What Really Works

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What Really Works
What Really Works The 42 Formula for Sustained
Business Success, William Joyce, Nitin Nohria,
and Bruce Robertson, Harper Business, 2003.
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• The book What Really Works The 42 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.

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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 42 formula.

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What Doesnt Work

• The research found no correlation between a
  companys 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.

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• The research identified four types of companies
  from 1986-1996
• Winners
• Climbers
• Tumblers
• Losers

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The 4 2 Formula for Business Success

• Four primary elements
• Strategy
• Execution
• Culture
• Structure
• Four secondary elements
• Talent
• Leadership
• Innovation
• Mergers and partnerships

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Winners

• 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.

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Primary Element Strategy

• 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.

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Primary Element Execution

• 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.

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Primary Element Culture

• 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 dont abide by the values of
  the organization.

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Primary Element Structure

• 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.

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Secondary Element Talent

• 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.

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Secondary Element Leadership

• 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 companys success.

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Secondary Element Innovation

• Make innovations that are industry transforming.
• Most important is to anticipate rather than react
  to disruptive events in an industry.

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Secondary Element Mergers and Partnerships

• 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.

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What Winners Do in Strategy

• 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.

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What Winners Do in Execution

• 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.

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What Winners Do In Culture

• 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.

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What Winners Do With Structure

• 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.

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What Winners Do With Talent

• 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.

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What Winners Do In Leadership

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

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What Winners Do In Innovation

• Introduce disruptive technologies and business
  models.
• Exploit new and old technologies to design
  products and enhance operations.
• Dont hesitate to cannibalize existing products.

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What Winners Do In Mergers and Partnerships

• Acquire new businesses that leverage existing
  customer relationships.
• Enter new businesses that complement their
  companys existing strengths.
• With a partner, move into new businesses that can
  use the partnerships talents.
• Develop a systematic capability to identify,
  screen, and close deals.

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Winning

• Exceptionally difficult juggling actmust keep
  all six plates (42) in the air spinning at the
  same time. If one falls down, they all fall.
• The 42 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.

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• But winners manage it by
• Having a focused strategy
• Flawlessly executing
• Having a performance-based culture
• Having flat, simple structure

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• Plus, having two of the following four
• Talent
• Leadership
• Innovation
• Mergers and partnerships
• And never, never, never, never letting up.