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What Really Works. What Really Works: The 4+2 Formula for Sustained Business Success, William Joyce, Nitin Nohria, and Bruce Robertson, Harper Business, 2003.

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What really works

What Really Works

What Really Works: The 4+2 Formula for Sustained Business Success,

William Joyce, Nitin Nohria, and Bruce Robertson, Harper Business, 2003.


  • The book What Really Works: The 4+2 Formula for Sustained Business Success is based on a five-year, intensive research project with the help of 50 leading academics and consultants to analyze the experience of 160 of companies over a ten-year period.


What works
What Works

  • The researchers identified eight elements – four primary and four secondary – that directly correlated with superior corporate performance as measured by total return to shareholders.

  • Winning companies achieved excellence in all four primary elements, plus two of the secondary ones – hence the 4+2 formula.


What doesn t work
What Doesn’t Work

  • The research found no correlation between a company’s investment in technology and its total return to shareholders over the decade of the study.

  • The research found no correlation between corporate change programs and achieving superior results in total return to shareholders.



The 4 2 formula for business success
The 4+ 2 Formula for Business Success 1986-1996:

  • Four primary elements:

    • Strategy

    • Execution

    • Culture

    • Structure

  • Four secondary elements:

    • Talent

    • Leadership

    • Innovation

    • Mergers and partnerships


Winners
Winners 1986-1996:

  • Had high scores in all four primary elements.

    • Strategy, execution, culture, and structure

  • And high scores in at least two of the secondary elements.

    • Talent, leadership, innovation, and mergers and partnerships.


  • Primary element strategy
    Primary Element: Strategy 1986-1996:

    • Devise and maintain a clearly stated, focused strategy.

      • Whatever the strategy, it will work if it is sharply defined, clearly communicated, and well understood by employees, customers, partners, and investors – all stakeholders.

      • One of the key mandates of winning companies was a focus on growth.

        • Enabling a doubling of the existing core business every five years.


    Primary element execution
    Primary Element: Execution 1986-1996:

    • Develop and maintain flawless operational execution.

      • Winners consistently meet the expectations of their customers by delivering on their value proposition.

        • Bad quality will hurt. A company cannot afford to be in the bottom half of the perceived quality rankings, but it is safe as long as it remains in the top third.

      • Winners consistently slash operational costs while increasing productivity by 6 to 7 percent every year.


    Primary element culture
    Primary Element: Culture 1986-1996:

    • Develop and maintain a performance-oriented culture.

      • Winners embrace corporate cultures that support high-performance standards, which employees universally accept.

      • Winners dealt quickly with poor performers, especially those who don’t abide by the values of the organization.


    Primary element structure
    Primary Element: Structure 1986-1996:

    • Found “structure follows strategy.”

    • Build and maintain a fast, flexible, flat organization.

      • Winners create and adapt structures that reduce bureaucracy and simplify work.

        • Simpler is faster and better.


    Secondary element talent
    Secondary Element: Talent 1986-1996:

    • Hold on to talented employees and find more.

      • The most important indicator of the depth and quality of talent in an organization is whether it can grow its own stars from within.

        • Promote from within.


    Secondary element leadership
    Secondary Element: Leadership 1986-1996:

    • Keep leaders and boards of directors committed to the business.

      • CEOs, on the average, contributed only 15 percent of the variance in corporate performance, for better or worse.

        • Good CEOs are chosen by good boards on which the board members understand the business and are passionately committed to a company’s success.


    Secondary element innovation
    Secondary Element: Innovation 1986-1996:

    • Make innovations that are industry transforming.

      • Most important is to anticipate rather than react to disruptive events in an industry.


    Secondary element mergers and partnerships
    Secondary Element: Mergers and Partnerships 1986-1996:

    • Make growth happen with mergers and partnerships.

      • Companies that do relatively small deals (less than 20 percent of their existing size) are likely to be more successful than organizations that do large, occasional deals.


    What winners do in strategy
    What Winners Do in Strategy 1986-1996:

    • Build strategy around a clear value proposition for customers.

    • Develop strategy from the outside in. Base it upon what customers, partners, and investors have to say and how they behave.

    • Maintain antennae that allow them to fine-tune strategy to changes in the marketplace.

    • Clearly communicate their strategy to all stakeholders.

    • Are wary of the unfamiliar.


    What winners do in execution
    What Winners Do in Execution 1986-1996:

    • Deliver products and services that consistently meet customers’ expectations.

    • Empower front lines to respond to customer needs.

    • Constantly strive to improve productivity and eliminate all forms of excess and waste.


    What winners do in culture
    What Winners Do In Culture 1986-1996:

    • Inspire all to do their best.

    • Reward achievement with praise and pay-for-performance, but keep raising the performance bar.

    • Create a work environment that is challenging, satisfying, and fun.

    • Establish and abide by clear company values.


    What winners do with structure
    What Winners Do With Structure 1986-1996:

    • Eliminate redundant organizational layers and bureaucratic structures and behaviors. Simplify, simplify, simplify.

    • Promote cooperation and the exchange of information across the whole company.

    • Put their best people closest to the action and keep their front line stars in place.


    What winners do with talent
    What Winners Do With Talent 1986-1996:

    • Fill mid- and high-level jobs with internal talent whenever possible.

    • Create and maintain top-of-the-line training and educational programs.

    • Design jobs that will intrigue and challenge the best performers.

    • Top management becomes personally involved in winning the war for talent.


    What winners do in leadership
    What Winners Do In Leadership 1986-1996:

    • Inspire management to strengthen its relationships with people at all levels of the company.

    • Inspire management to hone its capacity to spot opportunities and problems early.

    • Appoint a board of directors whose members have a substantial financial stake in the company’s success.

    • Closely link the pay of the leadership team to performance.


    What winners do in innovation
    What Winners Do In Innovation 1986-1996:

    • Introduce disruptive technologies and business models.

    • Exploit new and old technologies to design products and enhance operations.

    • Don’t hesitate to cannibalize existing products.


    What winners do in mergers and partnerships
    What Winners Do In Mergers and Partnerships: 1986-1996:

    • Acquire new businesses that leverage existing customer relationships.

    • Enter new businesses that complement their company’s existing strengths.

    • With a partner, move into new businesses that can use the partnership’s talents.

    • Develop a systematic capability to identify, screen, and close deals.


    Winning
    Winning 1986-1996:

    • Exceptionally difficult juggling act—must keep all six plates (4+2) in the air spinning at the same time. If one falls down, they all fall.

    • The 4+2 factors are all interrelated and must always function at the highest level to continue to be a winner.

    • Staying on top is more difficult than getting there.


    • But winners manage it by: 1986-1996:

      • Having a focused strategy

      • Flawlessly executing

      • Having a performance-based culture

      • Having flat, simple structure



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