Here are my notes and quotes from Jerry Porras' talk. There is an audiotape
available from Pegasus Communications. http://www.peagsuscom.com
-- Rick
How many have read _Built to Last_? (about half)
I will hit some of the key ideas that relate to the idea of a Learning
Organization.
Three main topics for this talk
- a vision framework that grew out of the research
- leadership, the type we found in these organizations and how it might
differ from other views of leadership
- summarize the Built to Last principles
Books are slightly different... In softcover edition, we added a chapter
about vision.
In 80's thinking about this research project. A personal learning journey
we went through. As we studied these visionary companies... And the paired
comparison companies... What lessons they can teach from how they led
their lives over the course of 100 years.
We went in with our assumptions about how the world worked... As we
examined 100 year history of these companies, some surprises. Type of
leadership. The role of profits, whether the purpose is really to max
profits. Whether that ought to be the purpose. About what it took to start
a great organization, whether you need a great idea to have a great
organization.
We allowed the data to speak to us. The way a good researcher should.
Then we could see the unique ways these companies operated.
I'll start with what vision is.
There are different perspectives about what org vision is. We feel that
there hasn't been a clear understanding of what vision is supposed to do
for an org.
What is a vision supposed to do for an org? (Audience answers, "Inspire,
motivate, focus.") Yes... Do the vision statements in your org do this?
Often not.
We studied 36 companies, 18 visionary companies and 18 selected as matched
comparisons, studied thru their whole history, from founding date thru
1990. What did visionary companies do that comparison companies did not do.
What are the enduring principles that guided?
The word "vision" was not used by the companies. But, they had direction.
Were inspired and they inspired their empl. They were able to be focused
over shorter time periods. Had highly motivated workforce that participated
in success of the org thru it's long history.
"They had the components of what we think vision is."
We think vision is... Based on what the visionary companies did...
- three major parts, and a fourth that amplifies
- two major components: core ideology and the envisioned future, we use
the ying-yang symbol.
- Core Ideology includes: core values and purpose
- Envisioned Future includes an audacious goal and a vivid description
Visionary companies were adept at dealing with things that might appear as
opposities. Core ideology and envisioned future.
When core values are printed on wallet cards or posted on the wall... When
I ask, what are your core values, and they reach for the wallet card. Or
take me to see the poster. How much is that really affecting how people in
the org work.
"In visionary companies, the core values really did affect how people
worked. Leaders behaved in ways that were consistent with the core values
in very political situations."
Small cluster of core values, very fundamental, unchanging, constant values
in the organization. Between three and five, not a lot. Values that the org
was willing to suffer for. That's a tough test for a value.
Larger number of (non-core) values... these we called "cultural practice
values." Might evolve over time, and make sense in a certain period of
time. For example, the values about women in the workforce in early 90's
vs. today. Cultural practice values evolve over time.
Ability to learn and adapt involves how deal with cultural practice
values... Sometimes these are treated like core values. I think IBM got
into trouble by treating some cultural practice values as core values...
e.g. the cultural practice value of lifetime employment. This was not a
value in the early days of the org. It came into being as a value, a
cultural practice value. And, then it was continued, as though it was a
core value.
[At IBM...] the core value is respect for people, giving customer what
customer wants, and going the extra mile to do a good job. IBM's other
problem was when they forgot some of these core values, e.g. giving
customer what they want.
When J&J faced Tylenol poisioning crisis... They stayed with their core
values. Their number one core value in the J&J credo was.. first, resp to
our customers. Living their values had impact on the organization. Withdrew
all product on shelves in the country, not just... The decision was made
two hours after the crisis emerged.
Conversation at the exec office: Come on! How did you analyze the financial
impact to make this decision? We didn't consider costs, first obligation
was to protect the customer. So we did it... two hours after the crisis
emerged.
And, they didn't withhold information.
In addition, they shut down the plants for six weeks, and didn't lay anyone
off. This wasn't publicized. Credo has second, resp is to our employees.
It is estimated that this caused them $100m of hurt. An example of org
living its core values. And teaching the whole org that it really respects
it's core values.
Just speaking about values is not enough.
In one company, the CEO always asks the question for each decision or
action, 'How does this action relate to our core values?' When cascaded
down, this gets the message down throughout the organization.
"Core values have to be alive, they have to guide the organization."
We were surprised, we expected a few core values that would appear in most
of the companies. There was not one core value that every company shared.
We had thought there were some basic ones, like respect for people. Data
said this wasn't the case. Conclusion, what are your core values are not so
important, more important that there are core values and the org live it.
Core values provide inspiration.
Now, Purpose...
These companies had a purpose. An answer to the question, "Why do you
exist?" Or explore this by asking, "Why not shut this operation down?"
Start by writing down what do you do. They ask, why do we do that? Why do
we provide this service. Three or four levels of the "Why?" question.
Disney says, "To make people happy."
HP, "To make technical contributions."
Merck, "To preserve and improve human life."
Those are nice words. Do they really mean it? Looking at an org over time,
we can judge this. Merck provides examples. We observed over time that
Merck has evidenced their perspective. In 1945, with TB running rampant,
Merck produced a TB drug, almost the only product. Merck priced the drug
low, just above cost. Later, Merck became the largest foreigh pharm company
in Japan. Managers believe the TB drug action contributed to the long term
growth of the company.
Merck sold rights to the Hepatitis B vacine to the Chinese for a tiny sum.
Merck developed a drug for River Blindness, it affects about 1m people in
Africa. African govt's couldn't afford it, and there was no money from
other sources. Merck gave it to them. But, the govt's had no money for
distribution. Merck paid for the distribution. Doctors to monitor? Merck
paid for the doctors. Believe in the long run it will come back with a
business benefit for Merck.
Visionary companies outperformed mkt by 18x. (Comparison companies by 2x.)
Visionary companies lived their purpose. By doing so, they made a lot of
money.
"Purpose provides a long term direction for the corporation." You won't
expect to see Disney buying steel mills. They created the Anaheim Mighty
Ducks hockey team.A cruise line for adults and kids (may adults and kids
will be on opposite parts of the ship, but still in the same boat.)
Now, the envisioned future part. Audacious goal.
We called it "Big hairy audacious goal" (BHAG) in the book. Not certain to
be achievable, only 50% to 60% odds. Like Kennedy's NASA goal of man on the
moon (and back) by end of the decade. Inspriational. Motivational.
Difficult to achieve. Kenedy was advised it was too uncertain, too risky.
He set the goal anyway.
BHAG has a time frame. "Creates sense of urgency and focus. Drives people
to be turned on and riveted by it."
Story: Stanford prof working in a NASA lab late at night. Met a janitor.
What are you doing? Janitor replied, 'I'm helping to get a man on the
moon.'
For IBM, the 360 system was an incredible BHAG. A five billion dollar
decision. It was a bet the company BHAG.
Boeing does the same thing. With the 707. And 747... Maybe even the 777.
Bet the company goals will focus people.
Boeing people say, "It ws the most rewarding and exciting experience in my
professional career."
"Important that you select a BHAG that's consistent with your culture."
If told a Boeing engineer, "We've just set a goal of being a $150b company
by xx date." the response would be, "Who cares?" But when you suggest the
goal of an exciting, challenging new airplane...
Core ideology and envisioned future are what vision are all about.
Direction, motivation, focus.
Connections of these ideas to the notion of learning organizations... We
see them played out in a way that reflects the learning principles
discussed here at this conference..
Leadership.
We expected to see charismatic, larger than life, visionary leaders. We
thought people who created these companies had to be fantastic. Instead, we
found the founders described as "Thoughtful, soft spoken, somewhat humble,
good listener, a bit shy, professorial."
When I look in the mirror in the morning, I don't see a larger than life
charismatic figure.
"This is empowering for all of us. You don't have to be larger than life to
build a company like the ones we studied."
The comparison companies had more of the larger than life figures. Figures
who focused on leading the org, having the vision, being the brilliant
inventor. George Westinghouse founded that company on his inventions. Led
the org. Created an org that revolved around their brilliance.
In contrast the visionary companies leaders didn't. They focused on
creating a great org. Putting resources in the org so *it* could come up
with the great ideas. Focused on building the org's capabilities , rather
than having the org revolve aroudn their capabilities.
They were creating learning organizations.
Westinghouse built a company around his ideas. In contrast, Charles Coffin,
at GE, created the first industrial research lab. To create ideas and
products.
Create org that will continue to function long after I'm gone.
Looking at companies over 100 years, you see the power and impact... The
way you lead has a big effect.
In most places, you aren't rewarded for creating a great org that grows
after you are gone. You can make better decisions yourself, get the big
bang, get the reward...
Great leaders want to leave a legacy that will last after they are gone.
Even though most of the pressures are pushing in the opposite direction.
Different orientation. More than difference in style.
Our metaphor... Leaders who focus on clock building... not time telling.
They built orgs that preserved the core and stimulated progress. Change and
no change in the org at the same time.
Now, LO seems to be about stimulating change in the context of a vision.
These corporations didn't change their core ideology, but changed
everything else over their history.
Mechanisms... Found in companies we studied...
To Preserve the core:
- Core ideology, more than profits
- Cult-like cultures... So powerful, if you don't fit, people get ejected,
pushed out.
- home grown mnagement, especially for top positions; internal CEO helps
preserve the core, it's in their gut not just in their heads.
To Stimulate progress... The change and learning side:
- BHAGs (big hairy... goals)
- Try a lot of stuff and keep what works. We call it purposeful evolution.
If it doesn't work, try to learn from it. Deal with risk-taking in a very
positive way, not kill the risk taker.
- Good enough never is.
The J&J decision did so much to solidify the core values.
How many have had exp of standing before 30 of your peers going into
excruciating detail about a failure that you were responsible for. Not a
very common experience. Well, it's pretty common at 3M. And, they have
concrete structures that support it. Monthly seminar about failed efforts.
At one, Art Fry was hearing from a chemist about a glue that failed; he saw
in this a solution for a problem we had, and this became Post-It notes.
Seminars in which people talk abut their work, successes and failures, in
diverse audiences.
Competing teams? Might work if they are held together by the shared
ideology of the corporation.
Alignment...
"The three key principles in an effective org are alignment, alignment, and
alignment."
The studied orgs were better aligned than the comparison companies.
The comparison companies outperformed the market by 2x. Visionary companies
by 18x.
Comparison companies had no core to preserve. Comparison companies may have
been pretty good at the 'stimulate progress' side, but missing the
'preserve the core' side.
Maybe a company can survive only by stimulating progress, with no core.
"Can you survive if you only preserve the core? Well, I'm a Catholic...
maybe the Catholic Church is an example... This troubled me... Finally, I
realized how the Catholic Church continues to survive by preserving the
core and not being very good at stimulating progress... The answer is
divine intervention." [laughter]
Q: What about a networked environment?
A: Appears horder to me. This might mean fewer great companies in the
future. And, consider how companies are now funded... venture capital, go
public, bang! Will be more difficult to create new companies like the ones
we studied.
And, values get acted out in structures. If you implement systems that
convey the values... But, it's much harder. The msgs I send with my
behavior are more powerful that the msgs I can create with structures.
Q: Limits to growth... Some of the visionary companies including HP are now
experiencing what some insiders see as abandonment of their core values.
A: In growth, it's easy to lose sight of the core... Growth drives your
attention. HP for example is now dealing with very powerful dynamics that
could lead them down the wrong path. In the past they walked away from
business in which they couldn't make tech contributions. As the products
mature more and more, the opportunity for them to make tech contributions
are less. What's more important to customers is price. So, people in HP are
being driven more and more to reduce costs and price. I speculate tension
between mgrs who want to cut costs and those who say tech contributiosn are
what we are all about. If succomb to the cost reduction pressures... Cost
is a seductive argument.
3M faced some of the same. Got rid of two big parts of the company... The
part that did mag tapes and floppy disks, video tapes, and audio tape. The
CEO's statement, "In doing this, we are strengthening our corporate
culture." I think he meant, there was no place to make tech contributions,
competition was purely price. The key core value for 3M is innovation.
What would happen over time with managers focused on cutting costs?
Q: I work in a new organization. Don't know what we're doing or where we
are going. Do we work on the core or stimulate progress for survival?
A: In survival mode, pay attention to the environment, what we need to do.
What need to do to have a job tomorrow. Once out of survival mode, then
have to be thinking about vision.
Some companies can think about the core even during survival periods. Sony
spent two months out of the first seven of their life figuring out their
philosophy. Even during the survival period.
--Richard Karash ("Rick") | <http://world.std.com/~rkarash> Speaker, Facilitator, Trainer | email: Richard@Karash.com "Towards learning organizations" | Host for Learning-Org Discussion (617)227-0106, fax (617)523-3839 | <http://www.learning-org.com>
Learning-org -- Hosted by Rick Karash <rkarash@karash.com> Public Dialog on Learning Organizations -- <http://www.learning-org.com>