What do great businesses in common? What do bad businesses forget to do? In their book, What Really Works- the 4+2 Formula for Sustained Business Success, the authors Joyce, Nohria, and Roberson analyzed data from hundreds of different companies. Using total return to shareholders as a results, the “Evergreen” project as it was called identified 8 factors of successful businesses.
In order for a business to have sustained success they needed to exhibit all of the first four, and two of the last four, hence the 4+2 formula in the subtitle.
The four mandatory factors are:
1) Strategy- Devise and maintain a clearly focused strategy
2) Execution- Develop and maintain flawless operational executution
3) Culture- Develop and maintain a performance-oriented culture
4) Structure- Build and maintain a fast, flexible, flat organization
The four optional (remember, you only need two) catagories are.
1) Talent: hold on to talented employees and find more
2) Leadership: keep leaders and directors committed to the business
3) Innovation: Make innovations tha tare industry transforming
4) Mergers and Partnerships: Make growth happen with mergers and partnerships.
One of the problems that I have with some of these management books is that they shoot their wad after the second chapter, the one that outlines the book. The value of this book after the second chapter is arguably less that the outline, but the case studies of both good and bad companies are interesting, well written, and reinforce the premise of the book.
I think one could argue about total value returned to shareholders being the paramount sign of a good company, especially when one looks short term. The authors had to pick something, and I think it was a good enough factor, that was easy to define.
I also know that this book isn’t a panacea. Like every other business book, this one will chaffe with age. I do think it reinforces some basics, and I think it merits reading.
If you’re in Columbia,MD, get a copy cheap. Daedalus Books in Columbia had it in stock for $4.98