Author: Jim Collins and Jerry I. Porras

ISBN: 978-0060516406

One of the most talked about business books. I was deeply disappointed; I didn't find any original ideas and the book was much too lenghty. So many better books on creating lasting companies. In my opinion; reading the below excerpts more than suffices.

EXCERPTS

A visionary company exports its core values and purpose to all of its operations in every country, but tailors its practices and strategies to local cultural norms and market conditions.

Social-cause organizations often begin in response to a specific problem, much as companies often begin in response to a specific great idea or timely market opportunity. But, just as any great idea or market opportunity eventually becomes obsolete, the founding goal of a social-cause organization can be met or become irrelevant. Looking for a deeper, more enduring purpose that goes beyond the original founding concept therefore becomes vitally important to building a lasting organization.

Both face the need to transcend dependence on any single leader or great idea. Both depend on a timeless set of core values and an enduring purpose beyond just making money. Both need to change in response to a changing world, while simultaneously preserving their core values and purpose. Both benefit from cult-like cultures and careful attention to succession planning. Both need mechanisms of forward progress, be they BHAGs (Big Hairy Audacious Goals), experimentation and entrepreneurship, or continuous self-improvement. Both need to create consistent alignment to preserve their core values and purpose and to stimulate progress.

THE COMPANY ITSELF IS THE ULTIMATE CREATION

If you equate the success of your company with success of a specific idea—as many businesspeople do—then you’re more likely to give up on the company if that idea fails; and if that idea happens to succeed, you’re more likely to have an emotional love affair with that idea and stick with it too long, when the company should be moving vigorously on to other things. But if you see the ultimate creation as the company, not the execution of a specific idea or capitalizing on a timely market opportunity, then you can persist beyond any specific idea—good or bad—and move toward becoming an enduring great institution.

The visionary companies did a better job than the comparison companies at developing and promoting highly competent managerial talent from inside the company, and they thereby attained greater continuity of excellence at the top through multiple generations.

The continuity of superb individuals atop visionary companies stems from the companies being outstanding organizations, not the other way around.

If you’re involved in building and managing a company, we’re asking you to think less in terms of being a brilliant product visionary or seeking the personality characteristics of charismatic leadership, and to think more in terms of being an organizational visionary and building the characteristics of a visionary company.

We are in the business of preserving and improving human life. All of our actions must be measured by our success in achieving this goal.

MANAGEMENT GUIDELINES

• We shall eliminate any unfair profit-seeking, persistently emphasize substantial and essential work, and not merely pursue growth.
• We shall welcome technical difficulties and focus on highly sophisticated technical products that have great usefulness in society, regardless of the quantity involved.
• We shall place our main emphasis on ability, performance, and personal character so that each individual can show the best in ability and skill.

“Our plan is to lead the market with new products, rather than ask them what kind of products they want.... Instead of doing a lot of market research, we...refine a product...and try to create a market for it by educating and communicating with the public.” [Only for companies with vast resources!]

PROFITABILITY is a necessary condition for existence and a means to more important ends, but it is not the end in itself for many of the visionary companies. Profit is like oxygen, food, water, and blood for the body; they are not the point of life, but without them, there is no life.

“Profit,” according to Packard, “is not the proper end and aim of management—it is what makes all of the proper ends and aims possible.”

In short, we did not find any specific ideological content essential to being a visionary company. Our research indicates that the authenticity of the ideology and the extent to which a company attains consistent alignment with the ideology counts more than the content of the ideology.

We concluded that the critical issue is not whether a company has the “right” core ideology or a “likable” core ideology but rather whether it has a core ideology—likable or not—that gives guidance and inspiration to people inside that company.

Core Ideology = Core Values + Purpose

A very important point: We strongly encourage you not to fall into the trap of using the core values from the visionary companies (listed in Table 3.1) as a source for core values in your own organization. Core ideology does not come from mimicking the values of other companies—even highly visionary companies; it does not come from following the dictates of outsiders; it does not come from reading management books; and it does not come from a sterile intellectual exercise of “calculating” what values would be most pragmatic, most popular, or most profitable. When articulating and codifying core ideology, the key step is to capture what is authentically believed, not what other companies set as their values or what the outside world thinks the ideology should be.

In other words, why are we here? I think many people assume, wrongly, that a company exists simply to make money. While this is an important result of a company’s existence, we have to go deeper and find the real reasons for our being.” Purpose need not be wholly unique. It’s entirely possible that two companies could have a very similar purpose, just as it’s entirely possible that two companies can both share a rock-solid belief in a value like integrity. The primary role of purpose is to guide and inspire, not necessarily to differentiate.

The important step is to get at the deeper, more fundamental reasons for the organization’s existence. An effective way to get at purpose is to pose the question “Why not just shut this organization down, cash out, and sell off the assets?” and to push for an answer that would be equally valid both now and one hundred years into the future.

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.

3M didn’t just pay lip service to encouragement of individual initiative and innovation; it decentralized, gave researchers 15 percent of their time to pursue any project of their liking, created an internal venture capital fund, and instituted a rule that 25 percent of each division’s annual sales should come from products introduced in the previous five years.

Takeaway:

• Big Hairy Audacious Goals (BHAGs): Commitment to challenging, audacious—and often risky—goals and projects toward which a visionary company channels its efforts (stimulates progress).
• Cult-like Cultures: Great places to work only for those who buy in to the core ideology; those who don’t fit with the ideology are ejected like a virus (preserves the core).
• Try a Lot of Stuff and Keep What Works: High levels of action and experimentation—often unplanned and undirected—that produce new and unexpected paths of progress and enables visionary companies to mimic the biological evolution of species (stimulates progress).
• Home-grown Management: Promotion from within, bringing to senior levels only those who’ve spent significant time steeped in the core ideology of the company (preserves the core).
• Good Enough Never Is: A continual process of relentless self-improvement with the aim of doing better and better, forever into the future (stimulates progress).

Yet—and this is the key point—Boeing was willing to make the bold move in the face of the risks. As in Boeing’s case, the risks do not always come without pain. Staying in the comfort zone does little to stimulate progress.

Create BHAGs that take a life of their own and thereby act as a stimulus through multiple generations of leadership.

Does your company have a BHAG to which it is committed and that will provide momentum long after you’re gone? And, even more important, does it have the ability to continually set bold new goals for itself long into the future?

A BHAG should be so clear and compelling that it requires little or no explanation. Remember, a BHAG is a goal—like climbing a mountain or going to moon—not a “statement.” If it doesn’t get people’s juices going, then it’s just not a BHAG. A BHAG should fall well outside the comfort zone. People in the organization should have reason to believe they can pull it off, yet it should require heroic effort and perhaps even a little luck. A BHAG should be so bold and exciting in its own right that it would continue to stimulate progress even if the organization’s leaders disappeared before it had been completed.

A BHAG has the inherent danger that, once achieved, an organization can stall and drift in the “we’ve arrived” syndrome, as happened at Ford in the 1920s. A company should be prepared to prevent this by having follow-on BHAGs. It should also complement BHAGs with the other methods of stimulating progress.

When we began our research project, we speculated that our evidence would show the visionary companies to be great places to work (or at least better places to work than the comparison companies). However, we didn’t find this to be the case—at least not for everyone. Recall how well Bill and Laura fit and flourished at Nordstrom; for them, it was a truly great place to work. But notice how Robert just couldn’t fully buy in; for him, Nordstrom was not a great place to work. Nordstrom is only a great place to work for those truly dedicated—and well suited to—the Nordstrom way.

We learned that you don’t need to create a “soft” or “comfortable” environment to build a visionary company. We found that the visionary companies tend to be more demanding of their people than other companies, both in terms of performance and congruence with the ideology.

“VISIONARY,” we learned, does not mean soft and undisciplined. Quite the contrary. Because the visionary companies have such clarity about who they are, what they’re all about, and what they’re trying to achieve, they tend to not have much room for people unwilling or unsuited to their demanding standards.

We did, however, find some common themes, and in particular we found four common characteristics of cults that the visionary companies display to a greater degree than the comparison companies;

• Fervently held ideology (discussed earlier in our chapter on core ideology)
• Indoctrination
• Tightness of fit
• Elitism

Practical examples:

• Internal “universities” and training centers
• On-the-job socialization by peers and immediate supervisors.
• Rigorous up-through-the-ranks policies—hiring young, promoting from within, and shaping the employee’s mind-set from a young age
• Exposure to a pervasive mythology of “heroic deeds” and corporate exemplars (for example, customer heroics letters, marble statues)
• Unique language and terminology (such as “cast members,” “Motorolans”) that reinforce a frame of reference and the sense of belonging to a special, elite group
• Corporate songs, cheers, affirmations, or pledges that reinforce psychological commitment
• Tight screening processes, either during hiring or within the first few years
• Incentive and advancement criteria explicitly linked to fit with the corporate ideology
• Awards, contests, and public recognition that reward those who display great effort consistent with the ideology. Tangible and visible penalties for those who break ideological boundaries
• Tolerance for honest mistakes that do not breach the company’s ideology (“non-sins”); severe penalties or termination for breaching the ideology (“sins”)
• “Buy-in” mechanisms (financial, time investment)
• Celebrations that reinforce successes, belonging, and specialness
• Plant and office layout that reinforces norms and ideals
• Constant verbal and written emphasis on corporate values, heritage, and the sense of being part of something special

Visionary companies impose tight ideological control and simultaneously provide wide operating autonomy that encourages individual initiative.

Evolutionary progress differs from BHAG progress in two key ways. First, whereas BHAG progress involves clear and unambiguous goals (“We’re going to climb that mountain”), evolutionary progress involves ambiguity (“By trying lots of different approaches, we’re bound to stumble onto something that works; we just don’t know ahead of time what it will be”).

It might be far more satisfactory to look at well-adapted visionary companies not primarily as the result of brilliant foresight and strategic planning, but largely as consequences of a basic process—namely, try a lot of experiments, seize opportunities, keep those that work well (consistent with the core ideology), and fix or discard those that don’t.

Karl von Clausewitz argued that detailed plans usually fail, because circumstances inevitably change.

“Listen to anyone with an original idea, no matter how absurd it might sound at first.”

“Encourage; don’t nitpick. Let people run with an idea.”

“Hire good people, and leave them alone.” “If you put fences around people, you get sheep. Give people the room they need.” “Encourage experimental doodling.” “Give it a try—and quick!”

Mistakes will be made [by giving people the freedom and encouragement to act autonomously], but. . . the mistakes he or she makes are not as serious in the long run as the mistakes management will make if it is dictatorial and undertakes to tell those under its authority exactly how they must do their job. Management that is destructively critical when mistakes are made kills initiative and it’s essential that we have many people with initiative if we are to continue to grow.

[We] must possess a two-fisted generating and testing [process] for ideas. . . . Every idea evolved should have a chance to prove its worth, and this is true for two reasons: 1) if it is good, we want it; 2) if it is not good, we will have purchased our insurance and peace of mind when we have proved it impractical.

The 3M way:

• “15 percent rule”—a long-standing tradition that encourages technical people to spend up to 15 percent of their time on projects of their own choosing and initiative.
• “Golden Step” award, granted to those responsible
• “Genesis Grants”—internal venture capital fund that distributes parcels of up to $50,000 for researchers to develop prototypes and market tests.
• Technology sharing awards, granted to those who develop a new technology and successfully share it with other divisions.
• New product forums, where all divisions share
• “High Impact Programs”—each division selects one to three priority products to get to market within a short, specified time frame.
• Small, autonomous divisions and units—42 product divisions in 1990, each with average annual sales of about $200 million; plants—median size 115 people—are spread across forty states, mostly in small towns.
• To stimulate individual initiative by promoting a “small company within a big company” feel.

The Disney case illustrates an important point. If you’re involved with an organization that feels it must go outside for a top manager, then look for candidates who are highly compatible with the core ideology. They can be different in managerial style, but they should share the core values at a gut level.

Your company should have management development processes and long-range succession planning in place to ensure a smooth transition from one generation to the next.

Do not fall into the trap of thinking that the only way to bring about change and progress at the top is to bring in outsiders, who might dilute or destroy the core. The key is to develop and promote insiders who are highly capable of stimulating healthy change and progress, while preserving the core.

The entrepreneurial model of building a company around a great idea, growing quickly, cashing out, and passing the company off to outside professional managers will probably not produce the next Hewlett-Packard, Motorola, General Electric, or Merck.

COMFORT is not the objective in a visionary company. Indeed, visionary companies install powerful mechanisms to create discomfort—to obliterate complacency—and thereby stimulate change and improvement before the external world demands it.

The problem, of course, is how to avoid complacency—how to remain self-disciplined once a company has attained success or become number one in its field. How can a company keep alive that “fire that burns from within” that impels people to keep pushing, to never be satisfied, and to always search for improvement? [...] He therefore responded favorably to a radical proposal made in 1931 by marketing manager Neil McElroy, namely to create a brand management structure that would allow P&G brands to compete directly with other P&G brands, almost as if they were from different companies. P&G already had the best people, the best products, the best marketing muscle. So why not pit the best of P&G against the best of P&G? If the marketplace doesn’t provide enough competition, why not create a system of internal competition that makes it virtually impossible for any brand to rest on its laurels?

The point here is not that a successful company should necessarily create internal competition in order to keep itself vibrant. The point is that it should have some sort of discomfort mechanisms in place to combat the disease of complacency—a disease that inevitably begins to infect all successful organizations. Internal competition is one such mechanism, but not the only one. The others are:

• a history of ranking employees relative to their peers,
• HP also installed a powerful mechanism called “pay as you go” (a policy against taking out any long-term debt). Sophisticated financial models have shown this policy to be totally irrational—that a company like HP should take out debt in order to maximize its value. But such models fail to account for the powerful internal effect of a no-debt policy: It enforces discipline. By refusing to take on long-term debt in order to fund growth, HP forced itself to learn how to fund its 20-plus percent average annual growth (not to mention its ongoing 10 percent of sales investment in R&D) entirely from within. Such a mechanism may not be considered rational, but it produced a whole company of incredibly disciplined general managers skilled at operating with a level of leanness and efficiency usually only found in small, cash-constrained companies.

This philosophy [pay-as-you-go] provides great discipline all the way down. If you want to innovate, you must bootstrap.

By analyzing annual financial statements dating back to the year 1915, we found that the visionary companies consistently invested more heavily in new property, plant, and equipment as a percentage of annual sales than the comparison companies (thirteen out of fifteen cases).

They also plowed a greater percentage of each year’s earnings back into the company, paying out less in cash dividends to shareholders

The visionary companies invested more heavily in R&D as a percentage of sales in every single case.

The visionary companies also invested much more aggressively in human capital via extensive recruiting, employee training, and professional development programs. Merck, 3M, P&G, Motorola, GE, Disney, Marriott, and IBM all made significant investments in their “universities” and “education centers” for intensive training and development programs.

Annual performance reviews for every employee—hourly and managerial.

Incentive bonuses reaching all the way down to coffee shop managers; bonuses based on service, quality, and cleanliness in addition to cost effectiveness.

Profit-sharing program available to employees at all levels of the company; participation in the program where individual employees invest up to 10 percent of their wages in a profit-sharing trust, thus creating a tangible link between the individual employee’s welfare and the progress of the company.

Investment in extensive interviewing and screening to hire quality employees.

Management and employee development programs.

The essence of a visionary company comes in the translation of its core ideology and its own unique drive for progress into the very fabric of the organization—into goals, strategies, tactics, policies, processes, cultural practices, management behaviors, building layouts, pay systems, accounting systems, job design—into everything that the company does. A visionary company creates a total environment that envelops employees, bombarding them with a set of signals so consistent and mutually reinforcing that it’s virtually impossible to misunderstand the company’s ideology and ambitions.

The company recruited prominent academic scientists to serve on the board of directors and created a dual career track that allowed scientists to pass up promotions into management without financial penalty.

For instance, Merck explicitly rejected budgets as a planning or control tool in R&D. It creates new product project teams and explicitly does not give them a budget. Instead, team leaders (“champions”) must persuade people from a variety of disciplines to join the team and to commit their resources to the project. This process creates a survival-of-the-fittest selection process where the best projects attract resources and the weakest perish.

When facing corporate-wide downturns, HP generally asked all employees to take every other Friday off and reduce their pay by 10 percent, rather than imposing a 10 percent layoff.

HP sought to hire only top 10 percent graduating seniors from respected engineering schools, rather than hiring more experienced but less talented engineers from industry.

“marketing people must play a secondary role in the question of product definition.”

HP encouraged its international divisions to develop R&D capabilities, rather than merely remaining sales and distribution centers.

HP shunned corporate debt (even though such a practice is “irrational”) because Hewlett and Packard believed debt would erode entrepreneurial discipline.

It’s the remarkable comprehensiveness and consistency over time that counts.

What might be “good” at HP might be “bad” at Merck or 3M or Marriott or P&G. THE real question to ask is not “Is this practice good?” but “Is this practice appropriate for us—does it fit with our ideology and ambitions?”

After you’ve drafted a preliminary list of the core values, ask about each one: “If the circumstances changed and penalized us for holding this core value, would we still keep it?” If you can’t honestly answer yes, then it’s not core and should be dropped.

Core ideology = core values + core purpose

A company should not change its core values in response to market changes; rather, it should change markets—if necessary—in order to remain true to its core values.

Those involved in articulating the core values should wrestle with such questions as: What core values do you personally bring to your work—core values you hold to be so fundamental that you would keep them regardless of whether they are rewarded? What would you say if asked to describe to your children and/or other loved ones the core values you stand for in your work, values that you hope they would stand for when they become working adults? If you awoke tomorrow morning with enough money to retire for the rest of your life, would you continue to live according to these core values? Can you envision these core values being equally valid for you 100 years from now as they are today? Would you want to hold these core values, even if at some point one or more of them became a competitive disadvantage? If you were to start a new organization tomorrow in a different line of work, what core values would you build into the new organization regardless of its industry?

Core purpose, the second component of core ideology, is the organization’s fundamental reason for being.

Core purpose guides and inspires an organization.

Purpose (which should last at least 100 years) should not be confused with specific goals or business strategies (which should change many times in 100 years).

Whereas you might achieve a goal or complete a strategy, you cannot fulfill a purpose; it is like a guiding star on the horizon—forever pursued, but never reached. Yet while purpose itself does not change, it does inspire change. The very fact that purpose can never be fully realized means that an organization can never stop stimulating change and progress in order to live more fully to its purpose.

• 3M: To solve unsolved problems innovatively
• Fannie Mae: To strengthen the social fabric by continually democratizing home ownership
• Hewlett-Packard: To make technical contributions for the advancement and welfare of humanity
• Pacific Theatres: To provide a place for people to flourish and to enhance the community
• Merck: To preserve and improve human life
• Nike: To experience the emotion of competition, winning, and crushing competitors
• Sony: To experience the joy of advancing and applying technology for the benefit of the public
• Wal-Mart: To give ordinary folk the chance to buy the same things as rich people
• Walt Disney: To make people happy
• McKinsey’s purpose is not to do management consulting, but to help corporations and governments be more successful, which might in 100 years involve methods other than consulting.

One way to get at the purpose that lies beyond just maximizing shareholder wealth is to play the “Random Corporate Serial Killer” game. It works like this: Suppose you could sell the company to an individual who would pay a price that everyone inside and outside the company agrees is more than fair, taking into account a very generous set of assumptions about the expected future cash flows of the company. Suppose the buyer plans to “kill” the company after the purchase—its products or services will be discontinued, its operations will be shut down, its brand-names will be shelved forever, and so on. Would you accept the offer? Why or why not? Why is it important that the company continue to exist, now and in the future?

The best and most dedicated people are ultimately volunteers, for they have the opportunity to do something else with their lives.

A very important point: You do not “create” or “set” core ideology. You discover core ideology. It is not derived by looking to the external environment; you get at it by looking inside. It has to be authentic. You can’t fake an ideology. Nor can you just “intellectualize” it. Do not ask, “What core values should we hold?” Ask instead: “What core values do we actually hold?” Core values and purpose must be passionately-held on a gut level or they are not core.

The role of core ideology is to guide and inspire, not to differentiate; it’s entirely possible that two companies can have the same core values or purpose. Many companies could have the purpose “to make technical contributions,” but few live it as passionately as HP. Many companies could have the purpose “to preserve and improve human life,” but few hold it as deeply as Merck.

Again, it’s not the content of the ideology that makes a company visionary, it’s the authenticity, discipline, and consistency with which the ideology is lived—the degree of alignment—that differentiates visionary companies from the rest of the pack. It’s not what you believe that sets you apart so much as that you believe in something, that you believe in it deeply, that you preserve it over time, and that you bring it to life with consistent alignment.

Core ideology need only be meaningful and inspirational to people inside the organization; it need not be exciting to all outsiders. It’s the people inside the organization that need to be compelled by the core values and purpose to generate long-term commitment to the organization’s success.

The effect your core ideology has on people outside the organization is less important and should not be the determining factor in identifying the core ideology. Core ideology therefore plays an essential role in determining who’s inside and who’s outside the organization.

A clear and well-articulated ideology attracts people to the company whose personal values are compatible with the company’s core values and, conversely, repels those whose personal values are contradictory.

Executives often ask, “How do we get people to share our core ideology?” You don’t. You can’t! Instead, the task is to find people who already have a predisposition to share your core values and purpose, attract and retain these people, and let those who aren’t disposed to share your core values go elsewhere.

Finally, don’t confuse “core ideology” with the concept of “core competence.” Here’s the difference: Core competence is a strategic concept that captures your organization’s capabilities—what you are particularly good at—whereas core ideology captures what you stand for and why you exist.

If it’s not core, it’s up for change. Or, the strong version of this rule: If it’s not core, change it!

Envisioned future—the second primary component of the vision framework—consists of two parts: a ten- to thirty-year “Big Hairy Audacious Goal” and vivid descriptions of what it will be like when the organization achieves the BHAG. We selected the phrase “envisioned future,” recognizing that it contains a paradox. On the one hand, it conveys a sense of concreteness—something vivid and real; you can see it, touch it, feel it. On the other hand, it portrays a time yet unrealized—a dream, hope, or aspiration.

BHAG:

• applies to the entire organization and requires ten to thirty years of effort to complete,
• inventing such a goal forces an executive team to be visionary, rather than just strategic or tactical. A BHAG should not be a sure bet—perhaps only 50 to 70 percent probability of success—but the organization must believe “we can do it anyway.” It should require extraordinary effort, and perhaps a little luck.

In creating such a vision-level BHAG we suggest thinking about the following four categories: target, common enemy, role model, or internal transformation.

Vivid description, the second component of envisioned future, is a vibrant, engaging, and specific description of what it will be like to achieve the BHAG.

This “picture-painting” is essential for making the ten- to thirty-year BHAG tangible in people’s minds.

Passion, emotion, and conviction are essential parts of the vivid description.

Some managers are uncomfortable with expressing emotion about their dreams, but it’s the passion and emotion that will attract and motivate others.

If you state teamwork as a core value, but you compensate primarily on individual performance, then you’ve got to change the compensation structure.

If you state innovation as a core value, yet have market share as the dominant strategic objective, then you’ve got to change your strategy.

If you want to encourage people to try a lot of stuff and keep what works, then you have to remove penalties for honest mistakes. Keep in mind that this is a never-ending process. When misalignments crop up you’ve got to kill them as quickly as possible.

If you do this right, you will spend only a small percentage of your time articulating the vision. The vast majority of your time will be spent bringing the organization into alignment. Keep in mind that there is a big difference between being an organization with a vision statement and becoming a truly visionary organization.

If you want to start a company, build it quickly, make a lot of money, cash out, and retire, then building a visionary company is not for you. If you don’t have a drive for progress—an internal urge to never stop improving and going forward for its own sake—then building a visionary company is not for you. If you don’t have any interest in a values-driven company with a sense of purpose beyond just making as much money as possible, then building a visionary company is not for you. If you don’t care about building the company so that it will be strong not only during your tenure but also decades after you’re gone, then building a visionary company is not for you.

Even going into the office will become less relevant as technology enables people to work from remote sites. The corporate bonding glue will increasingly become ideological. People still have a fundamental human need to belong to something they can feel proud of. They have a fundamental need for guiding values and sense of purpose that gives their life and work meaning. They have a fundamental need for connection with other people, sharing with them the common bond of beliefs and aspirations. More than any time in the past, employees will demand operating autonomy while also demanding that the organizations they’re connected to stand for something.

Might it be that a higher percentage of companies that share the visionary characteristics go bankrupt than those companies that do not share the visionary characteristics? To use an analogy, suppose we studied the climbing techniques of two groups of mountain climbers: “visionary climbers” who successfully climb Mount Everest and “comparison climbers” who do not successfully climb Mount Everest. It’s entirely possible that the “visionary climbers” die at a more frequent rate than the “comparison climbers,” but since we’re only studying climbers that lived, we wouldn’t catch that fact in the study. So, although we could give good guidance as to what it takes to be a visionary climber, we might (unwittingly) also be giving guidance that increases the odds of death.

We have two responses to this concern. First, some climbers do indeed die while trying to climb Mount Everest, but only those who fully try to climb Mount Everest (whatever the risks) do in fact ever reach the summit. We cannot deny the possibility that some companies with visionary characteristics have died out there on the corporate landscape. But so what? We’re not writing about mere survival in this book. We don’t find mere survival to be a very interesting topic. We’re interested in how companies might attain entrance to that special category of premier institutions, and we readily admit that it might require a risky path to get there. But—and this is our second response—we believe (although we cannot prove) that the visionary characteristics might actually increase both the odds of greatness and the odds of survival. We return again to our historical perspective. We’re not writing about one-shot companies here. We’re writing about enduring companies that have faced massive change and prospered for decades. If being visionary is risky, then why has this risk not caught up with these companies and killed them at some point during their very long lives?

We also acknowledge that relying on a survey assumes that visionary companies are, by definition, widely known and admired. This, in turn, introduces a bias toward large, publicly held companies.

Perhaps there are a number of privately held companies that no one has studied that were even more successful for longer periods of time, yet relied on a different set of dynamics.