Building Your Company’s Vision

James C. Collins & Jerry I. PorrasJames C. Collins & Jerry I. Porras

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Building Your Company’s Vision

An enduring corporate An enduring corporate vision guides you vision guides you through through changechange

It also spells out what It also spells out what will will nevernever change change

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The Three Stages of Competition

OPPORTUNITY

HORIZON

STRATEGIC

ARCHITECTURE

COMPETITIVE

STRATEGY

•Vision of future mkts

•Corporate ambition

•Sense of purpose

•Resources ( technology,brands etc)

•Competencies

•Skills

•Industry analysis

•Strategic segmentation & positioning

•Cost & differentiation drivers

Competition for

Existing Markets

Competition for

Resources &

Competencies

Competition for

Dreams

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Imagine a middle-aged man, with a textile trading business and just four looms, carrying around in his head the aspiration to set up a fully integrated petroleum chain!

FABRIC

YARN

BULK INTERMEDIATES, PTA/ PFY

PROPYLENE/ ETHYLENE

PETROLEUM REFINING

OIL/GAS EXPLORATION

RELIANCE

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Articulating A Vision

Core Ideology

•Core Values

•Core Purpose

Envisioned Future

•10-30 yr. BHAG

•Vivid Description

Unchanging:defines a co’s

timeless character

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Two Components of a Lasting Vision: Core Ideology and Envisioned Future

Core IdeologyCore Ideology

Core values are the handful of Core values are the handful of guiding principles by which a guiding principles by which a company navigatescompany navigates

Core purpose is an Core purpose is an organization’s most organization’s most fundamental reason for beingfundamental reason for being

Envisioned FutureEnvisioned Future

Big, Hairy, Audicious Big, Hairy, Audicious Goals(Goals(BHAGsBHAGs) are ambitious ) are ambitious plans that rev up the entire plans that rev up the entire organizationorganization

Vivid descriptions paint a Vivid descriptions paint a picture of what it will be like to picture of what it will be like to achieve the BHAGsachieve the BHAGs

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Merck – Core Values

Corporate social responsibilityCorporate social responsibility

Unequivocal excellence in all aspects of the companyUnequivocal excellence in all aspects of the company

Science-based innovationScience-based innovation

Honesty and integrityHonesty and integrity

Profit, but profit from work that benefits humanityProfit, but profit from work that benefits humanity

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Nordstrom – Core Values

Service to the customer above all elseService to the customer above all else

Hard work and individual productivityHard work and individual productivity

Never being satisfiedNever being satisfied

Excellence in reputation; being part of something specialExcellence in reputation; being part of something special

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Philip Morris – Core Values

The right to freedom of choiceThe right to freedom of choice

Winning – beating others in a good fightWinning – beating others in a good fight

Encouraging individual initiativeEncouraging individual initiative

Opportunity based on merit; no one is entitled to anythingOpportunity based on merit; no one is entitled to anything

Hard work and continuous self-improvementHard work and continuous self-improvement

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Walt Disney – Core Values

No cynicismNo cynicism

Nurturing and promulgation of “ wholesome American values”Nurturing and promulgation of “ wholesome American values”

Creativity, dreams and imaginationCreativity, dreams and imagination

Fanatical attention to consistency and detailsFanatical attention to consistency and details

Preservation and control of the Disney magicPreservation and control of the Disney magic

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A company need not have as its core value…

Customer Service ( Sony doesn’t)Customer Service ( Sony doesn’t) Respect for individual( Disney doesn’t)Respect for individual( Disney doesn’t) Quality ( Walmart doesn’t)Quality ( Walmart doesn’t) Market Focus ( HP doesn’t)Market Focus ( HP doesn’t) Teamwork( Nordstrom doesn’t)Teamwork( Nordstrom doesn’t)

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Core Purpose Is a Company’s Reason for Being

3M3M: To solve unsolved problems innovatively: To solve unsolved problems innovatively

CargillCargill: To improve the standard of living around the world: To improve the standard of living around the world

Fannie MaeFannie Mae: To strengthen the social fabric by continually : To strengthen the social fabric by continually democratizing home ownershipdemocratizing home ownership

Hewlett-PackardHewlett-Packard: To make technical contributions for the : To make technical contributions for the advancement and welfare of humanityadvancement and welfare of humanity

McKinsey & CoMcKinsey & Co: To help leading corporations and governments to be : To help leading corporations and governments to be more successfulmore successful

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Core Purpose ……(contd)

MerckMerck: To preserve and improve human life: To preserve and improve human life

NikeNike: To experience the emotions of competition, winning and : To experience the emotions of competition, winning and crushing competitorscrushing competitors

SonySony: To experience the joy of advancing and applying technology : To experience the joy of advancing and applying technology for the benefit of the publicfor the benefit of the public

Wal-MartWal-Mart: To give ordinary folk the chance to buy the same things as : To give ordinary folk the chance to buy the same things as rich peoplerich people

Walt DisneyWalt Disney: To make people happy: To make people happy

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BHAG/1Target BHAGs can be quantitative or qualitative

Become a $125 bn co. by yr.2000 (Become a $125 bn co. by yr.2000 (Wal-MartWal-Mart, 1990), 1990)

Democratize the automobile ( Democratize the automobile ( FordFord, Early 1900s), Early 1900s)

Become the co. most known for changing the worldwide poor quality Become the co. most known for changing the worldwide poor quality image of Japanese products ( image of Japanese products ( SonySony, Early 1950s), Early 1950s)

Become the most powerful,the most serviceable, the most far reaching Become the most powerful,the most serviceable, the most far reaching world financial institution that has ever been( world financial institution that has ever been( City BankCity Bank, predecessor , predecessor to Citicorp,1915)to Citicorp,1915)

Become the dominant player in commercial aircraft and bring the Become the dominant player in commercial aircraft and bring the world into the jet age (world into the jet age (BoeingBoeing, 1950), 1950)

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BHAG/2Common enemy BHAGs involve David versus Goliath thinking

Knock off RJR as the no. 1 Knock off RJR as the no. 1 tobacco co. in the world (Philip tobacco co. in the world (Philip Morris, 1950s)Morris, 1950s)

Crush Adidas (Nike, 1960s)Crush Adidas (Nike, 1960s)

Yamaha wo tsubusu! Yamaha wo tsubusu! We will We will destroy Yamaha (Honda, destroy Yamaha (Honda, 1970s)1970s)

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BHAG/3Role-model BHAGs suit up and coming organizations

Become the Nike of the cycling industry (Giro Sport Design, 1986)Become the Nike of the cycling industry (Giro Sport Design, 1986)

Become as respected in 20 years as Hewlett-Packard is Become as respected in 20 years as Hewlett-Packard is today(Watkins-Johnson,1996)today(Watkins-Johnson,1996)

Become the Harvard of the west (Stanford University,1940s)Become the Harvard of the west (Stanford University,1940s)

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BHAG/4Internal-transformation BHAGs suit large established organizations

Become no.1 or no. 2 in every market we serve and revolutionize this Become no.1 or no. 2 in every market we serve and revolutionize this co. to have the strengths of a big co. combined with the leanness and co. to have the strengths of a big co. combined with the leanness and agility of a small co. (GE, 1980s)agility of a small co. (GE, 1980s)

Transform this co. from a defense contractor into the best diversified Transform this co. from a defense contractor into the best diversified high technology co. in the world( Rockwell, 1995)high technology co. in the world( Rockwell, 1995)

Transform this division from a poorly respected internal products Transform this division from a poorly respected internal products supplier to one of the most respected,exciting and sought after supplier to one of the most respected,exciting and sought after divisions in the co.(Components Support Division of a Computer divisions in the co.(Components Support Division of a Computer Products Co,1989)Products Co,1989)

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Four types of BHAGs

1.1. Target BHAGsTarget BHAGs2.2. Common Enemy BHAGsCommon Enemy BHAGs3.3. Role Model BHAGsRole Model BHAGs4.4. Internal Xformation BHAGsInternal Xformation BHAGs

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Core Purpose NOT = BHAG

Core Purpose is like the star on the horizon Core Purpose is like the star on the horizon forever to be chased.forever to be chased.

BHAG is the mountain to be climbed.BHAG is the mountain to be climbed.e.g:e.g:Singapore>>Colombo ’47>>NY ‘60Singapore>>Colombo ’47>>NY ‘60

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Role of Core Ideology is to guide and inspire Role of Core Ideology is to guide and inspire not to differentiatenot to differentiate

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Core Ideology vs Core Competency

SONY’s core competency is “miniaturization”

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Sony – Core Ideology

Core ValuesCore Values Elevation of the Japanese Elevation of the Japanese

culture and national statusculture and national status

Being a pioneer, not following Being a pioneer, not following others, doing the impossibleothers, doing the impossible

Encouraging individual ability Encouraging individual ability and creativityand creativity

PurposePurpose To experience the sheer joy of To experience the sheer joy of

innovation and the application innovation and the application of technology for the benefit of technology for the benefit and pleasure of the general and pleasure of the general publicpublic

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Sony – Envisioned Future

BHAGBHAGBecome the co. most known for Become the co. most known for

changing the worldwide poor changing the worldwide poor quality image of Japanese quality image of Japanese productsproducts

Vivid DescriptionVivid DescriptionWe will create products that become We will create products that become

pervasive around pervasive around the worldthe world…We …We will be the first Japanese co. to go will be the first Japanese co. to go into the US market and distribute into the US market and distribute directly.. We will succeed with directly.. We will succeed with innovations innovations that US cos. have that US cos. have failed at- such as the transistor failed at- such as the transistor radio..Fifty years from now our radio..Fifty years from now our brand namebrand name will be as well known will be as well known as any in the world.. And will as any in the world.. And will signify innovation and quality that signify innovation and quality that rival the most innovative cos. rival the most innovative cos. anywhere..”Made in Japan” will anywhere..”Made in Japan” will mean something fine not something mean something fine not something shoddy. shoddy.

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Building a visionary company requires1% vision and 99 % alignment

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Lego

Mission:Mission:To nurture the child in each of us.To nurture the child in each of us.

Corporate belief:Corporate belief:Children are our role models. They are Children are our role models. They are

curious, creative and imaginative.curious, creative and imaginative.