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What Really WorksWhat Really Works
What Really Works: The 4+2 Formula for Sustained Business SucceWilliam Joyce, Nitin Nohria, and Bruce Robertson, Harper Business,
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The book The book What Really Works:What Really Works: The 4+2Formula for Sustained Business
Success is based on a !e"year,is based on a !e"year,intensi!e research pro#ect $ith theintensi!e research pro#ect $ith the
help o% &0 leadin' academics andhelp o% &0 leadin' academics and
consultants to analy(e the e)perienceconsultants to analy(e the e)perience
o% *+0 o% companies o!er a ten"yearo% *+0 o% companies o!er a ten"yearperiod.period.
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What WorksWhat Works
The researchers identied ei'ht elements The researchers identied ei'ht elements
%our primary and %our secondary that %our primary and %our secondary that
directly correlated $ith superiordirectly correlated $ith superiorcorporate per%ormance as measured bycorporate per%ormance as measured by
total return to shareholders.total return to shareholders.
Winnin' companies achie!ed e)cellenceWinnin' companies achie!ed e)cellence
in all %our primary elements, plus t$o o%in all %our primary elements, plus t$o o%the secondary ones hence the -2the secondary ones hence the -2
%ormula.%ormula.
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What Doesn’t Work What Doesn’t Work
The research %ound no correlation The research %ound no correlation
bet$een a company/s in!estment inbet$een a company/s in!estment in
technolo'y and its total return totechnolo'y and its total return toshareholders o!er the decade o% theshareholders o!er the decade o% the
study.study.
The research %ound no correlation The research %ound no correlation
bet$een corporate chan'e pro'ramsbet$een corporate chan'e pro'ramsand achie!in' superior results in totaland achie!in' superior results in total
return to shareholders.return to shareholders.
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The research identied %our types o% The research identied %our types o%
companies %rom *1+"*+companies %rom *1+"*+
WinnersWinners limberslimbers
Tumblers Tumblers
4osers4osers
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The 4+ 2 Formula forThe 4+ 2 Formula for
Business SuccessBusiness Success
5our primary elements5our primary elements 6trate'y6trate'y
7)ecution7)ecution
ultureulture
6tructure6tructure
5our secondary elements5our secondary elements Talent Talent
4eadership4eadership
8nno!ation8nno!ation
9er'ers and partnerships9er'ers and partnerships
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WinnersWinners
Had hi'h scores in all %our primaryHad hi'h scores in all %our primary
elements.elements.
6trate'y, e)ecution, culture, and6trate'y, e)ecution, culture, andstructurestructure
:nd hi'h scores in at least t$o o% the:nd hi'h scores in at least t$o o% the
secondary elements.secondary elements. Talent, leadership, inno!ation, and Talent, leadership, inno!ation, and
mer'ers and partnerships.mer'ers and partnerships.
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Primary Element: StrateyPrimary Element: Stratey
;e!ise and maintain a clearly stated,;e!ise and maintain a clearly stated,
%ocused strate'y.%ocused strate'y.
Whate!er the strate'y, it $ill $ork i% it isWhate!er the strate'y, it $ill $ork i% it issharply dened, clearly communicated, andsharply dened, clearly communicated, and
$ell understood by employees, customers,$ell understood by employees, customers,
partners, and in!estors all stakeholders.partners, and in!estors all stakeholders.
<ne o% the key mandates o% $innin'<ne o% the key mandates o% $innin'
companies $as a %ocus on 'ro$th.companies $as a %ocus on 'ro$th.
7nablin' a doublin' o% the e)istin' core7nablin' a doublin' o% the e)istin' core
business e!ery !e years.business e!ery !e years.
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Primary Element: E!ecutionPrimary Element: E!ecution
;e!elop and maintain =a$less;e!elop and maintain =a$lessoperational e)ecution.operational e)ecution.
Winners consistently meet the e)pectationsWinners consistently meet the e)pectationso% their customers by deli!erin' on theiro% their customers by deli!erin' on their!alue proposition.!alue proposition. Bad >uality $ill hurt. : company cannot a?ord toBad >uality $ill hurt. : company cannot a?ord to
be in the bottom hal% o% the percei!ed >ualitybe in the bottom hal% o% the percei!ed >ualityrankin's, but it is sa%e as lon' as it remains in therankin's, but it is sa%e as lon' as it remains in the
top third.top third. Winners consistently slash operational costsWinners consistently slash operational costs
$hile increasin' producti!ity by + to @$hile increasin' producti!ity by + to @percent e!ery year.percent e!ery year.
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Primary Element: "ulturePrimary Element: "ulture
;e!elop and maintain a per%ormance";e!elop and maintain a per%ormance"
oriented culture.oriented culture.
Winners embrace corporate cultures thatWinners embrace corporate cultures thatsupport hi'h"per%ormance standards,support hi'h"per%ormance standards,
$hich employees uni!ersally accept.$hich employees uni!ersally accept.
Winners dealt >uickly $ith poorWinners dealt >uickly $ith poor
per%ormers, especially those $ho don/tper%ormers, especially those $ho don/tabide by the !alues o% the or'ani(ation.abide by the !alues o% the or'ani(ation.
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Primary Element: StructurePrimary Element: Structure
5ound Astructure %ollo$s strate'y.5ound Astructure %ollo$s strate'y.
Build and maintain a %ast, =e)ible, =atBuild and maintain a %ast, =e)ible, =at
or'ani(ation.or'ani(ation. Winners create and adapt structures thatWinners create and adapt structures that
reduce bureaucracy and simpli%y $ork.reduce bureaucracy and simpli%y $ork.
6impler is %aster and better.6impler is %aster and better.
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Secon#ary Element: TalentSecon#ary Element: Talent
Hold on to talented employees andHold on to talented employees and
nd more.nd more.
The most important indicator o% the depth The most important indicator o% the depthand >uality o% talent in an or'ani(ation isand >uality o% talent in an or'ani(ation is
$hether it can 'ro$ its o$n stars %rom$hether it can 'ro$ its o$n stars %rom
$ithin.$ithin.
Cromote %rom $ithin.Cromote %rom $ithin.
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Secon#ary Element:Secon#ary Element:
$ea#ershi%$ea#ershi%
Deep leaders and boards o% directorsDeep leaders and boards o% directors
committed to the business.committed to the business.
7<s, on the a!era'e, contributed only *&7<s, on the a!era'e, contributed only *&percent o% the !ariance in corporatepercent o% the !ariance in corporate
per%ormance, %or better or $orse.per%ormance, %or better or $orse.
Eood 7<s are chosen by 'ood boardsEood 7<s are chosen by 'ood boards
on $hich the board memberson $hich the board membersunderstand the business and areunderstand the business and are
passionately committed to a company/spassionately committed to a company/s
success.success.
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Secon#ary Element:Secon#ary Element:
&nno'ation&nno'ation
9ake inno!ations that are industry9ake inno!ations that are industry
trans%ormin'.trans%ormin'.
9ost important is to anticipate rather than9ost important is to anticipate rather thanreact to disrupti!e e!ents in an industry.react to disrupti!e e!ents in an industry.
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Secon#ary Element:Secon#ary Element:
(erers an# Partnershi%s(erers an# Partnershi%s
9ake 'ro$th happen $ith mer'ers and9ake 'ro$th happen $ith mer'ers and
partnerships.partnerships.
ompanies that do relati!ely small dealsompanies that do relati!ely small dealsFless than 20 percent o% their e)istin' si(eGFless than 20 percent o% their e)istin' si(eG
are likely to be more success%ul thanare likely to be more success%ul than
or'ani(ations that do lar'e, occasionalor'ani(ations that do lar'e, occasional
deals.deals.
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What Winners Do inWhat Winners Do in
StrateyStratey
Build strate'y around a clear !alueBuild strate'y around a clear !alue
proposition %or customers.proposition %or customers.
;e!elop strate'y %rom the outside in. Base it;e!elop strate'y %rom the outside in. Base it
upon $hat customers, partners, andupon $hat customers, partners, and
in!estors ha!e to say and ho$ theyin!estors ha!e to say and ho$ they behavebehave..
9aintain antennae that allo$ them to ne"9aintain antennae that allo$ them to ne"
tune strate'y to chan'es in the marketplace.tune strate'y to chan'es in the marketplace.
learly communicate their strate'y to alllearly communicate their strate'y to all
stakeholders.stakeholders.
:re $ary o% the un%amiliar.:re $ary o% the un%amiliar.
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What Winners Do inWhat Winners Do in
E!ecutionE!ecution
;eli!er products and ser!ices that;eli!er products and ser!ices that
consistently meet customers/consistently meet customers/
e)pectations.e)pectations. 7mpo$er %ront lines to respond to7mpo$er %ront lines to respond to
customer needs.customer needs.
onstantly stri!e to impro!eonstantly stri!e to impro!e
producti!ity and eliminate all %orms o%producti!ity and eliminate all %orms o%
e)cess and $aste.e)cess and $aste.
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What Winners Do &n "ultureWhat Winners Do &n "ulture
8nspire all to do their best.8nspire all to do their best.
Re$ard achie!ement $ith praise andRe$ard achie!ement $ith praise and
pay"%or"per%ormance, but keep raisin'pay"%or"per%ormance, but keep raisin'the per%ormance bar.the per%ormance bar.
reate a $ork en!ironment that isreate a $ork en!ironment that is
challen'in', satis%yin', and %un.challen'in', satis%yin', and %un.
7stablish and abide by clear company7stablish and abide by clear company
!alues.!alues.
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What Winners Do WithWhat Winners Do With
StructureStructure
7liminate redundant or'ani(ational7liminate redundant or'ani(ational
layers and bureaucratic structures andlayers and bureaucratic structures and
beha!iors. 6impli%y, simpli%y, simpli%y.beha!iors. 6impli%y, simpli%y, simpli%y. CromoteCromote cooerationcooeration and the e)chan'eand the e)chan'e
o% in%ormation across the $holeo% in%ormation across the $hole
company.company.
Cut their best people closest to theCut their best people closest to theaction and keep their %ront line stars inaction and keep their %ront line stars in
place.place.
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What Winners Do WithWhat Winners Do With
TalentTalent
5ill mid" and hi'h"le!el #obs $ith5ill mid" and hi'h"le!el #obs $ith
internal talent $hene!er possible.internal talent $hene!er possible.
reate and maintain top"o%"the"linereate and maintain top"o%"the"linetrainin' and educational pro'rams.trainin' and educational pro'rams.
;esi'n #obs that $ill intri'ue and;esi'n #obs that $ill intri'ue and
challen'e the best per%ormers.challen'e the best per%ormers.
Top mana'ement becomes personally Top mana'ement becomes personally
in!ol!ed in $innin' the $ar %or talent.in!ol!ed in $innin' the $ar %or talent.
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What Winners Do &nWhat Winners Do &n
$ea#ershi%$ea#ershi%
8nspire mana'ement to stren'then its8nspire mana'ement to stren'then its
relationships $ith people at all le!els o% therelationships $ith people at all le!els o% the
company.company.
8nspire mana'ement to hone its capacity to8nspire mana'ement to hone its capacity to
spot opportunities and problems early.spot opportunities and problems early.
:ppoint a board o% directors $hose members:ppoint a board o% directors $hose members
ha!e a substantial nancial stake in theha!e a substantial nancial stake in the
company/s success.company/s success. losely link the pay o% the leadership team tolosely link the pay o% the leadership team to
per%ormance.per%ormance.
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What Winners Do &nWhat Winners Do &n
&nno'ation&nno'ation
8ntroduce disrupti!e technolo'ies and8ntroduce disrupti!e technolo'ies and
business models.business models.
7)ploit ne$ and old technolo'ies to7)ploit ne$ and old technolo'ies todesi'n products and enhancedesi'n products and enhance
operations.operations.
;on/t hesitate to cannibali(e e)istin';on/t hesitate to cannibali(e e)istin'
products.products.
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What Winners Do &nWhat Winners Do &n
(erers an# Partnershi%s:(erers an# Partnershi%s:
:c>uire ne$ businesses that le!era'e:c>uire ne$ businesses that le!era'e
e)istin' customer relationships.e)istin' customer relationships.
7nter ne$ businesses that complement7nter ne$ businesses that complementtheir company/s e)istin' stren'ths.their company/s e)istin' stren'ths.
With a partner, mo!e into ne$With a partner, mo!e into ne$
businesses that can use thebusinesses that can use the
partnership/s talents.partnership/s talents. ;e!elop a systematic capability to;e!elop a systematic capability to
identi%y, screen, and close deals.identi%y, screen, and close deals.
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WinninWinnin
7)ceptionally dicult #u''lin' actI7)ceptionally dicult #u''lin' actI
must keep all si) plates F-2G in the airmust keep all si) plates F-2G in the air
spinnin' at the same time. 8% one %allsspinnin' at the same time. 8% one %allsdo$n, they all %all.do$n, they all %all.
The -2 %actors are all interrelated and The -2 %actors are all interrelated and
must al$ays %unction at the hi'hestmust al$ays %unction at the hi'hest
le!el to continue to be a $inner.le!el to continue to be a $inner. 6tayin' on top is more dicult than6tayin' on top is more dicult than
'ettin' there.'ettin' there.
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But $inners mana'e it byBut $inners mana'e it by
Ha!in' a %ocused strate'yHa!in' a %ocused strate'y
5la$lessly e)ecutin'5la$lessly e)ecutin' Ha!in' a per%ormance"based cultureHa!in' a per%ormance"based culture
Ha!in' =at, simple structureHa!in' =at, simple structure
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Clus, ha!in' t$o o% the %ollo$in' %ourClus, ha!in' t$o o% the %ollo$in' %our
Talent Talent
4eadership4eadership 8nno!ation8nno!ation
9er'ers and partnerships9er'ers and partnerships
:nd ne!er, ne!er, ne!er, ne!er lettin':nd ne!er, ne!er, ne!er, ne!er lettin'
up.up.