Defining an Exceptional Business

Every large, Fortune 500 company once was a small
business. So what did they do differently that allowed
them to grow and profit so well? Maybe more
appropriately, the question should be, what does it
really take to create an exceptional business that
prospers?

by Steve Strauss

In the book "Built to Last," Jim Collins and Jerry Porras
decided to answer that question. They found that more
than a commitment to profits, more than great products
or exceptional employees, it turns out that the best
businesses are created with, and driven by, a vision.

Of course profits are important. But a great business
is more than just a money machine. The great businesses
make a difference — for their owners and shareholders,
for their staff and employees, and for their customers
and patrons.

This comes from implementing a grand plan for the
business, which can be organized into four different
categories:

1. Exceptional businesses begin with, and are sustained
by, a vision. Boeing Aircraft’s first airplane was a
failure. Microsoft lost money during its few years in
business. Milton Hershey failed in several businesses
before inventing the Hershey Bar.

When the business is built on a solid foundation, you
can endure early failures. It is not the exceptional
idea that sustains the business, but vice versa: The
exceptional business sustains the idea. Slow starts are
fine if you put a strong foundation in place. It is the
visionary business that creates visionary products, not
the other way around.

2. Exceptional businesses live their values. The best
businesses have core values and live by them. These
values guide everyone from secretaries to owners in
daily activities.

For example, in 1945, in the remnants of a bombed-out
building in Tokyo, Masaru Ibuka decided to start a new
company he would call Sony. One of the first things
Ibuka did was to create a code for his nascent company,
including:

* "A place of work where engineers can feel the joy of
technological innovation."

* "To pursue dynamic activities…for the reconstruction
of Japan."

* "We shall welcome technical difficulties."

* "We shall eliminate any unfair profit seeking."

That last point is critical. Everyone loves profits,
but evidence indicates that the best businesses mix
profits into the values bag, treating them equally with
other important business attributes.

The point to take away then is that great companies
value values. They are not just enterprises created to
make a buck. These businesses have a core ideology of
which profit is but one ideal.

3. Exceptional businesses think big. The best
businesses create viable, precise, large goals and
then work to achieve them. When the tiny toy company
Mattel decided to invent a doll that you could dress
and accessorize, that was a BIG goal; in fact, it
changed the entire direction of the company. But their
invention — Barbie — changed an entire industry.

4. Exceptional businesses experiment. Before inventing
Tupperware, Earl Tupper created a variety of
forgettable products: Knitting needles, egg peelers,
compact mirrors and flour sifters to name just a few.
He just kept plugging along until he finally hit on a
product that worked in the marketplace. This is true
for many successful businesses. You can’t do without
trial and error.

The upshot is that to create a great business, you have
to have a vision and then work to implement that
vision. Maybe the legendary David Packard of HP put it
best when he once said:

"I want to discuss why a company exists in the first
place. Many people assume wrongly that a company exists
simply to make money . . . As we investigate this, we
inevitably come to the conclusion that a group of
people get together and exist as an institution that we
call a company so that they are able to accomplish
something collectively that they could not accomplish
separately — they make contributions to society."

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