“We don’t think in terms of power,” says Jobs. “We think about creating new innovative products that will surprise and delight our customers. Happy and loyal customers are what give Apple its ‘power.’ At the heart of it, though, we simply try to make great products that we want for ourselves, and hope that customers will love them as much as we do. And I think after all these years we’ve gotten pretty decent at it.”

This is another example of the importance of beliefs in an organization. It is yet another illustration (with the results that follow) of what Jim Collins and Jerry Porras found in Built to Last:

…truly great organizations think of themselves in a fundamentally different way than mediocre enterprises. They have a guiding philosophy or a spirit about them, a reason for being that goes far beyond the mundane or the mercenary.

And while we’re at it, here’s another example from A.G. Lafley of Procter & Gamble, in Harvard Business Review:

I learned many things from Peter [Drucker] over the years, but far and away the most important were the simplest: “The purpose of a company is to create a customer” and “A business…is defined by the want the customer satisfies when he or she buys a product or a service. To satisfy the customer is the mission and purpose of every business.”

At P&G we keep Peter’s words in mind with every decision. We declared that the consumer — not the CEO — is boss, and made it our purpose to touch more consumes and improve more of each consumer’s life. When we look at the business from the perspective of the consumer, we can see the need to win at two moments of truth: First, when she buys a P&G brand or product in a store, and second, when she or another family member uses that product in the home….By putting customers first, we’ve nearly doubled the number served, from 2 billion to 3.8 billion; doubled sales; and tripled P&G profits in the first nine years of the twenty-first century.

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When I first met Peter Drucker, 15 years ago, he shared with me ideas that have deeply influenced my work ever since. Chief among them was that beyond just making a profit or creating wealth for stakeholders, the essence of a company is making a difference, being really useful, and creating something the world truly needs.

That higher purpose, Drucker pointed out, has to be something grand — like General Electric’s ambition to be, as he put it, “the leader in making science work for humanity” — and not superficial, like so many of the mission statements that companies have nowadays.

Why is such a creed so important? Because without a compelling raison d’etre, a company can’t hope to tap the full potential of its employees. “The number of people who are really motivated by money is very small,” Drucker told me. “Most people need to feel that they are here for a purpose, and unless an organization can connect to this need to leave something behind that makes this a better world, or at least a different one, it won’t be successful over time.”

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Just as you don’t learn anything in science without experimenting, you don’t learn anything in business without trying, failing, and trying again. The trick, and it’s a tough one, is a common cultural understanding of what kind of failure is okay and what kind leads to disaster. But don’t kid yourself. No amount of analysis, especially market research, will lead to true innovation.

Or, as Jim Collins puts it, “try a lot of stuff and keep what works.” That is, branch and prune:

The idea is simple: If you add enough branches to a tree (variation) and intelligently prune the deadwood (selection), then you’ll likely evolve into a collection of healthy branches well positioned to prosper in an ever-changing environment. (Built to Last: Successful Habits of Visionary Companies, 146).

And this doesn’t just apply to your business or organization. It applies to the rest of your life as well. Try stuff. Make things happen. Build on what works.

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Contrary to business school doctrine, “maximizing shareholder wealth” or “profit maximization” has not been the dominant driving force or primary objective through the history of the visionary companies.

Visionary companies pursue a cluster of objectives, of which making money is only one — and not necessarily the primary one.

Yes, they seek profits, but they’re equally guided by a core ideology — core values and sense of purpose beyond just making money.

Yet, paradoxically, the visionary companies make more money than the more purely profit-driven companies.

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Every excellent company we studied is clear on what it stands for, and takes the process of value shaping seriously. In fact, we wonder whether it is possible to be an excellent company without clarity on values and without having the right sorts of values.

Thomas Watson, Jr., of IBM, wrote an entire book on this long ago in which he summarizes what Peters (and, later, Jim Collins in Built to Last: Successful Habits of Visionary Companies) found to be true of all excellent companies: in order to be an excellent company (and an enduring one), the company must be founded on a coherent set of foundational beliefs. There must be a “core.”

The core is unchanging. Everything other than the core is open to constant change. As Collins points out, the single guiding principle for managing an organization is therefore this: preserve the core and stimulate progress.

Here is how Watson put it in his classic work A Business and Its Beliefs:

One may speculate at length as to the cause of the decline and fall of a corporation. Technology, changing tastes, changing fashions, all play a part. … No one can dispute their importance. But I question whether they in themselves are decisive.

I believe the real difference between success and failure in a corporation can very often be traced to the question of how well the organization brings out the great energies and talents of its people. What does it do to help these people find common cause with each other? And how can it sustain this common cause and sense of direction through the many changes which take place from one generation to another?

Consider any great organization — one that has lasted over the years — and I think you will find that it owes its resiliency not to its form of organization or administrative skills, but to the power of whqt we call beliefs and the appeal these beliefs have for its people.

This then is my thesis: I firmly believe that any organization, in order to survive and achieve success, must have a sound set of beliefs on which it premises all its policies and actions. Next, I believe that the most important single factor in corporate success is faithful adherence to those beliefs. And, finally, I believe if an organization is to meet the challenge of a changing world, it must be prepared to change everything about itself except those beliefs as it moves through corporate life.

In other words, the basic philosophy, spirit, and drive of an organization have far more to do with its relative achievements than do technological or economic resources, organizational structure, innovation, and timing. All of these things weigh heavily in success. But they are, I think, transcended by how strongly the people in the organization believe in its basic precepts and how faithfully they carry them out. (Cited in In Search of Excellence, 280.)

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(HT: JT)

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