W h y s o m e c o m p a n I e s m a k e t h e



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Good-to-Great
G O OD TOG RE AT
I NTH E EARLY STAGES
O F BUILT TO LAST
Looking back on the Built to Last study, it appears that the enduring great companies did in fact go through a process of buildup to breakthrough, following the good-to-great framework during their formative years. Consider, for example, the buildup-breakthrough flywheel pattern in the evolution of Wal-Mart. Most people think that Sam Walton just exploded onto the scene with his visionary idea for rural discount retailing, hitting breakthrough almost as a startup company. But nothing could be further from the truth.


Good to Great
Sam Walton began in 1945 with a single dime store. He didn't open his second store until seven years later. Walton built incrementally, step by step, turn by turn of the flywheel, until the Hedgehog Concept of large discount marts popped out as a natural evolutionary step in the s. It took Walton a quarter of a century to grow from that single dime store to a chain of 38 Wal-Marts. Then, from 1970 to 2000, Wal-Mart hit breakthrough momentum and exploded to over 3,000 stores with over
$150 billion (yes, billion) in revenues Just like the story of the chicken jumping out of the egg that we discussed in the flywheel chapter, Mart had been incubating for decades before the egg cracked open. As Sam Walton himself wrote Somehow over the years people have gotten the impression that Mart was. just this great idea that turned into an overnight success. But.
. it was an outgrowth of everything we'd been doing since And like most overnight successes, it was about twenty years in the If there ever was a classic case of buildup leading to a Hedgehog Concept, followed by breakthrough momentum in the flywheel, Wal-Mart is it. The only difference is that Sam Walton followed the model as an entrepreneur building a great company from the ground up, rather than as a CEO transforming an established company from good to great. But it's the same basic
Hewlett-Packard provides another excellent example of the good-to- great ideas at work in the formative stages of a Built to Last company. For instance, Bill Hewlett and David Packard's entire founding concept for HP was not what, but who-starting with each other. They'd been best friends in graduate school and simply wanted to build a great company together that would attract other people with similar values and standards. The founding minutes of their first meeting on August 23, 1937, begin stating that they would design, manufacture, and sell products in the electrical engineering fields, very broadly defined. But then those same founding minutes goon to say, "The question of what to manufacture was postponed. Hewlett and Packard stumbled around for months trying to come up with something, anything, that would get the company out of the garage. They considered yacht transmitters, air-conditioning control devices, medical devices, phonograph amplifiers, you name it. They built electronic



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