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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,

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Presentation on theme: "What Really Works What Really Works: The 4+2 Formula for Sustained Business Success, William Joyce, Nitin Nohria, and Bruce Robertson, Harper Business,"— Presentation transcript:

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

2 The book What Really Works: 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. 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.

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

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

5 The research identified four types of companies from : The research identified four types of companies from : –Winners –Climbers –Tumblers –Losers

6 The 4+ 2 Formula for Business Success Four primary elements: Four primary elements: –Strategy –Execution –Culture –Structure Four secondary elements: Four secondary elements: –Talent –Leadership –Innovation –Mergers and partnerships

7 Winners Had high scores in all four primary elements. Had high scores in all four primary elements. Strategy, execution, culture, and structure Strategy, execution, culture, and structure And high scores in at least two of the secondary elements. And high scores in at least two of the secondary elements. Talent, leadership, innovation, and mergers and partnerships. Talent, leadership, innovation, and mergers and partnerships.

8 Primary Element: Strategy Devise and maintain a clearly stated, focused 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. Enabling a doubling of the existing core business every five years.

9 Primary Element: Execution Develop and maintain flawless operational 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. 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.

10 Primary Element: Culture Develop and maintain a performance- oriented 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.

11 Primary Element: Structure Found structure follows strategy. Found structure follows strategy. Build and maintain a fast, flexible, flat organization. Build and maintain a fast, flexible, flat organization. –Winners create and adapt structures that reduce bureaucracy and simplify work. Simpler is faster and better. Simpler is faster and better.

12 Secondary Element: Talent Hold on to talented employees and find more. 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. Promote from within.

13 Secondary Element: Leadership Keep leaders and boards of directors committed to the business. 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. Good CEOs are chosen by good boards on which the board members understand the business and are passionately committed to a companys success.

14 Secondary Element: Innovation Make innovations that are industry transforming. Make innovations that are industry transforming. –Most important is to anticipate rather than react to disruptive events in an industry.

15 Secondary Element: Mergers and Partnerships Make growth happen with 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.

16 What Winners Do in Strategy Build strategy around a clear value proposition for customers. 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. 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. Maintain antennae that allow them to fine-tune strategy to changes in the marketplace. Clearly communicate their strategy to all stakeholders. Clearly communicate their strategy to all stakeholders. Are wary of the unfamiliar. Are wary of the unfamiliar.

17 What Winners Do in Execution Deliver products and services that consistently meet customers expectations. Deliver products and services that consistently meet customers expectations. Empower front lines to respond to customer needs. Empower front lines to respond to customer needs. Constantly strive to improve productivity and eliminate all forms of excess and waste. Constantly strive to improve productivity and eliminate all forms of excess and waste.

18 What Winners Do In Culture Inspire all to do their best. Inspire all to do their best. Reward achievement with praise and pay- for-performance, but keep raising the performance bar. Reward achievement with praise and pay- for-performance, but keep raising the performance bar. Create a work environment that is challenging, satisfying, and fun. Create a work environment that is challenging, satisfying, and fun. Establish and abide by clear company values. Establish and abide by clear company values.

19 What Winners Do With Structure Eliminate redundant organizational layers and bureaucratic structures and behaviors. Simplify, simplify, simplify. Eliminate redundant organizational layers and bureaucratic structures and behaviors. Simplify, simplify, simplify. Promote cooperation and the exchange of information across the whole company. 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. Put their best people closest to the action and keep their front line stars in place.

20 What Winners Do With Talent Fill mid- and high-level jobs with internal talent whenever possible. Fill mid- and high-level jobs with internal talent whenever possible. Create and maintain top-of-the-line training and educational programs. Create and maintain top-of-the-line training and educational programs. Design jobs that will intrigue and challenge the best performers. Design jobs that will intrigue and challenge the best performers. Top management becomes personally involved in winning the war for talent. Top management becomes personally involved in winning the war for talent.

21 What Winners Do In Leadership Inspire management to strengthen its relationships with people at all levels of the company. 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. 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. 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. Closely link the pay of the leadership team to performance.

22 What Winners Do In Innovation Introduce disruptive technologies and business models. Introduce disruptive technologies and business models. Exploit new and old technologies to design products and enhance operations. Exploit new and old technologies to design products and enhance operations. Dont hesitate to cannibalize existing products. Dont hesitate to cannibalize existing products.

23 What Winners Do In Mergers and Partnerships: Acquire new businesses that leverage existing customer relationships. Acquire new businesses that leverage existing customer relationships. Enter new businesses that complement their companys existing strengths. Enter new businesses that complement their companys existing strengths. With a partner, move into new businesses that can use the partnerships talents. With a partner, move into new businesses that can use the partnerships talents. Develop a systematic capability to identify, screen, and close deals. Develop a systematic capability to identify, screen, and close deals.

24 Winning Exceptionally difficult juggling actmust keep all six plates (4+2) in the air spinning at the same time. If one falls down, they all fall. Exceptionally difficult juggling actmust 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. 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. Staying on top is more difficult than getting there.

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

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


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