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
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 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.
The research identified four types of
companies from 1986-1996:
Winners
Climbers
Tumblers
Losers
The 4+ 2 Formula for Business
Success
Four primary elements:
Strategy
Execution
Culture
Structure
Four secondary elements:
Talent
Leadership
Innovation
Mergers and partnerships
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.
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.
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.
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.
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.
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.
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.

Secondary Element: Innovation
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
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
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
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
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
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
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
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.
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.
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.
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.
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:
Having a focused strategy
Flawlessly executing
Having a performance-based culture
Having flat, simple structure
Plus, having two of the following four:
Talent
Leadership
Innovation
Mergers and partnerships
And never, never, never, never letting up.