What is the secret of companies that have achieved enduring success? Jerry Porras, together with Jim Collins, his friend and colleague at Stanford, spent six years, studying 18 “visionary companies,” and provided the answer in the bestselling business classic Built to Last.

Then how about individuals who have achieved enduring success? Porras and his two co-authors spent 10 years studying more than 200 people who had had a significant impact (and not necessarily in the business sphere) for at least 20 years, and revealed their secrets in another bestseller, Success Built to Last.

My conversation with Porras at his Stanford office in June 2008 went the other way round. We started at personal success and ended with organizational leadership.

So we were interested in finding people who made a difference in the world in various ways and at various levels. There are people who have made a difference at the world level and national level—people like, Nelson Mandela and Jimmy Carter, for example—but also people you’ve never heard of, who have made a difference at the community level or company level.

It was difficult to identify this group in any rigorous sort of way. So we relied on the varieties of lists of “The Most Important People,” leaders in industries, and so on. Then we just became opportunistic. One of the co-authors, Mark Thompson, was a very frequent attendant at the World Economic Forum. So he would interview people that went to that.

In deciding what kind of people to interview, our definition of success was based on the notion of having had an impact. It didn’t mean they were wealthy or necessarily famous. But they had had an impact for at least for 20 years.

There are individuals we interviewed who are not really well known or who haven’t made a lot of money. But in fact they really had an impact in the universe in which they operated. I like to use the example of Norma Hotaling, a drug addict and prostitute in San Francisco. She got herself out of prostitution, stopped being an addict and then built a community organization that helps women like her get out of similar situations. At the time we interviewed her, she wasn’t famous. Most people in San Francisco didn’t know who she was. But people in the community that she was helping certainly knew. She had been making a big difference for at least 20 years, another of the criteria we used.¹

The example you gave earlier about people being very wealthy, very famous, yet very unhappy, I think is a product of what they have achieved or not achieved in their passion. If they are achieving their passion, I don’t think they are unhappy. That’s what the data seem to tell us.

However, it wasn’t a total surprise, because the findings in Built to Last had already shown us that those companies that lived their values and pursued a fundamental purpose beyond maximizing profits wound up being more significant in the world. They wound up being more admired in the world. They wound up performing better economically too. That was a paradoxical finding. So the parallel at the individual level is that if you pursue your purpose, which one could say is parallel to passion, and you do it well, then you will be more successful in a lot of ways, even in the traditional ways, than if you pursue being successful in those traditional ways.

If we have people who have meaning and action, their outcome is a bit different. They are achieving things but they’ll probably have difficulty achieving those things more because they don’t have the mental set necessary to really continue to achieve. For example, learning from mistakes is a thought style. If they don’t have that capacity, they will make mistakes and keep making the same mistakes over and over again. So the level of accomplishment of whatever passion they are trying to fulfill will probably be lower. But they will be getting things done, whereas the first group will not.

Now, to have thought and action, and not meaning, is to be all over the place. You take this action, get something done and maybe feel good about it but it won’t have a lasting effect because it isn’t fulfilling any passion. Some other opportunities, some other challenges will come up and you will jump in. So what we will probably see is a life in which a person has done a lot of different things but never really made substantial, meaningful, enduring contributions because they are all over the map.

So the more people lack confidence in themselves, the more likely they are to be defensive. If they have more confidence in themselves and their abilities, the less likely they are to be defensive and the more able to analyze and assess the failure and move from there to learning from it. Now what can be done? There are in my mind two ways of thinking about that question. One is the individual in isolation and the second is the individual in an organization.

In contrast, an organization can be one that values failures, like 3M. 3M makes it possible for people to publicly describe and detail their failures. In our research for Built to Last, I talked to the inventor of Post-It notes and he described in detail what had happened. It was a really powerful example of an individual who had failed in accomplishing a particular project to create a kind of glue, but who could openly talk about it in a public setting.

When I teach this in executive programs, I ask the executives, “How many of you have had the opportunity to stand in front of 30 or 40 of your peers and spend an hour going into minute detail describing a failure you are responsible for?” Your culture may be different, but in the United States, in Western cultures, almost nobody raises their hand. In fact, they laugh about it.

So, organizations can create cultures, systems, procedures, and policies that reinforce open discussion and learning from failures. Even people who might be defensive about their failures are overpowered by an environment in which it’s OK to talk about it. So the environment can make a very substantial difference in the behavior of the individual. If one is thinking about enhancing the learning from failures, I think the very first place to focus on is the organization in which the person is supposed to be learning from failures.

Now if we think about individuals, independent of organizations—which is harder to do because most of the things people do are in the context of an organization—part of the process is a mind game that the person has to play with himself or herself about a failure. Part of the mind game is asking and exploring questions within yourself, such as, “What is the worst thing that could happen if I talk about this failure, if I don’t hide it, if I don’t react like it didn’t happen?” When you look at that, often the worst thing that could happen is not very scary. It’s not clarifying the worst thing that’s scary. It’s the ambiguity that’s scary. So one way that people could start to manage themselves out of that is through asking themselves those sorts of questions.

A second way to think about it is delivering the idea in educational experiences like the one you are offering, promoting failures as opportunities for learning. Most of us don’t grow up with that idea. Most of us grow up with the idea that failures are bad. So there is a self-analysis and self-managing process, but also an external educational process. The education can also involve real examples like the Post-It of how a failure was learned from and created great success.

Before we started the research, Jim and I were having lots of conversations about organizations. I was saying what really guides an organization is purpose. He was saying what really guides an organization is mission. So we were back and forth. Are they the same? Are they different? This slowly evolved into thinking about doing some research together and we thought it would be good to learn more about great organizations and how they got to be great.

We then had a very simple model: we said it takes great leaders to build great organizations. It’s not an outrageous statement, I think. Then we asked ourselves what makes a great leader. We were having this discussion in the late 1980s, when much management thinking in the US about leadership revolved around leaders having to be visionary.

When we looked for the definition and description of a visionary leader, one of the words that showed up in almost every account was “charismatic.” In order to be a great leader, you had to be charismatic, brilliant, insightful, committed, focused, risk-taking . . . It took all those things to be visionary.

We then said, if it takes a great leader to build a great organization, and a great leader is a visionary leader, and a visionary leader is charismatic, who are the great charismatic leaders of organizations that we think are great? The first organization that popped into our minds was 3M. But when we began to explore a little bit, we couldn’t find a leader at 3M, from the founders forward, who met that description of a visionary leader. We could find no one who was that charismatic. We found very successful, effective leaders but none of them could be typified as “charismatic.”

Because our little theory had broken down, we decided that maybe we had put the spotlight on the wrong entity and that, instead, we ought to focus on the great organizations, rather than on visionary leaders, and ask how they were built.

It turned out when we studied these organizations, they had great leaders but the great leaders were defined in a different way. It turned out that style was not the important characteristic. Whether you are charismatic or not isn’t important, because virtually none of the great leaders in visionary companies was charismatic.

What we found was that the great leaders in the visionary companies focused on building great organizations. The great leaders in the comparison companies, who by and large were generally charismatic, focused on leading their organizations, which means that they created companies that depended heavily on them to be successful. They depended on their brilliance as technologists, as strategists, as advertisers, as product developers, as financial geniuses, and so on.

That wheel is what we call a “visionary organization.” It needs to have a core ideology; it needs to have a passion for change; it needs to have processes that preserve the core ideology and that stimulate change. And we describe the six common mechanisms for preserving the core and stimulating change. So if you build an organization, you would be asking yourself, “Does my organization have these characteristics?”

So the environment has to be conceptualized. The concept that I have used is that there are four main arenas in the work environment. The first is what I call the organizing arrangements—the structure, the policies and procedures, the formal systems that exist. The second category is what I call social factors, and here we have the culture of the organization, the informal networks of communication and influence, the leadership style, and so on. The third dimension is what I call the technology, and here we have the machinery and equipment people work with, the designs of the jobs, the technical systems such as scheduling systems and the exchange of technical information, and so on. The final dimension is the physical setting. Whether we have offices with long halls and closed doors, whether we have open bullpens, whether we have a factory that’s dirty or dark or clean, and so on.

So those four arenas send signals to people about behavior. Now these ideas and the Built to Last ideas merged in that we want to design those arenas in such a way that they are consistent with the core ideology and they continue to stimulate change. So if we design a structure, is that structure consistent with the ideology? If we have a reward system within that formal structure, is that reward system consistent with the value system? Do they serve the purpose? If we ask that question about each of the four arenas, we can then begin to build an environment that is aligned to deliver signals that are consistent around behaviors that we want. Built to Last is a photograph of an ideal organization. How do we translate that photograph into much more concrete reality? I would suggest that it is by recognizing these four arenas and asking the question: what should they look like to be consistent with this picture?

We want to have a more successful organization, and we also want to have more developed people. If the two happen, then you can get long-term organizational success and an enduring organization. If you only get organizational success but you don’t get the individual development, that success will be temporary. If you get just individual development but not organizational performance, that development will also be temporary. So having both guarantees the long-term, enduring nature of the organization. Just like an architect builds a building, an organizational architect builds an organization.

I think one thing that is universal is that people like to feel they are contributing something that’s important—important to them, important to the company, important to the country, and important to the society. I believe also that people intrinsically like to do a good job. I think that you have to be psychologically ill to have the perspective that you are going to work today and mess up, create problems, fail, and do a bad job.

So, if we believe in that assumption we need to change the focus of what the organization does in relation to people. This is where the idea of development begins to fit in. If you believe people want to do a good job, then why not try to create an organization to make it possible? If all that becomes possible and people behave accordingly, then you tend to have a much higher-performing organization.

In our evolution in how we see people, we get closer and closer to seeing them in this humane way. But we are not there yet. I don’t know enough about organizations in China, but my speculation is that a substantial number of organizations, especially in the production facilities, still view people as milk cows and wheels and they are to be told what to do.

Now the economist’s view of the world is that organizations exist to maximize shareholders’ wealth, which means maximizing profits. That’s been the heritage of thinking in the economic world. So it’s no wonder that that’s how most managers think.

Our findings in Built to Last were very profound in this regard, in that they show that those companies that focused on maximizing profits over a 70-year period performed better than the market by a factor of 3:1. But, in comparison, those companies that focused on pursuing their purpose performed better than the market by 15:1. I updated the data to year 2000, 10 years later, and found that the visionary companies had performed better than the market by 16:1. The others also went up, to 4:1, but the visionary companies are still continuing to improve.

The data are pretty powerful but people just refuse to accept them. They somehow continue to claim that there is something wrong with the analyses or that it’s just a freak aberration or whatever. They don’t want to let go of the idea that the only way to make a lot of money is to focus on maximizing profits. I think people don’t want to let it go because it’s easier not to.

It’s easier to focus on that. It’s clear. Everybody knows about it. You are not getting many complaints about it. People aren’t going to criticize you for it because it’s well accepted. But to say, “Our focus is to make the contribution that’s implied in our purpose and if we do that really well, we are going to make a lot of money. We are not going to focus on making a lot of money. We are going to focus on serving our purpose,” takes more courage and is a harder sell than to say we are going to focus on maximizing shareholders’ wealth.

Mission is sometimes used to describe a contribution you want to make. If you use it that way, it’s more like purpose. But sometimes mission is used to describe what you are doing: “Our mission is to provide health care to the Northern California community.” That’s a description of what you are doing. Sometimes mission is the responsibility that you have. For instance, the military might say, “Our mission is to protect the northern sector.” And sometimes mission, is a big goal you want to achieve. “Our mission is to land a man on the moon and get back by the end of the decade.” The word can be used in those four contexts, so when you use the word “mission,” I don’t know which meaning you intend until I listen more and find out.

Purpose has a much more definite, narrow meaning—it relates to why you exist and the fundamental contribution you make. That’s why we used “purpose” rather than “mission.”

When we were starting our discussions, we weren’t very clear about those differences. We were also coming from working with different groups. Jim had been working with management teams from small companies, for whom mission was much more a major goal. I had been working with larger organizations as a whole. Jim was a consultant, and I was thinking theoretically. I was trying to figure out the glue that holds organizations together; what defines what the structure looks like, the culture, and all that. I was thinking of the word “purpose” as being the glue that holds things together because if everybody understands the purpose, then you design the structure in a culture, technology and physical setting to be consistent with the purpose to help you achieve the purpose. So we were coming from very different places in the way we were thinking about the words we were using. And that’s the reason we had a disagreement. But out of discussions we began to understand each other better.

Vision is thought about most commonly as a view of the future, or a dream that you have about what the future should be like. If you ask yourself, “What is vision supposed to do for an organization?” and are really serious about this, you could come up with a pretty long list of requirements. Vision is supposed to motivate people, to inspire them, to focus them, to guide behavior, to limit activities, and so on.

I asked executives in executive programs to tell me what they thought vision should do for their company, and we came up with a list of up to 20 items. Then I asked them, “Does your company have a vision?” And they all raised their hands. Then I asked them, “Among all these items written on the board, how many of them are satisfied by your company’s vision?” Usually the answer was three to five; which means 15 to 17 items were not satisfied by their company’s vision.

So what’s wrong? It is that the traditional view of vision is not complex enough. That’s where we came up with the description of vision in Built to Last, which is that vision is more complicated than just a dream of the future. So if you want to satisfy all those 20 items, you have to be much more complex.

If you look at what the visionary companies are doing to satisfy all of the 20 items, first of all, they have a purpose that satisfies some of the items; then they have core values that satisfy another set of items; and they also have a big hairy audacious goal that satisfies the remaining items. These three things together will satisfy all those 20 items. So vision is these three things. Plus, you have to communicate it. If you’ve got them, then you’ve got vision.