The Business Book

191

The yin-yang symbol reflects

the dual nature of visionary companies,

according to Collins and Porras. They

suggest replacing the “tyranny of the

‘OR’” with the “genius of the ‘AND.’”

See also: Take the second step 43 ■ How fast to grow 44–45 ■ Effective leadership 78–79 ■
Investment and dividends 126–27 ■ Accountability and governance 130–31 ■ Profit versus cash flow 152–53

WORKING WITH A VISION

In 1994, James Collins and Jerry
Porras studied companies such as
General Electric, Marriott, and 3M
that had been in business for more
than a century and that consistently
outperformed the stock market.
They used the Chinese yin-yang
sign—symbolizing complementary
opposites—to explain how
successful businesses maintain
control of both the short- and long-
term. The organizations they
studied were able to manage
contradictory ideas at the same
time, by focusing on “both ... and
...” rather than “either ... or ...”
They also demonstrated the
concept by performing well both in
the short-term and in the long-term.

Public and private
In a private limited company (Ltd),
managers can plan for different
time horizons without scrutiny from
shareholders. Sir Anthony Bamford,
for example, runs JCB, a privately
owned British company. JCB was
started by his father, Joseph Cyril
Bamford, who began making
agricultural tipping trailers in 1945.

Today JCB is the third-largest

manufacturer of earth-moving

machinery in the world, with 22

factories in Europe, Asia, and North

and South America. Bamford can

invest when and where he chooses.

He decided to invest in India by

opening a factory in 1978, a long-

term prospect that paid off; JCB

is now market leader there. In 2012,

JCB opened a factory in Brazil.

Unlike many CEOs, who hold a

post for a few years then move on,

Bamford saw that balancing the

short- and long-term is critical. His

dual focus has paid off: despite the

worldwide recession, JCB sales

grew 40 percent in 2011 and topped

£2.75 ($4.3) billion in 2012.

In contrast, a typical public

limited company (plc), owned by

shareholders and quoted on a stock

exchange, is under greater scrutiny.

These investors look for returns,

in the form of dividends, on an

annual basis. This can become a

strategic issue, since institutional

shareholders may put pressure on

directors of limited companies to

return cash, rather than to reinvest

in the business, without regard to

the impact on long-term prospects.

This happened in 2013 at Apple.

To ensure the right balance

between short- and long-term,

companies often split planning

responsibility between different

management teams. This allows

the organization to manage the

immediate operation, while looking

ahead for growth and innovation. ■

Jack Welch Born in 1935, John F. Welch

studied chemical engineering at

the University of Massachusetts,

then gained an MSc and PhD in

chemical engineering from the

University of Illinois. In 1960, he

joined General Electric (GE), rising

to become the company’s

chairman and CEO from 1981 until

his retirement in 2001. During this

time, Welch increased the value

of the business from $13 billion

to several-hundred billion. His

management skills became

legendary; he had little time for

bureaucracy and managers were

given free reign as long as they

followed the GE ethic of

constant change and striving

to do better. In 1999, Fortune

magazine named him Manager

of the Century, and the

Financial Times claimed he

was one of the three most

admired business leaders in the

world. He founded the Jack

Welch Management Institute at

Strayer University, US, in 2009.

Key works

2001 Jack: Straight from the Gut

(with John A Byrne)

2005 Winning

Preserve

the core

Stimulate

progress