Monday, May 05, 2003

Optimize Magazine - May 2003 - "A Formula For Sustained Success" - written by William Joyce, Nitin Nohria, and Bruce Roberson - the authors of the forthcoming book "What Really Works" - This article summarises the findings of a 5 year project undertaken by 50 leading consultants and academics. It's aim was to conduct a systematic analysis of the practices that create business winners.

The team analyzed the experiences of 160 companies over a 10-year period, from 1986 to 1996, in search of the management practices that directly correlate with superior corporate performance as measured by total return to shareholders.

Their results were that 8 practices - 4 primary and 4 secondary - were largely responsible for the success of the winning companies, who excelled at all 4 of the primary practices and bizaarely, any combination ofat least 2 of the secondary practices (4+2 model)

The 4 Primary Practices are:
1) Devise and maintain a clearly stated, focused strategy - ideally focussed on growing the core business
2) Develop and maintain flawless operational execution
3) Develop and maintain a performance-oriented culture
4) Maintain a fast, flexible, flat organisation - one that reduces bureaucracy and simplifies work.

The 4 Secondary Practices are:
1) Hold onto talented employees and find more.
2) Make industry-transforming innovations.
3) Make growth happen with mergers and partnerships.
4) Keep leaders and directors committed to the business.

Interestingly, the authors also note that less than 5% of all the publicly traded companies in their study maintained a total return to shareholders greater than their industry peers for more than 10 years. Well written and interesting reading this.

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