R.C. Willey is famous for not being open on Sundays.  When Warren Buffett, the world’s greatest investor, purchased R.C. Willey, this home furnishing chain only had stores in Utah.  After the purchase Bill Child, the CEO who remained with the company, wanted R.C. Willey to open a store in Idaho.  Up to that point, the only R.C. Willey stores were located in Utah.  Warren Buffett refused, believing that the closed-on-Sundays policy would make expansion outside Utah unsuccessful.  Bill Child believed in the Idaho expansion so fervently that he offered to front all the cost for the land and the new store personally.  If the store was not successful, it could be shut down and R.C. Willey would not lose any money.  If the store was successful, R.C. Willey could purchase the store from Bill Child at a price not much higher than what Bill had invested.  Warren accepted, the store in Idaho was built, and it was so successful during the “soft” launch that by the grand opening, Warren Buffet jokingly took credit for the Idaho expansion idea.  R.C. Willey has since expanded to Nevada with similar success.

One of the recurring themes of this book that stood out most were the defining moments in the history of R.C. Willey, and Bill Child’s leadership and decision-making during those moments.  R.C. Willey had many situations where the future of the company hinged on a single decision.  Many people look back at success that could have been and say “what-if.”  Bill Child lead the company through many defining moments that could have made or broken R.C. Willey, and traded “what-ifs” for a world-class success.  Here are a few examples:

(1) R.C. Willey was started by a man named R.C. Willey, who was Bill Child’s father-in-law.  Bill Child had gone to college intending to be a teacher.  Shortly after Bill finished college, he received an teaching job offer, and intended to pursue that career.  Before Bill he accepted, R.C. Willey believed he had ulcers and asked Bill Child to watch the store for a few weeks while R.C. took a vacation with his wife.  R.C. returned early from his trip, discovered he had cancer, and passed away soon thereafter.  Bill discovered quickly that the accountant had not been paying the bills and that the store had a huge amount of debt.  Bill and R.C.’s widow met with the company’s banker who recommended the company fold because of the huge debt load and the passing of R.C..  Bill Child refused to quit, gave notice he would not accept the teaching job, and spent the rest of his career building the R.C. Willey business.  If R.C. had made the easy decision to teach and walk away from the huge debt, his business career would have been over before it started.

(2) When Bill Child took over R.C. Willey, the store sold only home appliances.  Bill decided to expand the product line to include home furnishings, and feels if they had not made this decision they would have stayed a single store, and would have been forced to close when “big box” stores entered the market.

(3) In the early days of Bill Child’s success with a single store, a large percentage of his sales came from military personnel who worked on a nearby base.  Bill anticipated government cutbacks on military spending.  Instead of cutting costs and contracting to weather the storm, R.C. decided to expand to a second store in the Salt Lake City metro area.  When the military cutbacks happened, R.C. Willey had diversified and was even stronger than before.

(4) Bill Child invested in television advertising when other home furnishing companies did not see the value in this type of advertising.  Because of this decision, he was able to cut a “remnant” advertising deal to purchase a large amount of unsold advertising space before “remnant” advertising deals became popular.  As a result R.C. Willey received a phenomenal amount of advertising that the company never could have purchased, and experienced growth they could not have otherwise achieved.

(5) When the credit markets made it hard for R.C. Willey customers to receiving financing from traditional sources, Bill Child decided the company would offer financing directly to the customers.  The company’s financing arm became one of the key elements of R.C. Willey success.

When faced with adversity, many business leaders retract.  Bill Child knew how and when to keep moving forward instead of stepping back when times got tough.  In the end, R.C. Willey was rewarded with a $170 million acquisition by Warren Buffett, the brightest investor of our day.

In closing, here are few Bill Child quotes I enjoyed:

“Be motivated by excellence, not money.  You need to be better than all of your competitors.  If you are, the profits will come.”

” Offer customers true value on quality products.  A low price on a cheap piece of furniture is not value.”

One of the most surprising results of this research was the finding that virtually all of the companies which experienced this “Good to Great” transformation had a different kind of leader at the helm during the key transformation years. In Good to Great, they refer to this type of transformational leader as a “Level 5 leader”.

LEVEL 1 LEADERS are highly capable individuals who make productive contributions through talent, knowledge, skills and work habits.

LEVEL 2 LEADERS are contributing team members who add their individual abilities to the group objectives and work well with others as part of a group.

LEVEL 3 LEADERS are competent managers who effectively organize people and resources to achieve pre-determined objectives.

LEVEL 4 LEADERS are effective leaders who catalyze commitment to and vigorous pursuit of a clear and compelling vision, stimulating higher performance standards.

Level 4 leaders sound like the type of leaders that elevate the performance of everyone around them and can effectively get priorities done. What more can we ask for than this? The research from Good to Great indicated that ALL of the leaders of the Good to Great companies had something more than their Level 4 counterparts at the less-successful companies. The attributes of this elite group of leaders is described as “Level 5 leadership”.

LEVEL 5 LEADERS build enduring greatness in their companies through a paradoxical blend of personal humility and professional will. Level 5 leaders demonstrate a duality of being “modest and willful, humble and fearless.”

Level 5 leaders channel their ego needs away from themselves and into the larger goal of building a great company. It’s not that Level 5 leaders have no ego or self-interest. Indeed, they are incredibly ambitious–but their ambition is first and foremost for the institution, not themselves.

Level 5 leaders often were described in interviews as: “quite, humble, modest, reserved, shy, gracious, mild-mannered, self-effacing, understated, did not believe his own clippings, etc. They seek to give the praise to others when things go right, and give the blame to them when things go wrong.

Level 5 leaders look out the window to apportion credit to factors outside themselves when things go well (and if they cannot find a specific person or event to give credit to, they credit good luck). At the same time, they look in the mirror to apportion responsibility, never blaming bad luck when things go poorly.

Conversely, Level 4 leaders often have enormous egos that contribute to the demise or continued mediocrity of their companies.

For example, the CEO of Bethlehem Steel (a less-successful company), blamed all of their company problems on steel imports from foreign companies. Conversely the CEO of Nucor (a Good to Great competitor who thrived during the same era), saw the challenges faced by steel imports as a blessing, because their overseas competitors would have to ship heavy steel across the ocean, giving Nucor a large advantage.

However, Level 5 leadership is not just about humility and modesty. It is also just as much about “ferocious resolve, an almost stoic determination to do whatever needs to be done to make the company great… Level 5 leaders are fanatically driven, infected with an incurable need to produce results.”

Level 5 leaders help their successors to have even greater success than they had, and are not threatened by the success of these successors, because their goal is the long-term success of the company. Level 4 leaders often set their successors up for failure.

A damaging trend was identified by Good to Great, in which boards of directors tend to select larger-than-life, dazzling CEOs instead of the more reserved Level 5 leaders, passing by the individuals with the greatest chance to help create an enduring great company. These larger-than-life leaders are actually negatively correlated with going from good to great. Nearly all Good to Great CEOs were hired from within their companies.

So, what can I do to become more like a Level 5 leader? According to Jim Collins, some Level 5 leaders develop this skill through life challenges they have faced. Others were blessed with mentors or parents who helped teach them these principles. In my goal to be more like a Level 5 leader, I need to be better about giving credit to others when things go well, yet accepting the blame myself when things don’t go well. I need to be modest, and never boastful. I also need to be willing to pay the price to help the companies achieve the best long-term results.

Find Good to Great: Why Some Companies Make the Leap… and Others Don’t at Amazon.com.

(Source: The source for much of the content of this post came from Good to Great, by Jim Collins.)

In examining the history of visionary companies we were struck by how often they made some of their best moves not by detailed strategic planning, but rather by experimentation, trial and error, opportunism, and–quite literally accident.

This week I read an interview in Founders at Work with Paul Buchheit of Google. Paul was the creator of Gmail and developed the first Adsense concept. He also suggested the now-famous Google axiom “Don’t be evil.” The part of the interview that stood out most to me was that before Paul began the Gmail project, he didn’t receive a detailed spec with features, as you would expect from a company such as Google and a project of the magnitude of Gmail. Instead, Paul was given the non-specific charter to work on some type of email or personalization project. They just said, “We think this is an interesting area.” Paul went on to create the Gmail email program that has helped to revolutionize email.

Google didn’t try to micromanage Paul Buchheit. They hired a very talented employee, pointed him in a general direction, and then allowed him to do something even more amazing than what they were expecting. Google has done this repeatedly. Each of the Google developers is allowed to spend 20% of their time on a project of their choosing. In this way Google tries many new projects, and then runs with the ones that work.

The authors of Built to Last call this concept “branching and pruning”:

The idea is simple: If you add enough branches to a tree (variation) and intelligently prune the deadwood (selection), then you’ll likely evolve into a collection of healthy branches well positioned to prosper in an ever-changing environment.

Note how essential the pruning step is in this process. If we just try a lot of things and don’t prune, we will have a lot of projects falling somewhere in the mediocre to good range. To have a tree filled with great branches, or a company filled with great projects, we have to discipline ourselves to continuously prune away the less healthy branches or business concepts as we continue to add new branches or ideas.

William McNight was the visionary CEO of 3M, one of history’s most innovative companies. 3M utilized this “branching and pruning” concept extensively to develop products such as Post-It notes and Scotch tape. 3M allowed their team members to sprout tiny “twigs” in response to problems or ideas. Most of these twigs did not develop into anything. However, each twig that showed promise would be allowed to grow into a branch or even a tree.

3M developed a system which created a culture of continuous innovation. The following elements were implemented by 3M to create this systematic innovation:

• 15% Rule – allowing people to spend 15% of their time on projects of their own choosing and initiative. 3M executive Geoffrey Nicholson said “a lot of the things [that led to the Post-it] were accidental.” However, if 3M employees had not been doodling with weird adhesives during their 15% time, 3M would not have invented the Post-it note.
• 25% Rule – 25% of annual sales need to come from products introduced in previous 5 years.
• Golden Step Award – for team members responsible for new 3M business ventures.
• Genesis Grants – internal venture capital to develop ideas.
• Technology Sharing Awards – for team members who developed technology and successfully shared it with other divisions.
• Own Business – 3Mers who championed a new product could get the opportunity to run it as her own project or division.
• New Product Forums – sharing the latest innovations across the company.
• Dual Ladder - allows technical and professional team members to move up without sacrificing their research or professional interests.
• Problem-Solving Missions – small teams sent to customer sites to solve specific problems.
• High Impact Programs – each division selects one to three priority products to get to market in a short time frame.
• Profit Sharing – to stimulate individual investment.

McNight’s philosophy was captured in the following phrases which became part of the 3M culture:

• 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!

McNight understood that not all experimentation would prove favorable:

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.

Johnson & Johnson is another example of effectively implementing this concept of trying a lot of things, keeping the things that work, and quickly getting rid of the things that don’t. R.W. Johnson Jr. said, “Failure is our most important product.” He understood that companies must accept failure as an essential part of this innovation process.

In conclusion, the process of “trying a lot of things, keeping what works and getting rid of what doesn’t work”, if understood and harnessed, can be a powerful process to stimulate progress. For this to work I need to experiment with a lot of ideas, nurture the good ideas, quickly get rid of the ideas that don’t work, and accept failure as an essential element of the innovation process.

Find Built to Last: Successful Habits of Visionary Companies at Amazon.com

(source for much of this article: Built to Last)

This week Crystal and I listened to Leadership & Self Deception again. This is an amazing book by the Arbinger Institute, which works to help people see themselves, others, problems and solutions in a different way.

Leadership & Self Deception teaches about self-betrayal, the process by which we each participate in self-deception and get “into the box”. This book makes the following major points about self-betrayal.

1. Self betrayal is an act contrary to what we feel we should do for someone else.
2. When we betray ourselves, we begin to see the world in a way that justifies our self-betrayal.
3. When we see a self-justifying world, our views of reality become distorted. We inflate the faults of others, and at the same time inflate our own virtues.
4. When we betray ourselves, we enter the box.
5. With time, certain boxes become characteristic of us, and we end up carrying them with us.
6. When we are in the box, we provoke others to be in the box.
7. When I and others around me are in the box, we mutually mistreat each other, which then gives us mutual justification to continue to mistreat each other. We collude to give the other person a reason to remain in the box.

How do we know if we are participating in self-betrayal and are “in the box?”

• Do we treat people as people or as just objects? Do we take the time to remember their names? Are we truly interested in others, or just interested in what they think about us? Do we manipulate others to get what we want in relationships? If we don’t truly care about others, they can almost always feel the hypocrisy in us. If we are not treating people as people it is a good indication we are “in the box.”
• Do we inflate the faults of others and inflate our own virtue? Do we inflate the value of things that justify our self betrayal? If so, this is a good indication we are “in the box.”
• Are we blaming others? If so, this is a good indication we are “in the box”.
• Are we feeling a desire for the welfare and good of others, and a desire to be out of the box in that relationship? Do we have feelings about kind things we can do for the other person? If we are not having these feelings, it may indicate that we are “in the box” towards this person.

What doesn’t work when we are in the box?

1. Trying to change others
2. Doing my best to cope with others
3. Leaving
4. Communication – this doesn’t work when we’re in the box, because we communicate the negative things we’re feeling.
5. Implementing new skills or techniques
6. Changing our behavior

How Do We Get Out & Stay Out of the Box?

According to Leadership & Self Deception, when we’re feeling we want to be out of the box towards someone, in that moment we’re already out. We’re feeling that way because we’re now seeing him or her as a person. In feeling that way toward that person, we’re already out of the box.

Once we are out of the box, the question then is how to stay out. At times we have specific impressions of things we should do for others, particularly toward friends, family or work associates. We know these people and many of their hopes, needs, cares, and fears. We’re also more likely to have wronged them. To stay out of the box, we must honor what our out-of-the-box sensibility tells us we should do for these people.

However, this doesn’t mean we need to do everything we feel would be ideal for everyone, because we have our own responsibilities that sometimes take a position of higher priority. We do the best we can under the circumstances, and we do that because when we’re out of the box we see other people as people.

In short, I need to follow the feelings of kind things I should do for others so I can stay out of the box in those relationships. I need to not blame others, but I need to do what is in my power to stay out of the box so that I can have a better perspective of reality and the solutions available to solve the problems I’m facing.

Find Leadership and Self Deception: Getting Out of the Box at Amazon.com.

(source: Leadership & Self Deception)

Far better to dare mighty things, to win glorious triumphs, even though checkered by failure, than to take rank with those poor spirits who neither enjoy much nor suffer much, because they live in the gray twilight that knows not victory, nor defeat. – Theodore Roosevelt

President Kennedy set a BHAG for NASA when he said “this Nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to earth.” This was bold and outrageous, yet achievable.

Like the moon mission, a BHAG is clear, compelling and serves as a unifying focal point for the company, individual or organization. BHAGs engage people and often create immense team spirit. In setting a BHAG, the company should ask: Does it stimulate forward progress and momentum? Does it get people’s juices flowing? Do team members find the BHAG stimulating, exciting and adventurous? Are team members willing to throw their hearts, souls and creative energies into the BHAG?

In 1990 Sam Walton set a BHAG that Wal-Mart would reach $125 billion in sales. At the time, the largest retailer in the world had reached $30 billion. The only corporation which had attained a sales volume close to $125 million was General Motors.

Boeing gambled their entire company on a BHAG to build their first commercial jet airplane, the 707. Walt Disney gambled everything on Snow White as a full-length, animated feature film. IBM made an all-or nothing investment in the IBM 360 computer. Tom Watson Jr. wrote about the IBM 360 decision:

There wasn’t going to be much room for error. It was the biggest, riskiest decision I ever made, and I agonized about it for weeks, but deep down I believed there was nothing IBM couldn’t do.

The following are concluding key points from Built to Last about BHAGs:

• BHAGs have clear finish lines so everyone can know when they are achieved. However, it is very important for companies to set a new BHAG once the first is achieved to avoid a stagnation or paralysis of “we’ve arrived.” A BHAG only helps an organization as long as it has not yet been achieved.

• A BHAG should be so clear and compelling that it requires little or no explanation.

• Team members should clearly believe that they can and will reach their BHAG. Built to Last says that “It simply never occurred to them that they couldn’t do what they set out to do.”

• A BHAG should be exciting on its own. If a BHAG doesn’t get the team members’ juices flowing its not a BHAG. A good BHAG will survive the departure of a founder or CEO, as was the case with Wal-Mart.

• A BHAG should be completely outside the company’s comfort zone. It should require heroic effort to achieve.

• BHAGs should be consistent with the company’s core ideology and company needs to be careful to preserve its core while pursuing its BHAG.

Find Built to Last: Successful Habits of Visionary Companies at Amazon.com.
(Source: Built to Last)

According Jim Collins and Jerry Porras in Build to Last, the “tyranny of the OR” leads businesses to feel that they can only choose one option or the other, but not both, such as:

• Change OR stability,
• Conservative OR bold,
• Low cost OR high quality,
• Creative autonomy OR consistency and control,
• Invest in future OR do well in short-term,
• Make progress through methodical planning OR by opportunistic groping,
• Shareholder returns OR good for world,
• Values driven OR profit driven.

Visionary companies embrace the “genius of the AND”, the ability to embrace both extremes at the same time. They figure out how to have one option AND the other simultaneously. Does this seem irrational and unrealistic? Possibly, but this is exactly what visionary companies are able to do.

I believe in implementing the “AND” principle in as many situations as reasonably possible. I believe that businesses can be profitable AND values-driven, which is the heart of “social enterprise”, and can result in even greater profitability, as with Adoption.com. I believe businesses can have low cost AND high quality, ad demonstrated by Wal-Mart or Google business applications.

I believe businesses can protect the core business AND relentlessly stimulate progress, as every visionary company seems to have found a means to accomplish. Sam Walton (Wal-Mart founder) said:

You can’t just keep doing what works one time, because everything around you is always changing. To succeed, you have to stay out in front of the change.

Find Built to Last: Successful Habits of Visionary Companies at Amazon.com.

(Source: Built to Last)

Being a charismatic leader or having a great idea is “time telling”. Companies built around “time tellers” might look like a genius with a thousand helpers. Building a company that can thrive long after the leader is gone is “clock building”. The greatest creation of a “time teller” might be his or her amazing and innovative ideas or products. The greatest creation of a “clock builder” is the company itself and what it stands for. The company itself is the ultimate creation.

For example, Sam Walton valued change, experimentation and constant improvement. However, instead of simply preaching these values, Walton implemented organizational mechanisms to stimulate change and improvement. For example, when an employee in a store had an idea, that idea was immediately distributed throughout appropriate parts of the world-wide company.

Great companies, like Wal-Mart, Sony, Marriott, Merck, Boeing, Nordstrom, 3M and HP started without great ideas (they weren’t “time telling”). Instead great people focused first on building good companies (“clock building”). In fact, several of these companies failed with their first ideas. According to Build to Last research, great ideas brought forth by charismatic leaders might be negatively correlated with building a visionary company.

This doesn’t mean that charismatic leaders cannot be successful; it just means charismatic leadership is not necessary to create a successful, visionary company. In fact, according to Built to Last research, companies without charismatic founders are in great company along with 3M, P&G, Sony, Boeing, HP and Merck.

This also doesn’t mean that great ideas are not important. Each of the great companies ultimately had many great ideas. However, the great companies started their organizations first, hired the right people, and then developed their great ideas and products. In the visionary companies, the companies were not vehicles for products, but products were vehicles for great companies. The constant development of innovative products from visionary companies results from being outstanding organizations, and not the other way around.

Built to Last teaches:

The single most important point to take away from this book is the critical importance of creating tangible mechanisms aligned to preserve the core and stimulate progress. This is the essence of clock building.

In the past, I have lead far too much with “time telling” as the visionary creator with many helpers. As I develop new organizations, I will focus more on “clock building”, and developing the best organizations I can, which can thrive long after I am involved.

Find Built to Last: Successful Habits of Visionary Companies at Amazon.com.

(Source: Built to Last)

The following list shows the core ideologies of the Visionary Companies:

3M

• Innovation; “Thou shalt not kill a new product idea”
• Absolute integrity
• Respect for individual initiative and personal growth
• Tolerance for honest mistakes
• Product quality and reliability
• “Our real business is solving problems”

American Express

• Heroic customer service
• Worldwide reliability of services
• Encouragement of individual initiative

Boeing

• Being on the leading edge of aeronautics; being pioneers
• Tackling huge challenges and risks
• Product safety and quality
• Integrity and ethical business
• To “eat, breathe, and sleep the world of aeronautics”

Citicorp

• Expansionism–of size, of services offered, of geographic presence
• Being out front-such as biggest, best, most innovative, most profitable
• Autonomy and entrepreneurship (via decentralization)
• Meritocracy
• Aggressiveness and self-confidence

Ford

• People as the source of our strength
• Products as the “end result of our efforts” (we are about cars)
• Basic honesty and integrity

General Electric

• Improving the quality of life through technology and innovation
• Interdependent balance between responsibility to customers, employees, society, and shareholders (no clear hierarchy)
• Individual responsibility and opportunity
• Honesty and integrity

Hewlett-Packard

• Technical contribution to the fields in which we participate
• Respect and opportunity for HP people, including the opportunity to share in the success of the enterprise
• Contribution and responsibility to the communities in which we operate
• Affordable quality for HP customers
• Profit and growth as a means to make all of the other values and objectives possible

IBM

• Give full consideration to the individual employee
• Spend a lot of time making customers happy
• Go the last mile to do things right; seek superiority in all we undertake

Johnson & Johnson

• The company exists “to alleviate pain and disease”
• “We have a hierarchy of responsibilities: customers first, employees second, society at large third, and shareholders fourth”
• Individual opportunity and reward based on merit
• Decentralization = Creativity = Productivity

Marriott

• Friendly service & excellent value; “make people away from home feel that they’re among friends and really wanted”
• People are number 1–treat them well, expect a lot, and the rest wil follow
• Work hard, yet keep it fun
• Continual self-improvement
• Overcoming adversity to build character

Merck

• “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.”
• Honesty and integrity
• Corporate social responsibility
• Science-based innovation, not imitation
• Unequivocal excellence in all aspects of the company
• Profit, but profit from work that benefits humanity

Motorola

• The company exists “to honorably serve the community by providing products and services of superior quality at a fair price”
• Continuous self-renewal
• Tapping the “latent creative power within us”
• Continual improvement in all that the company does–in ideas, in quality, in customer satisfaction
• Treat each employee with dignity, as an individual
• Honesty, integrity, and ethics in all aspects of business

Nordstrom

• Service to the customer above all else
• Hard work and productivity
• Continuous improvement, never being satisfied
• Excellence in reputation, being part of something special

Procter & Gamble

• Product excellence
• Continuous self-improvement
• Honesty and fairness
• Respect and concern for the individual

Sony

• To experience the sheer joy that comes from the advancement, application, and innovation of technology that benefits the general public
• To elevate the Japanese culture and national status
• Being a pioneer–not following others, but doing the impossible
• Respecting and encouraging each individual’s ability and creativity

Wal-Mart

• “We exist to provide value to our customers”–to make their lives better via lower prices and greater selection; all else is secondary
• Swim upstream, buck conventional wisdom
• Be in partnership with employees
• Work with passion, commitment, and enthusiasm
• Run lean
• Pursue ever-higher goals

Walt Disney

• No cynicism allowed
• Fanatical attention to consistency and detail
• Continuous progress via creativity, dreams and imagination
• Financial control and preservation of Disney’s “magic” image
• “To bring happiness to millions” and to celebrate, nurture, and promulgate “wholesome American values.”

Visionary companies can, and usually do evolve into exciting new business ideas, yet they remain guided by their core ideology.

It is interesting to note that none of the Visionary Companies had more than six core ideologies. More than that becomes too difficult for everyone to remember. The core ideology should be simple enough and thoroughly indoctrinated so that all team member can recite them and apply them. The core ideology should not revolve around fads or trends, or change with the market. They should be the guiding stars for the direction of the company.

Jack Welch, the legendary CEO of GE said:

Numbers and values. We don’t have the final answer here–at least I don’t. People who make the numbers and share our values go onward and upward. People who miss the numbers and share our values get a second chance. People with no values and no numbers–easy call. The problem is with those who make the numbers but don’t share the values… We try to persuade them; we wrestle with them; we agonize over these people.

Although it appears to be essential for businesses to develop core ideologies and alignment with team members to those core ideologies, businesses will not be successful with core ideologies alone. Well articulated intentions are important, however it is more important to translate those intentions into concrete goals, or “mechanisms with teeth”, which can transform a wannabe company into a sustainable great company.

Find Built to Last: Successful Habits of Visionary Companies at Amazon.com.

(Source: Built to Last)

Myth: The most successful companies exist to maximize profitability.
Reality: Paradoxically, visionary companies, which have core values and purpose beyond making money, make more money than purely profit-driven companies. This finding was interesting to me because of my passion for “social enterprise” where companies focus on making a profit and making a difference. It was nice to see research indicate that companies with this kind of focus actually were more profitable than companies who focused primarily on the bottom line.

Myth: It takes a great idea to start a great company.
Reality: Few visionary companies started with a great idea. Visionary companies often start slow, but win the long race.

Myth: Visionary companies require charismatic leaders.
Reality: Charismatic leaders are not required for visionary companies, and can be detrimental to their long-term success. The creators of the U.S. Constitution were more concerned with architecting an enduring country than being great individual leaders.

Myth: Change is the only constant.
Reality: Visionary companies rarely, if ever, change their core ideology. Visionary companies have a strong drive for progress, which they achieve by changing and adapting without compromising core ideals.

Myth: Blue chip companies play it safe.
Reality: Successful, visionary companies have judiciously made bold, audacious goals at crucial points in their histories.

Myth: Visionary companies are great places for everyone to work.
Reality: Someone will either fit well with a visionary company or they will be expulsed as a virus. It’s binary and only those who share the same core values will fit. Working for a visionary company is not easy, and requires talent and self motivation. Some people don’t fit in that environment and are more comfortable in companies where the workload and standards are not so rigorous.

Myth: Highly successful companies make brilliant and complex strategy plans.
Reality: Some of the greatest successes of visionary companies come by experimentation, trial and error, and opportunism— almost leveraging accident. Developing the perfect project is not the goal. Instead, many visionary companies rapidly develop and continuously improve and innovate.

Myth: Companies should hire outside CEOs to stimulate change and growth.
Reality: The most enduringly successful companies usually promote to their top positions from within, instead of hiring externally. This helps to preserve the culture and core values.

Myth: Successful companies focus on beating the competition.
Reality: Visionary companies tend to focus on being better and improving—beating themselves.

Myth: You can’t have your cake and eat it too.
Reality: Visionary companies are not prisoners to the “tyranny of the OR”. They do not unnecessarily restrict themselves to choosing between one option OR another. Instead, they focus on the “genius of the AND”. They choose stability AND progress, making money AND living by values and purpose. Visionary companies seek to pursue both options simultaneously.

Find Built to Last: Successful Habits of Visionary Companies at Amazon.com.

(Source: Built to Last)

According to Newsweek, the Disney brand is the 9^th most valuable brand in America, with a value exceeding $29 billion. The Walt Disney Company owns thousands of brands such as: ESPN, ABC, Mickey Mouse, Disney Princesses, The Muppets, Pixar, The Disney Channel, Touchstone, Miramax, Winnie the Pooh, Disney Cruise Line, Pirates of the Caribbean, Mary Poppins, Family.com, Movies.com, Club Penguin, The Lion King, Toy Story, Cars, Peter Pan, High School Musical, and Hanna Montana. Walt Disney has brought happiness to hundreds of millions of people.

With that said, Walt Disney was a failure. I say that with all due respect to the father of family entertainment, one of history’s greatest innovators, and one of my heroes. My point is that when we think of Walt Disney we think of his amazing successes. However, most of us have never even heard of his failures, which tremendously contributed to his phenomenal success.

Here are a few of his failures or challenges which I discovered recently from reading Inside the Dream: The Personal Story of Walt Disney.

• Walt was laid off from his first job as an animator after only one month.

• One of Walt’s first business ventures, Laugh-O-grams, was a financial disaster. Walt couldn’t pay his rent, and wound up living in his Laugh-O-grams office. He ate on credit at a little coffee shop. “I was all alone” Walt later said. “It was lonesome. When my credit ran out I was tempted to go into a restaurant and eat, and then tell them I couldn’t pay. But I didn’t have the nerve. I was so [bleep] hungry.” Laugh-O-grams filed bankruptcy.

• When Walt moved to California he wanted to be a “movie director”. He tried to get any job he could with the studios to get his foot in the door. Walt said, “I went from one studio to another and I went to the personnel departments and it was pretty cold.”

• Mickey Mouse was not Walt’s first cartoon character. Walt Disney’s company designed a character named Oswald the Lucky Rabbit and partnered with Charlie Mintz as the distributor. Charlie went behind Walt’s back and signed most of the top Disney artists to come work for him and took control of the Oswald character and brand. Charlie wasn’t the first to underestimate Walt Disney and he certainly wouldn’t be the last.

• Walt Disney later used another distributor named Pat Powers. Pat began withholding payments and stopped giving Walt any reports. It ended up that Powers, like Charlie Mintz, wanted to take over Walt’s operation, guaranteeing Walt a hearty salary to come work for him. As leverage, Powers hired away Walt’s best animator.

• Walt and his wife struggled with infertility.

• After the movie Snow White had been a success, the next three Disney films were not immediate financial successes. Even before the United States entered the Second World War, the studio’s revenues declined 40% with the loss of the overseas market.

• The Second World War essentially shut down the Disney Animation Studios, except for government projects. In addition to drafting many company employees, the war caught the studios in a financially vulnerable period of growth. In 1941, his employees formed a picket line to strike. This perceived betrayal from his staff was cataclysmic for Walt.

Walt obviously rebounded from each of these challenges or failures. After the Oswald character was seized by his distributor, he created Mickey Mouse, and protected his creative work much better in the future. After struggling with infertility, Walt and his wife were able to adopt. It was on outings with his girls that Walt’s ideas for Disneyland began to develop. After being unable to get any job in a movie studio, Walt eventually became a very successful movie director. After lean years from the war, Walt Disney Studios eventually rebounded began creating even better movies than they had previously.

How often in our lives do we compare our weaknesses, challenges and failures to the successes and strengths of others? How often do we not remember that the people in our idealistic comparisons have weaknesses, challenges and failures of their own? I am guilty of doing this regularly.

After the Laugh-O-grams bankruptcy Walt said, “And I came to Hollywood. I was just free and happy. I was 21 years old. But I’d failed. I think it’s important to have a good hard failure when you’re young.”

Roy Disney, Walt’s brother said the following of Walt’s early business skills, “If Walt had gone on like that he never would have gone anyplace.”

We all have to have weaknesses, challenges and failures or we cannot grow. A tree planted in the middle of a clearing grows fat, while the tree planted in a forest grows tall because it has to fight for the sun light. Challenges help us to also grow taller and closer to Heaven. If Walt had not had challenges, he might have retired as an animator in Kansas City. His weaknesses became important catalysts and growing experience to help him achieve the great things he did.

Ether 12:27 teaches, “And if men come unto me I will show unto them their weakness. I give unto men weakness that they may be humble; and my grace is sufficient for all men that humble themselves before me; for if they humble themselves before me, and have faith in me, then will I make weak things become strong unto them.”

Weaknesses, trials and challenges are part of our mortal existence on this earth, and they are some of the primary ways that God uses to shape us into what he needs us to be. Through these difficult circumstances we can humble ourselves, and receive the divine assistance we need to make those weak things strong.

2 Corinthians 12:9-10 teaches, “And he said unto me, My grace is sufficient for thee: for my strength is made perfect in weakness. Most gladly therefore will I rather glory in my infirmities, that the power of Christ may rest upon me. Therefore I take pleasure in infirmities, in reproaches, in necessities, in persecutions, in distresses for Christ’s sake: for when I am weak, then am I strong.”

In this scripture, the Apostle Paul teaches that the Lord’s strength is made perfect in weakness. I believe that this means our weaknesses help us realize how much we need God, and encourage us to turn to Him to receive strength from Him. Paul even rejoices in the weakness, because he knows that this weakness is what makes him strong. God gives us weaknesses so that we can triumph over them, and He wants us to be able to recognize His hand in that victory when it comes.

Walt Disney was a failure at first, but he used those challenges as opportunities to learn and grow. Those failures were some of the most important reasons why he was such a phenomenal success.

Find Inside the Dream: The Personal Story of Walt Disney at Amazon.com.

(Source: Inside the Dream)

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