Each Sunday, The Simple Dollar reviews a personal productivity or personal development book.
About a year ago, I began to really look at The Simple Dollar as the beginnings of a small business – likely one that would only ever have one employee (me), but a business nonetheless. I proceeded to dive into a big handful of recommended business books, but most of them made no impact at all on me – they either didn’t apply to me or were filled with platitudes so generic that they didn’t matter.
Then a reader of The Simple Dollar sent me his copy of Built to Last with a little inscription inside: “This book will change the way you think about The Simple Dollar and any goals you have with it. Good luck.”
I was really intrigued by this, and even more intrigued when I opened the book to the introduction and read the following:
We’ve come to understand since publication that, ultimately, this is not a business book, but a book about building enduring, great human institutions of any type. People in a wide range of noncorporate situations report that they’ve found the concepts valuable – from for-cause organizations like the American Cancer Society to school districts, colleges, universities, churches, teams, governments, and even families and individuals.
What’s so compelling here? Built to Last, in a nutshell, tries to extract the reason for success behind some of the greatest corporate success stories in American history. What do companies like 3M, Boeing, Sony, and Hewlett-Packard have in common, and what made them rise above the pack and keep enduring?
The idea that this subject could extract principles that apply to any organization, from Exxon-Mobil down to an individual person running a small, self-employed business, and that this book is so highly respected in the business community says that there might be something compelling for all of us between the covers. For instance, I read it for ideas on how to make The Simple Dollar a long-term thing. Let’s dig in together and see what there is to learn.
A Deeper Look At Built to Last
The Best of the Best
The book opens by seeking to identify visionary companies – best of breed companies within their respective areas that have endured over time. Some companies peak and then fall off (like, uh, Enron) and others stay around for a long time but never stay on top of any area (like Colgate, for instance). The book winds up identifying a list of eighteen companies – Citicorp, Procter and Gamble, Philip Morris, American Express, Johnson and Johnson, Merck, General Electric, Nordstrom, 3M Ford, IBM, Boeing, Walt Disney, Marriott, Motorola, Hewlett-Packard, Sony, and Wal-Mart – that have persisted at or near the top of their respective areas for a long time, surviving leadership changes and drastic changes in the marketplace. While I can think of a few companies that could be added to this list (Microsoft immediately comes to mind), I do have to say that all of the companies here did reinvent themselves and manage to stay relevant for a very long time (even if a few are having troubles right at the moment).
Clock Building, Not Time Telling
When you look at that list of companies, what do they make? You’ll probably come up with a long list of answers, but they all made one thing in common: an organization that could survive any personnel change, product change, or market change. Great ideas and great leaders might have helped in some cases, but neither one of those is absolutely necessary. What mattered was defining a process that worked regardless of the product, the idea, or the personnel.
Let’s translate this to blogging, something I’m interested in. You could compare The Simple Dollar to a completely different blog – say, amalah (an excellent parenting blog). We write about completely different topics and have almost no audience overlap, yet we’ve both found success in our respective areas – personal finance blogs and parenting blogs. What do we have in common that has value? We both write in a conversational tone. We both write very regularly, so that our readers can expect posts on a consistent basis. We both write on material that matters to our audience – we don’t write sidebar posts about our cat getting sick that are completely disconnected from the topic at hand. We’re both working on ways to make our message more permanent, through downloadables and book deals. It’s reasonable to think that these are elements of success that build a continually successful blog – and I’d bet that a lot of people would agree with that.
More Than Profits
Another interesting piece of the pie is that these companies all have goals in mind that don’t mention profits. Their mission doesn’t directly involve making money – money just comes in as a result of successfully completing the mission. They use a compelling example with Merck, who gave away millions of doses of Mectizan in the third world, a drug that cures “river blindness.” It brought them no profits at all – in fact, it was by itself a giant net loss. They did the same exact thing in Japan after World War II – they sold streptomycin there at cost because the Japanese couldn’t afford expensive medicine. What happened after that in Japan? Merck became the dominant American pharmaceutical company there because they didn’t just talk the talk about healing the world, they walked it, too.
I’ve taken this lesson to heart recently. What is the mission of The Simple Dollar? It’s to talk frankly about financial issues and help people to get back on track financially, regardless of where they came from. If I make money in the process of doing that, that’s great – it’s wonderful to receive some compensation for my time. But the mission of the site is to help people financially. That’s why I made some difficult choices recently, particularly in getting rid of most of the ads. I am violating my own mission by having payday loan ads or other ads that encourage poor financial decision making on the site, and while I’ve come to the viewpoint that such a stand is a bit extreme, it’s where my heart lies. In the long run, I firmly believe that following my mission above all else will pay off – I’ll reach more people than ever before. And that, my friends, is how I define success.
Preserve the Core/Stimulate Progress
A successful company usually has three or four core principles – outside of those principles, the company should be willing to change anything. Companies get into trouble when they start holding onto ideas and “rules” that are less important and refusing to change when the market changes. Built to Last uses IBM as an example here, showing their three core principles (give full consideration to the individual employee, spend a lot of time making customers happy, and go the last mile to do things right), the success IBM had when they followed them (up until the mid-1980s or so), and the failures after they started adhering to secondary principles, like corporate culture and such.
What are The Simple Dollar’s core principles? I sat down and thought about this for a while, and I came up with three. Simplify and humanize personal finance and growth is pretty much the core principle of the site, and these relate to my other two principles: never recommend a principle that I wouldn’t follow myself and be open and honest, even in failure. Everything I write or do related to The Simple Dollar comes from these three principles.
Big Hairy Audacious Goals
Here, Built to Last uses Boeing as the primary example, talking about how time and time again the company bet its entire future on what they saw as the next evolutionary step in the airplane. The challenge, though, is to make sure that these big goals are in line with your core principles – it wouldn’t make sense, for example, for Ford in 1909 to revolutionize the railroad industry.
What’s a big goal for The Simple Dollar? A book deal? 100,000 subscribers? My biggest goal, actually, would be to be able to have enough passive income to focus on spreading this message full time – the other items are just pieces of the puzzle to get there.
Another element of long-term success is that people in the organization believe in the principles in the organization. This is how often companies with great success bring in new management that doesn’t believe in the company’s principles – and then proceed to derail everything. Think of Bob Nardelli at Home Depot, for example – he came into a company with some core principles, basically chucked them out the door, and installed a version of what worked at GE. A lot of the Home Depot folks didn’t like that much at all, and it created a long period of internal strife there.
In other words, everybody involved needs to believe in the same principles. When that fails to happen, then the organization begins to waste a lot of effort working against itself instead of working towards those goals. From my perspective, this is even greater encouragement to throw out the things that don’t work.
Try a Lot of Stuff and Keep What Works
Continuing this same thread, Built to Last also encourages trying a lot of different things, seeing which ones work, and sticking with the ones that do work. Thus, most successful organizations (like 3M) encourage people to spend a percentage of their time simply trying out new things instead of doing the same old same old. A lot of innovative companies do the same – Google comes immediately to mind.
I do the same thing with The Simple Dollar. I constantly try out new topic areas to see how they fit, try new writing styles, and take contrarian views. Some of these things work – some of them don’t. But each time, I learn something new about myself and about people reading this site, and that makes the site better and more useful for everyone.
The book also encourages companies to look for management from within, something I strongly agree with. Almost every large company that brings in a new management team from the outside – particularly from another industry – winds up with some significant problems. For example, Jack Welch came from within GE and Lee Iacocca (at Chrysler) came from Ford and both saw great success, but Bob Nardelli came from GE to Home Depot and it was a big mistake.
I truly hope to find a mentor for The Simple Dollar someday. I would like to transition the entire site to the right person when the time comes (though that’s a long way off). But, if I don’t find the right person, I’ll just stop the whole thing – I want someone who is intimately involved with the site to take it over and I want that person to believe in the same things.
Good Enough Never Is
Built to Last believes the biggest enemy of all is complacency. Complacency is the point where you let competitors overtake you because you believe you’ve earned your spot. That never happens – someone’s always waiting to take your place in a competitive market.
How do I keep trying to work harder? I read the negative comments and rarely look at the positive ones. This even includes the ones that are obviously people trying to grind an axe that is unrelated to me. The negative comments usually point me to where I need to improve – the positive ones, while reaffirming, usually carry the message that I don’t need to improve. And that’s dangerous.
The End of the Beginning
The last principle is that success isn’t the end of the road. It’s merely the start of it, because now you have to live up to that success. Where can you go from here? It’s an eternal question that some companies can answer and some cannot. If you have all of the tools in place, you can usually find the answer to that question. It’s a powerful question to always think about, even if you believe that you really are the best – how can you get better?
Building a Vision
This chapter largely concludes the book by stating that all of these pieces do in fact intersect and come together, showing you a true vision for your organization. This isn’t buzzwords or “mission statements,” but the actual realization of the path you have left to travel and the tools you have to get there.
Buy or Don’t Buy?
Every person who does any sort of side business or is involved in running anything should read this book. It made me think about The Simple Dollar and my other side businesses in a very deep and careful way and it made me realize that the core values I’ve adopted really are the most important thing of all.
I really just scratched the surface of this book in this writeup, trying to point out a few of the principles that relate to what I do. This book is far deeper than that and not only relates to things done within an organization, but with how you choose to live your life as well. It brought me to some serious realizations about my principles and what I’m doing – you’ve already seen some of this in the last few months, and I think you’ll start to see more of them.
Read this book – it’s really worth it. It’s a bit of an older book, so you should be able to get it from your library or from PaperBackSwap quite easily.