What is common between the founders of Sony, Hewlett-Packard, Marriott, Motorola, Honda, Disney, Wal-Mart, Nordstrom, Merck and Procter & Gamble – other than the fact that they all founded great companies?
None of them started their companies with a great idea. They did not have a killer-concept or killer-product when they started their respective
companies. But that did not stop them from launching their companies.
It Doesn’t Have To Be A Killer-Idea
A common fallacy is that it is a great product that makes a great company or launches one. If that had been the case then we would not have many great companies of today – none of the founders of the abovementioned companies waited for a great idea to come to their mind before they took first step in building their company.
When Soichiro Honda founded his Honda Technical Research Institute – which later became Honda Motor Company, in 1946 he did not have any idea what product he would produce eventually.
Honda was definitely a visionary who was involved with automobile industry, albeit peripherally. He founded his company – though called an Institute, it was just himself and few associates and had no visible means of support – based upon a commitment of technological advancement of the post-war Japanese society.
He believed that “technology” would be the vehicle that would restore Japan. So he began to tinker with war surplus engines. And, after tinkering for two years did he build his first motorcycle.
Masaru Ibuka, a young inventor, invested $1,600 of personal savings and started a company in 1945 war-torn Japan. He had a company but no idea or product, in fact he was brainstorming with his other seven employees to figure out what product to make and what type of business could the new company enter. It considered products like sweetened bean-paste, miniature golf equipment before producing its first product – a rice cooker – that failed. That company went on to become Sony Corp.
Then there was Sam Walton, who didn’t open his first discount store until 1962 but later wrote in his autobiography, Made In America,
“… folks have gotten the impression that Wal-Mart was something that I dreamed up out of the blue … that it was just this great idea that turned into an overnight success. But [our first Wal-Mart store] was totally an outgrowth of everything we’d been doing since 1945…”
Cases like these are the ones that the management guru James Collins, author of Built To Last, uses to support his statement:
“If you are waiting for the lightening bolt of a great idea – or even a good idea – before truly committing yourself to building your company, you may be waiting for a long time.”
You Gotta Just Start
“Do What You Can, With What You Have, Where You Are.” – Theodore Roosevelt
V. S. Naipaul, the Nobel Prize winner author who pursued only one career – writing, once wrote that he wanted to become a writer but realized that he did not have talent, nevertheless, he decided he would start on his career and the talent would follow. That was in 50’s. By sixties he had made a name for himself as a great writer. How true was he!
The same is true for building a company. Many entrepreneurs have not let the (minor!!!) details like the lack of a killer product and money stop them from launching their businesses. Their subsequent perseverance and creativity proved that details like products and money could be made minor.
Sam Walton said about the success of Wal-Mart as “another case of me being unable to leave well enough alone, another experiment”. Bill Hewlett and Dave Packard also said, “we didn’t have any plans when we started – we were just opportunistic. We did everything that would bring in a nickel.”
It is true that many entrepreneurs started great companies with killer concepts – Fred Smith of FedEx, Ray Kroc of McDonald, Jobs and Wozniak of Apple – but more entrepreneurs started without killer ideas or their initial ideas did not last for long.
They succeeded because they took the first step and then persisted. Like Naipaul they decided to start their company and then worked to build products or services that were accepted by the market. The old proverb – the thousand-mile journey begins with a small step – works for business too.
It’s The Company, Stupid
Persistence is high in the list of critical success factors for everything – in life and in business. But persistence in what you may ask? Should you keep on persisting even if your products and services do not sell? How long should you persist?
James Collins answers it well – you persist with the company. If an idea or product does not work and seems to have no prospect then you kill the product but never give up on the company. If one idea fails then you try another.
Great companies become great because they put emphasis of company and adapt. 3M is anything but a mining company but that is what it was started for – mining minerals. Japanese conglomerate Sumitomo – a group of 43 companies in the fields of chemical, steel, finance, electronics – was started as a shop selling books and medicines by Masatomo Sumitomo back in 17th century. Swedish company, Stora Enso, a $12 billion integrated forest products company, was started as a copper mine in the year 1288, more than 700 years ago.
Contrast this with the stats that over 150 companies that were part of Fortune 500 companies in 1970 did not exist as single entity by 1983.
Arie de Geus, who was the group planning coordinator of Royal Dutch/Shell Group, writes in his book, The Living Company,
“… companies die because their managers focus exclusively on producing goods and services and forget that the organization is a community of human beings that is in business – any business – to stay alive.”
We have countless of examples of successful people who continuously evolved, pursuing many careers – some successful other failures. Lincoln was a militia captain, a storekeeper, a lawyer and a congressman. Harry S Truman had many careers – an army captain, a bank clerk, a railroad timekeeper, a bookkeeper, a farmer, a road overseer, a haberdasher, a salesman, a judge, and a congressman. These gentlemen were not hugely success in their various careers but they persisted finally becoming successful presidents and highly admired men.
A reason for their success is that they continuously evolved and adapted themselves to the changing circumstances. What is true for people is also true for successful companies. They too have to continuously evolve and adapt to the changing market conditions.
Eye On The Ball – Commitment To The Business
Just like it is not the choice of a career that makes a person successful, it is not a product that makes a company successful.
Don’t get me wrong. Behind every successful company lie good products and services. However, they are not the permanent reason for the success of a company.
In fact, they do not even figure in the top ten rules of success by Sam Walton.
He rates Commitment to the business as the top reason for the success of Wal-Mart – a belief in your business that lets you adapt to the changing business dynamics.
Sam’s other rules include:
- Treating associates [employees] as partners and sharing profit with them
- Motivating partners
- Communicating everything with partners
- Appreciating everything that partners do
- Celebrating successes
- Listening to everyone in the company
- Exceeding customers’ expectations
- Controlling expenses better than competition
- Swimming upstream and ignoring the conventional wisdom.
Why is this so? Why didn’t Sam Walton include Great Products as one of the top ten reasons for business success? Because there are certain factors for success that change as the time passes by but there are very many other factors that do not. Products & Services are success factor that change and could be created through creativity and persistence.
The top rules of success as mentioned by Sam Walton are not dependent upon the social, economic, technological and political environment. This is something that is common amongst all founders of great company. They developed core beliefs that were independent of current business environment and practices. They committed themselves to getting the details of implanting these core-beliefs right. Successful marketable products and services were just the outcome of consistently executing those details right.
