In my previous post I reviewed the concept of Evergreen Certified companies and the 7 tenets the concept is premised upon. Let me state upfront—I am a biased fan of the ideology associated with Evergreen Companies (EG), and I’m delighted Aptify is a certified Evergreen Company. However, as I wrote about them, I couldn’t help but wonder if Evergreen companies really do have the legs for long-term staying power. That reminded me of the work done by Collins & Porras in their book Built to Last, and I wanted to see if there are consistencies, or inconsistencies, between the Evergreen model and those companies identified as “built to last.”
The immediate irony I noticed is of the 18 companies listed in Built to Last (BTL), several have stumbled a bit, albeit stumbling is not the same as outright failure.
|Evergreen’s Defining Characteristics
|Built to Last
|Possessing a passion,
vision, & mission.
|Perhaps the concept introduced by the authors of BTL companies having a Big Hairy Audacious Goal (BHAG) is close to the idea of purpose. A BHAG may seem outlandish like putting a man on the moon or a computer in every home, but it inspires the organization to achieve unimaginable goals.
|Never give up attitude.
|Good enough is never good enough.
|Take care of your people
and they take care of the business.
|“Visionary” companies are not for everyone. The company demands employees live the core values and continually improve. Not so “touchy-feely”—more of a get on board or get out mentality.
|The ability to make
decisions based on the
|The 18 companies in BTL are not private: 3M, American Express, Boeing, Citicorp (now Citigroup), Disney, Ford, General Electric, Hewlett Packard, IBM, Johnson & Johnson, Marriott, Merck, Motorola, Nordstrom, Philip Morris (now Altria), Procter & Gamble, Sony &
Wal-Mart.But even these companies focus on the long-term vs. short-term.
|Profit represents a number that is an accurate gauge of customer value.
|Visionary companies may have many areas of focus and “making money is only one—and not necessarily the primary one.” As important is a company’s core ideology.
|A focused disciplined long-term steady growth strategy.
|BTL’s “Build Clocks” and aren’t focused on “Telling Time.” A clock builder is a company that can succeed beyond multiple product cycles and endure changes at the leadership level.
|Focus on continuous improvement—taking calculated risks to creatively innovate within the constraints of the business.
|BTL companies try a lot of new things. They keep what is promising and kill-off quickly what is not. They accept failures as a natural outcome of experimentation and growth and never stop experimenting.
What I found surprised me a bit. I thought the BTL companies would represent something akin to “evil empires,” but the 18 companies in the analysis were eerily similar to the Evergreen companies in several ways.
Both EG & BTL companies express a purpose for their existence albeit in different ways and with a slightly different twist.
Take for example General Electric:
General Electric’s mission and vision:
“General Electric Company’s (GE) mission is to usher in the next industrial era and to build, move, power, and cure the world.” GE’s vision is to focus on businesses that connect to its core competencies and are market leaders.
“GE’s strategy is to reshape its portfolio from a broad conglomerate to a more focused industrial leader. The portfolio goal for 2014-2016 is to achieve 75% of operating EPS from industrial businesses and to grow EPS each year, returning $50 billion to investors to repurchasing shares in order to increase margins and returns. The company also plans to exit those businesses that are deemed to be non-strategic or that are under performing or does not have a dominant market share.”
“We believe ICE CREAM = JOY. Pure, wholehearted and untarnished so that you can totally and utterly melt into the moment. We elevate the ice cream industry by thinking from the heart-side out, owning our impact on the world, pushing boundaries and inventing solutions to take quality, purity, positive impact and joy to the next level. Hell no status quo. Ice cream can and should be better. Get Smitten.”
Clearly, they’re very different types of messages. GE is reaching out to shareholders and investors, while Smitten is reaching out to the consumer in a soft/cutesy/friendly and non-threatening manner. Smitten’s Founder and Chief Brrrrrrrista (yea, really) is all about providing a superior product sans the unnecessary additives found in large commercial ice cream products.
Would I invest in GE? Probably. GE’s five year trend is upward? Would I prefer Smitten Ice Cream over a more commercialized product? Definitely.
: With the EG, it means never giving up or as I infer, having enough skin in the game to make giving up a financial disaster—for the individual, their family and their employees. For instance, investing one’s life savings or mortgaging a home provides a ton of leverage to persevere. Recall, privately owned means little to no outside capital.
The BTL companies’ ability to Persevere is evidenced by their longevity, but historic longevity is not a prelude to continued success, a la Motorola. It is interesting the BTL companies are “clock-builders” vs. “time- tellers.” In other words, their focus is on the long-term which in of itself suggest a preoccupation with being there for the long-haul.
I wonder about this. The BTL companies are pretty upfront: embrace the core ideology and culture, work your butt off, or find another place to collect your check.
What if you worked for an EG company and the CEO had all of her life savings invested in the business and you didn’t align from an ideological, cultural, or work perspective? My guess is the CEO would release you to the universe. Maybe it would be done more gingerly, but I suspect the end result is not much different between an EG company and a BTL company.
Although there is clearly a BIG difference between a company with outside investors (BTL) and those who are boot-strapped, I wonder how much the ability to make decisions is really all that different. Granted a sole proprietor is able to make decisions on their own, but is that always wise? I suspect most of the EG’s have individuals/mentors they run ideas by before making any significant decisions.
Conversely, I wonder how Jack Welch-like CEOs interact with their boards. My guess is the better run organizations (like the BTL companies) work collaboratively. According to Porras & Collins, those organizations led by a charismatic or dictatorial leader are sustainable for only so long which suggests a collaboration of many vs. just one.
If you visit the Tugboat Institute site (www.tugboatinstitute.com) it is a collaboration of like-minded entrepreneurs supporting one another through their videos, blog posts, and networking—no one can be an island and succeed.
A wise nun successfully turning around the fate of a dying hospital told me: “If there is no cash there is no mission.” That pretty much sums it up, BUT to focus on profit at the expense of core ideologies, culture, service to the community, providing a great service or product, and constantly innovating, is a mistake.
No one is going to buy Smitten Ice Cream if their experience is consistently poor, no matter how much they like the ice cream or how much it costs. American Express will lose their card holders if the service is consistently poor. Sure, there are companies that survive based on volume, but will they thrive and endure? Unlikely. Ironic, eh?
Both our EG companies and BTL companies are focused on the long-term. This is particularly challenging for the BTL companies who must be ever cognizant of investors and the mentality of many investors who insist on consistent quarterly growth.
How is this any different, though, for the EG entrepreneur who is looking for long-term growth? If the EG company isn’t seeking sustained growth quarter over quarter then there is no long-term. In essence, both types of organizations are seeking very similar outcomes but with very different looking “constituents.”
One of the key points elucidated by Porras & Collins is the ability of the BTL companies to take an “AND” approach to the future vs. an “OR” approach, believing the BTL companies are able to focus on near term growth AND long-term growth. This is in contrast to those companies without sustaining power which focus on one strategy or the other. This dichotomy of thought is shared with the EG companies—there must be an AND in their thinking.
Both EG and BTL companies realize the importance of continuous improvement—perhaps the biggest difference is the deeper resources available to the BTL. EG companies truly must be pragmatic in their decision-making capabilities, whereas the BTL companies are able to make a greater number of experiments. BTL’s “can try a lot of stuff and keep what works.” It is important for both to fail quickly before too many resources are exhausted, but continuous innovation is imperative, for as a friend of mine, Andy Bailey, has been known to say “Change or die.”
Does this mean Aptify, as an
EG-certified company is in the same league as a 3M, American Express, General Electric, or Wal-Mart? Nope, but it does mean by following Evergreen’s 7 principles we share much of what makes those companies great. In our industry, there has been significant consolidation, disruption, an infusion of private equity and venture capitalist money. Much of this change appears focused on capitulating to the whims of investors—get in—get out—get rich. How can this be good for our industry? I don’t believe it represents a healthy trend, which is why Aptify remains independent, focused, and committed to membership organizations and to the 7 Evergreen principles.
To find out where we see ourselves going, download our Painted Picture to learn more.