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

4. 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.

5. The research identified four types of companies from 1986-1996:
Winners
Climbers
Tumblers
Losers

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

7. 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.

8. 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.

9. 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.

10. 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 don’t abide by the values of the organization.

11. 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.

12. 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.

13. 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 company’s success.

14. Secondary Element: Innovation
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.
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.
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.

17. 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.

18. 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.

19. 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.

20. 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.

21. 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 company’s success.
Closely link the pay of the leadership team to performance.

22. What Winners Do In Innovation
Introduce disruptive technologies and business models.
Exploit new and old technologies to design products and enhance operations.
Don’t hesitate to cannibalize existing products.

23. What Winners Do In Mergers and Partnerships:
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.

24. Winning
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.

25. 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:
Talent
Leadership
Innovation
Mergers and partnerships
And never, never, never, never letting up.