Preserve the Core / Stimulate Progress
Maintain a fixed core ideology of values and purpose while driving relentless change in everything else - the central dynamic of enduring great companies
The central concept of Built to Last is the underlying dynamic of preserve the core and stimulate progress. A visionary company carefully preserves and protects its core ideology (core values and purpose beyond just making money), yet all the specific manifestations of that ideology must be open for change and evolution.
Core ideology and the drive for progress exist together like yin and yang. Core ideology provides continuity, stability, and a fixed stake in the ground. The drive for progress urges continual change, constant movement toward goals, improvement, and new possibilities. Each element enables, complements, and reinforces the other. By being clear about what is core and therefore fixed, a company can more easily seek variation and movement in all that is not core. And without continual change and forward movement, the company will fall behind and cease to be strong or perhaps even exist.
The crucial distinction is between core ideology (which should never change) and operating practices, cultural norms, strategies, tactics, organizational structures, and reward systems (which should be changing constantly in response to a changing world). Companies get into trouble by confusing core ideology with specific noncore practices, clinging too long to things that should be changed. IBM's three basic beliefs say nothing about white shirts, blue suits, or mainframe computers. Those are not core values but operating practices that should have changed much sooner.
The single most important point of the entire book is the critical importance of creating tangible mechanisms aligned to preserve the core and stimulate progress. This is the essence of clock building.
- Core ideology (values and purpose) should never change. Everything else, including strategy, culture, structure, and operating practices, must be open for change.
- Companies get into trouble by confusing core ideology with specific noncore practices, clinging too long to items that should be changed for the company to adapt.
- The drive for progress is a deep, inner, compulsive, almost primal drive to explore, create, discover, achieve, change, and improve. It does not wait for the external world.
- A visionary company does not simply balance between preserving core and stimulating progress. It does both to an extreme simultaneously.
- The single most important point is the critical importance of creating tangible mechanisms aligned to preserve the core and stimulate progress. This is the essence of clock building.
- Identify Your Core IdeologyArticulate your core values (the organization's essential and enduring tenets, a small set of guiding principles) and core purpose (the organization's fundamental reason for existence beyond just making money). These should be things that would not change even if the external environment made them a competitive disadvantage. You do not create or set core values; you discover them by looking inside.Pro tipAsk yourself: If we woke up tomorrow with enough money to retire comfortably for the rest of our lives, would we continue to hold these core values? If the values would not persist regardless of circumstances, they are not truly core.WarningDo not confuse core values with aspirational values (what you wish you had) or with descriptions of current practices (what you happen to do today). Core values are the genuine, deeply held principles that have guided the organization from its earliest days.
- Separate Core from NoncoreFor every practice, strategy, policy, norm, and structure in your organization, ask: Is this core ideology or is this a noncore manifestation of our ideology? Explicitly list what falls into each category. HP's respect for individual employees is core; serving fruit and doughnuts at ten A.M. is noncore. Wal-Mart's exceeding customer expectations is core; customer greeters at the front door is noncore. Boeing's being on the leading edge of aviation is core; commitment to building jumbo jets is noncore.Pro tipApply the test: Could we change this practice and still be true to our core values and purpose? If yes, it is noncore and should be open for change. If the answer is no, it is part of the core ideology.WarningThis is where most organizations fail. They either hold on to noncore practices as if they were sacred, or they abandon core values in the name of change. Both errors are fatal to long-term greatness.
- Create Mechanisms to Preserve the CoreBuild concrete organizational practices that keep core values alive and deeply embedded in daily operations. These include rigorous hiring and screening for cultural fit, indoctrination and training programs, promotion criteria aligned with values, stories and mythology about core-ideology heroes, physical symbols and environmental design, and internal communications that constantly reinforce why you exist.Pro tipDisney created Disney University. HP instituted promote-from-within. Nordstrom built its entire incentive system around customer service heroism. Marriott installed rigorous employee screening and customer feedback loops. These are not vague aspirations but tangible mechanisms with teeth.WarningMerely writing a values statement is not preserving the core. The core must be woven into the fabric of the organization through concrete, enforceable mechanisms that people encounter daily.
- Create Mechanisms to Stimulate ProgressBuild organizational practices that drive relentless change, improvement, and forward movement in everything that is not core ideology. These include BHAGs, internal competition, decentralized experimentation, continuous improvement processes, investment in innovation, and a culture that embraces risk and tolerates failure on noncore matters.Pro tip3M's fifteen percent rule, its internal venture capital fund, and its requirement that twenty-five percent of each division's annual sales come from products introduced in the previous five years are all tangible mechanisms that stimulate progress. Procter and Gamble pitted product lines in fierce competition with each other to stimulate forward movement.WarningStimulating progress without preserving the core produces chaos. Preserving the core without stimulating progress produces stagnation. Both must operate simultaneously.
- Align EverythingEnsure that all organizational elements send a consistent set of signals that reinforce core ideology and stimulate progress. Check strategies, tactics, organizational systems, structure, incentive systems, building layout, and job design for alignment. The gears and mechanisms should work in concert, not grind against each other.Pro tipMisalignment creates confusion and cynicism. When the stated values say one thing but the incentive system rewards the opposite, people follow the incentives and lose faith in the stated values. Every element of the organization must tell the same story.WarningAlignment is not a one-time exercise. It must be consciously practiced and revisited regularly, even by the most visionary of companies.
HP's 1995 annual report compared the company to a gyroscope, combining the stability of an inner wheel with the free movement of a pivoting frame. HP's enduring character guides the company as it both leads and adapts to the evolution of technology and markets. HP executives spoke frequently about the crucial distinction between core and noncore, helping people understand that change in operating practices and business strategies does not mean losing the spirit of the HP Way.
3M sold off entire chunks of its company that offered little opportunity for innovation, a dramatic move that surprised the business press. The company did this in order to refocus on its enduring purpose of solving unsolved problems innovatively. Rather than clinging to profitable but uninspiring businesses, 3M pruned what was inconsistent with its core.
Collins and Porras developed this framework as the organizing principle that ties together all of their other findings. After studying eighteen visionary companies for six years at Stanford, they concluded that if they had to distill the entire research project into one key concept, it would be this dynamic interplay between core and progress. They found that visionary companies distinguish their timeless core values and enduring purpose (which should never change) from their operating practices and business strategies (which should be changing constantly), and they create tangible mechanisms with teeth to preserve the one and stimulate the other.