

Their framework was influenced by both the research later published in Built to Last and their work with a variety of organisations. It should also be said that, in creating a framework, Collins and Porras intended to remove some of the “fuzziness” surrounding vision:

If we look at the literature on organizations and strategy, we find numerous terms for “vision” that sometimes are used synonomously, sometimes have partially overlapping meanings, and sometimes are intended to be totally distinct from each other. As one CEO told us: “I’ve come to believe that we need a vision to guide us, but I can’t seem to get my hands on what ‘vision’ is…no-one has given me a satisfactory way of looking at vision that will help me to sort out this morass of words and set a coherent vision for my company. It’s really frustrating!”

Eventually, the ideas first articulated here evolved into the framework many will now be familiar with from Built to Last and also Building Your Company’s Vision published by Harvard Business Review in 1996:

The diagram shows a modified yin yang symbol. In the yin element of the circle are the words, "Core Ideology: Core values, Core purpose" and in the yang element of the circle are the words, "Envisioned Future: 10-to-30-year BHAG (Big, Hairy, Audacious Goal), Vivid description".

For those of you unfamiliar with this framework, I hope to provide an introduction below.

Core ideology

For Collins and Porras, core ideology is absolutely integral to vision setting. Their use of the yin yang symbol was deliberate: core ideology is essentially meaningless without progress or movement towards the future, whilst a congruent vision cannot be created without a stable foundation.

For a vision to be created, it is essential to first understand those elements of the organisation that will always remain unchanging. In the words of Collins and Porras themselves:

Core ideology defines a company’s timeless character. It’s the glue that holds the enterprise together even when everything else is up for grabs…a consistent identity that transcends product or market life cycles, technological breakthroughs, management fads, and individual leaders.

Core values

Core values are the handful of beliefs, guiding principles or tenets that are absolutely non-negotiable within an organisation. Imagine your own personal values: it may be that, in relationships, honesty, integrity and kindness are important to you; you may value courage, fearlessness and daring; or how about fun, humour and happiness?  When you contemplate your personal values, you usually have a sense of what is truly important to you—the characteristics that you couldn’t live without. For Collins and Porras, organisational core values are the same—they are as natural as breathing.

Throughout their research, Collins and Porras consistently found that “companies tend to have only a few core values, usually between three and five”—any more than this and they believe that core values are being confused with other factors. From their perspective, ‘core’ means that a value is “so fundamental and deeply held that [it] will change seldom, if ever.”

Consistent with this idea, they believe that values cannot be created but must instead be discovered. Although we all aspire to worthy ideologies, if a value is not authentic to the behaviour of your organisation, Collins and Porras suggest that treating it as core is likely to lead to justifiable cynacism. Instead, they believe that aspirations are more appropriate to an envisioned future.

So, what does your organisation really believe in? There is “no universally right set of core values” and it is even likely that other organisations will hold at least some of the same core values as you. It is important however to determine those values that your organisation would hold steadfastly. To test whether a value is truly core, Collins suggests asking whether you would want your organisation to stand for this value in 100 years time and he even goes so far as to ask whether you would continue to hold this core value “even if at some point in time it became a competitive disadvantage”?

Core purpose

In many ways, core purpose is similar to core values: it is natural and fundamental to an organisation, it is deeply held and unchanging, it need not be unique, and it must be discovered rather than created.

For Collins and Porras, every organisation has a purpose, even if it hasn’t been articulated yet. Purpose could be described as the heartbeat or soul of your organisation—your organisation’s “most fundamental reason for being”. Not to be confused with product lines, services or customers, purpose motivates and inspires. A true purpose grabs “the ‘soul’ of each organisational member” and reflects their “idealistic motivations for doing the work.”

For me, Collins and Porras’ best description of core purpose is:

…like a guiding star on the horizon—forever pursued but never reached.

Purpose guides and directs an organisation, it determines who fits within an organisation and who does not, it is the plumb line by which all other decisions should be measured.

To determine your core purpose, Collins and Porras suggest asking questions such as:

How could we frame the purpose of this organisation so that if you woke up tomorrow morning with enough money in the bank to retire, you would nevertheless keep working here?

When telling your children and/or other loved ones what you do for a living, would you feel proud in describing your work in terms of this purpose?

Envisioned future

For Collins and Porras, an envisioned future is the means through which core ideology is translated into a tangible goal that stretches and challenges your organisation. Where core ideology “resides in the background, ever-present and ‘in the woodwork’”, an envisioned future is “in the foreground, focusing people’s attention on a specific goal…[it] is bold, exciting and emotionally charged.”

10-to-30 year BHAG (Big, Hairy, Audacious Goal)

Whilst all companies have goals, Collins and Porras found that visionary companies often had exceptionally bold and ambitious targets or, as Collins and Porras coined them, BHAGs—”pronounced BEE-hags and shorthand for Big, Hairy, Audacious Goals”.

Unlike core purpose, a BHAG has a clear finish line and an organisation should be able to determine when the goal has been achieved. That said, for Collins and Porras, “a BHAG should not be a sure bet—it will have perhaps only a 50% to 70% probability of success”. However, an organisation should nonetheless believe that it can achieve the goal, something that Collins and Porras came to call the “hubris factor”. To set BHAGs requires a “certain level of unreasonable self-confidence” or, at the very least, unreasonable self-ambition.

The easiest way to explain BHAGs is to compare them to stretching and challenging personal goals. For example, I have reasonably good levels of fitness and enjoy exercising regularly but to set myself the goal of cycling from Land’s End to John o’Groats, completing an Ironman triathlon, or climbing Mount Everest would require extraordinary effort on my part. All of these goals are potentially within my reach should I ever wish to complete them but they are certainly no walk in the park! BHAGs are the 10-to-30 year organisational equivalent of these. What does your organisation wish to achieve in its future that would require “extraordinary effort and perhaps a little luck”?

Perhaps the other thing that should be said about BHAGs is that, much like core ideology, they should be inspiring. To be honest, I have no real wish to climb Mount Everest at present, so I am unlikely to ever achieve it. Setting a BHAG simply for the sake of setting a goal is pointless. Rather, Collins and Porras suggest you should ask, “Does it get our juices flowing? Do we find it stimulating? Does it spur forward momentum? Does it get people going?” In their words:

The envisioned future should be so exciting in its own right that it would continue to keep the organisation motivated even if the leaders who set the goal disappeared.

Vivid description

Unlike a BHAG—which should be concise (usually no more than a sentence or phrase), easy to understand and capable of being expressed in a multitude of ways—a vivid description is an organisation’s opportunity to express in detail what it will feel like to achieve their goal.

For Collins and Porras, a vivid description is essential to making a BHAG tangible. Describing the achievement of the BHAG is about “painting a picture with your words”—a “vibrant, engaging” picture that brings your goal to life. For example, climbing Mount Everest is certainly a goal but how would it really feel to stand on that peak and look out across the mountain ranges below? What else would have already been achieved along the way?

Although it can be uncomfortable to express emotions in an organisational context and Collins and Porras readily acknowledge that some managers find this difficult, they also believe that “passion, emotion and conviction are essential parts of [a] vivid description”. It is precisely these ingredients that motivate others.

We must dispose of the widely accepted norm that rationality should rein supreme, and that emotion should be kept in check. Creating the right mission and describing it with vivid detail should release people’s passion and generate the commitment organisations need to achieve high performance.

One of the methods that Collins and Porras advocate for developing a vivid description is to write an article that you would love to see published about your organisation in 10, 20, 30 years from now. Imagine that you have achieved your BHAG and a major newspaper or business magazine is writing about your organisation—what would they say?

A last word

For Collins and Porras, their vision framework is about preserving the core (through the discovery of core ideology) and simultaneously stimulating progress (through the creation of an envisioned future). It is about managing both continuity and change.

…it’s not either core or progress. It’s not even a nice balance between core and progress but rather two powerful elements, inextricably linked and both working at full force to the ultimate benefit of the institution.

Collins and Porras believe that “without vision, organizations have no chance of creating their future, they can only react to it.” In contrast, when vision becomes an explicit part of an organisation’s DNA, they believe that the organisation has inherent capabilities to achieve their goals, to outlast changes in leadership, to weather organisational storms and, ultimately, to prosper.

Both authors acknowledge that an organisation’s journey will not always be smooth and it could even be said that visionary organisations will inevitably experience some failure but, in the words of Porras, “The key point is that visionary companies display a remarkable resiliency to bounce back from adversity and shine over the long term.”

And for those of you who like the research…

Brown, T. (1994). Greatness that endures. Industry Week. 12-22.

Collins, J.C. (2002). Vision framework. Available as a PDF from Jim Collins’ website

Collins, J.C. & Porras, J.I. (1991). Organizational vision and visionary organizations. California Management Review. 30-52.

Collins, J.C. & Porras, J.I. (1996). Building your company’s vision. Harvard Business Review

Collins, J.C. & Porras, J.I. (2000). Built to last: successful habits of visionary companies (3rd edition). London: Random House Business Books.

Reingold, J. & Underwood, R. (2004). Was “Built To Last” built to last? Fast Company

01
Sep
Posted by Matt Stocker, stored in: Performance Improvement  

I have just finished Good to Great by Jim Collins and I wanted to record my reflections about the book. However, I am in somewhat of a dilemma. On the one hand, I really enjoyed the book and felt that many of the concepts Jim talks about are values and ideas that I recognise as important in building a great business. On the other, I have read a number of critical reviews of the book (such as that by Rob May) pulling apart both the fundamental research foundations of the book and also its findings.

On balance

Overall, I think that Good to Great provides a very useful model and framework for developing and creating a great business. Concepts such as the flywheel go some way to challenging the ‘magic bullet’ fascination within the business world. Similarly, a Level 5 leader in place of ‘Fred the Shred’ might have created a very different outcome for Royal Bank of Scotland in the last year.

Solving the impossible

At the same time, trying to unravel the complexity of the business world to create a model that enables a business to become great is a tall order! Businesses operate in too complex an environment for a ‘key to business success’ to exist. Any business book that claims to have discovered the ‘secret to success’ is deceiving itself. Although I don’t feel that Jim Collins does claim the key to success in Good to Great, the book is taking on a huge task in assessing what creates ‘greatness’ and I suppose it is not surprising if it falls a little short of the answers.

Everlasting greatness

Obviously, there are other criticisms leveled against the book regarding the companies that were chosen and their subsequent fall from grace – Fannie Mae, being the most recent. However, the book never claims that the companies chosen will continue to be great beyond the 15 years of great performance shown. Indeed, 4 of the 11 great companies used in the study were facing serious challenges to their greatness or had already lost it by the time the book was published. It is also worth noting that Jim has recently published a new book (although I haven’t yet had chance to read it), entitled ‘How the mighty fall: And why some companies never give in‘, which I imagine begins to examine some of the questions raised by the fall of great companies.

Correlation versus Causality

I think one of the key problems with many studies and books is that of causality and correlation. Causality and correlation are similar and yet entirely different. Causality is where one or more factors cause an effect; correlation is where a relationship of some kind exists between two factors but one is not necessarily the cause of the other. Yet, so often when correlation is discovered, people assume they have discovered causality. Good to Great discovers correlation, but cannot prove causality: there are too many other uncontrollable and unexaminable factors to pin down exactly what causes greatness.

Should you read it?

If you are looking for factors (or levers) within a business that can be proven beyond doubt to create success then you might as well stop reading business books!

If however, you are looking for interesting ideas that help develop you and your business, not as a magic formula but rather as concepts to play against and spark off, then Jim Collins’ Good to Great does just that. It may not hold the secrets to success but it will certainly provide you with food for thought!