Entrepreneurship

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CC530
Entrepreneurship Biz. strategy
Built to Last
Professor. Taeyong Yang
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• Visionary Companies
• Premier institution in its industry
• Widely admired by knowledgeable businesspeople
• Made an indelible imprint on the world in which
  we live
• Had multiple generations of chief executives
• Been through multiple product (or service) life
  cycles
• Founded before 1950

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• Visionary Company
• 3M
• American Express
• Boeing
• Citicorp
• Ford
• GE
• HP
• IBM
• Johnson Johnson
• Marriot
• Merck
• Motorola
• Nordstrom
• Philip Morris
• Proctor Gamble
• Sony
• Wal-Mart
• Walt Disney

• Comparison Co.
• Norton
• Wells Fargo
• McDonnell Douglas
• Chase Manhattan
• GM
• Westinghouse
• Texas Instruments
• Burroughs
• Bristol-Myers Squibb
• Howard Johnson
• Pfizer
• Zenith
• Melville
• RJR Nabisco
• Colgate
• Kenwood
• Ames
• Columbia

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Twelve Shattered Myths

• It takes a great idea to start a great company.
• Visionary companies require great and charismatic
  visionary leaders.
• The most successful companies exist first and
  foremost to maximize profits.
• Visionary companies share a common subset of
  correct core values.
• The only constant is change.
• Blue-chip companies play it safe.
• Visionary companies are great places to work, for
  everyone.

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Twelve Shattered Myths

• Highly successful companies make their best moves
  by brilliant and complex strategic planning.
• Companies should hire outside CEOs to stimulate
  fundamental change.
• The most successful companies focus primarily on
  beating the competition.
• You cant have your cake and eat it too.
• Companies become visionary primarily through
  vision statements.

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Founding Dates

• 1812 Citicorp
• 1837 Procter Gamble
• 1847 Philip Morris
• 1850 American Express
• 1886 Johnson Johnson
• 1891 Merck
• 1892 General Electric
• 1901 Nordstrom
• Median 1902 3M
• 1903 Ford
• 1911 IBM
• 1915 Boeing
• 1923 Walt Disney
• 1927 Marriott
• 1928 Motorola
• 1938 Hewlett-Packard
• 1945 Sony
• 1945 Wal-Mart

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Clock Building, Not Time Telling

• Above all, there was the ability to build and
  build and buildnever stopping, never looking
  back, never finishingthe institution.... In the
  last analysis, Walt Disneys greatest creation
  was Walt Disney the company.
• RICHARD SCHICKEL, THE DISNEY VERSION
• I have concentrated all along on building the
  finest retailing company that we possibly could.
  Period. Creating a huge personal fortune was
  never particularly a goal of mine.
• SAM WALTON, FOUNDER, WAL-MART

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Clock Building, Not Time Telling

• The Myth of the Great Idea
• HP vs. TI (reflection of seismograph surveys)
• Sony vs. Kenwood (audio technology)
• 3M vs. Norton (innovative products)
• Wal-Mart vs. Ames Stores (rural discount
  retailing)
• The Company itself is the ultimate CREATION
• HP HP Way (not audio oscilloscope or pocket
  calculator)
• GE (Company) vs. Westinghouse (AC power system)

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Clock Building, Not Time Telling

• The Myth of the Charismatic Leader. A
  high-profile, charismatic style is absolutely not
  required to successfully shape a visionary
  company.
• William McKnight of 3M
• Masaru Ibuka of Sony
• Bill Hewlett Proctor, Gamble Allen (Boeing)
  Merck
• If yourre a high-profile charismatic leader,
  fine. But if youre not, then thats fine, too,
  for youre in good company right along with those
  that built companies like 3M, PG, Sony, Boeing,
  HP, and Merck. Not a bad crowd.

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Citicorp vs. Chase

• James Stillman
• Citicorps president from 1891 to 1909
• Concentrated on organizational development in
  pursuit of his goal to build a great national
  bank
• I have been preparing for the past two years to
  assume an advisory position at the Bank and to
  decline re-election as its official head. I know
  this is wise and it not only relieves me of the
  responsibility of dells, but gives my associates
  an opportunity to make names for themselves and
  lays the foundation for limitless possibilities,
  greater even for the future than what has been
  accomplished in the past. (Letter to Mom)
• Albert Wiggin
• Chases president from 1911 to 1929
• No delegation at all (decisive, humorless,
  ambitious)
• The Chase Bank is Wiggin and Wiggin is the Bank

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Wal-Mart vs. Ames

• Sam Walton
• Flamboyant and charismatic leader
• Never ending quest to build and develop the
  capabilities of the Wal-Mart organization
• change, experimentation, constant improvement
• A Store Within a Store (let managers run)
• Profit sharing and employee stock ownership
• Groomed a capable successor after his death
• Gilmans
• Dictated all changes from above
• Detailed manual
• No successor who shared their philosophy
• Disastrous postfounder CEOs

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Motorola vs. Zenith

• Paul Galvin (Motorola)
• No engineering background
• Hired excellent engineers
• Set challenges and gave people immense
  responsibility so as to stimulate the
  organization and its people to grow and learn
• Eugene F. McDonald, Jr. (Zenith)
• No succession plan (unexpected death in 1958)
• Charismatic, opinionated mastermind of Zenith
• Zenith is still growing and reaping profits from
  the drive and imagination of its late founder.
  (2.5 years after his death, Fortune magazines
  comment)

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Walt Disney vs. Columbia Pictures

• Walt Disney
• Brought immense personal imagination and talent
  to building Disney.
• Spent the night before he died in a hospital bed
  thinking about how to best develop Disney World
  in Florida.
• Instituted employee You Create Happiness
  training program
• Established Disney University for employees
• Harry Cohn
• Cultivated his image as a tyrant
• 1300 funeral attendees had not come to bid
  farewell, but to make sure he was actually dead
  (One observer).
• Upon his death, the company fell into listless
  disarray.

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Core Ideology

• Core Ideology Core Values Purposes
• Core Values
• The organizations essential and enduring tenets
  a small set of general guiding principles not
  to be confused with specific cultural or
  operating practices not to be compromised for
  financial gain or short-term expediency.
• Purpose
• The organizations fundamental reasons for
  existence beyond just making money a perpetual
  guiding star on the horizon not to be confused
  with specific goals or business strategies.

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Core Ideology in 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

• 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

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Core Ideology in the Visionary Companies

• Hewlett-Packard
• Technical contribution to fields in which we
  participate (We exist as a corporation to make a
  contribution)
• 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

• 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 aspect of the
  company
• Profit, but profit from work that benefits
  humanity

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Core Ideology in the Visionary Companies

• 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
  doesin ideas, in quality, in customer
  satisfaction
• Treat each employee with dignity, as an
  individual
• Honesty, integrity, and ethics in all aspects
  of business

• 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 pioneernot following others, but doing
  the impossible
• Respecting and encouraging each individuals
  ability and creativity

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Core Ideology in the Visionary Companies

• Wal-Mart
• We exist to provide value to our customersto
  make their lives bettor via lower price 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
• Fanatical control and preservation of Disneys
  magic image
• To bring happiness to millions and to
  celebrate, nurture, and promulgate wholesome
  American values.

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Core Ideology Drive Progress
Preserve the Core Stimulate Progress