Customer Reviews

What Really Works : The 4+2 Formula for Sustained Business Success

5 star:		(9)
4 star:		(3)
3 star:		(2)
2 star:		(1)
1 star:		(2)

 

 

This book has one glaring weakness: it offers absolutely no support for its central premise, which is that the authors have discovered the definitive eight management practices that, if a company is able to execute six effectively, have a 90 percent chance of predicting success ("the link between 4+2 practices and business success was astonishing. A company following the formula had a better than 90 percent chance of being a Winner." (page 15)). The complete description of their analysis is contained in just three paragraphs on pages 12 through 14. And there is nothing in these three paragraphs that describes a methodology for determining that the eight management practices they have chosen correlate to business success any better than any other of the 200 they reviewed.

It has other weaknesses: it does not provide a list of the 200 management practices that the authors reviewed in the course of their research, and it does not provide a list of the 160 companies and 40 industries that the authors concentrated on and are the basis for their findings.

I was also put off by their use of heroes and villains. It seems that their heroes, notably David Johnson of Campbell Soup and Ken Iverson of Nucor Steel, can do no wrong. Representing the villain, Chapter 12 uses Nike and Phil Knight as an example of what happens when a company fails to follow the management practices that the authors prescribe; in contrast to Johnson and Iverson, Nike and Knight could do nothing right. This is utter nonsense; like all successful companies Nike and Knight did many things right. The authors' analysis of Nike and Knight feels like a safely cutting the legs out from under a wide receiver who doesn't have the ball yet, a very cheap shot.

Much of what the authors offer is conventional wisdom. Dealing with the 4 in their 4+2 formula, are there any surprises in being told that your strategy needs to be clear and focused, that you need to execute well, and that you need a performance-based culture to be successful? As for making the organization flat, is this to say that large and complex companies like Boeing cannot be successful?

As for the 2 in the 4+2 formula, that you need to develop and keep your talent seems, again, to be conventional wisdom. I would tend to question the idea that management and directors have to have a significant equity stake in the company because I haven't seen any support for this idea anywhere in business literature. Industry-transforming innovations have been the route to success for many companies, including many of the dotcoms and technology companies, some of which are still with us. As for mergers and partnerships, many studies have shown that most mergers fail to meet their objectives and wind up diminishing rather than creating value for the acquiring company, and, if I recall correctly, Michael Porter did an analysis of partnerships that showed that they don't work any better than mergers.

Speaking of Michael Porter, I was surprised to see that Michael Porter and Tom Peters had comments included on the flyleaf. Tom Peters seems to have damned the book with faint praise. Michael Porter's books were groundbreaking. (I especially enjoyed The Competitive Advantage of Nations.) This book is not in the same class as the books by either of the authors.

In the absence of much more convincing evidence, I do not believe that this is "the first book identifying the fundamental practices that create business success - the ones that do indeed really matter" (page 5), nor do I buy their assertion that, "Now that they have the results of the Evergreen Project [the study the book is based on], the long era of trial and error is over" (page 23).

My guess is that if you manage a company, you've already discovered that there is no magic bullet.

For those of us on the receiving end of yet another directive from the corner office regarding the latest "fix the company" fad, help is on the way. In What Really Works: The 4+2 Formula for Sustained Business Success the authors (Joyce, Nohria and Roberson) actually have the temerity to introduce analysis instead of feel-good musings and, pshaw, to compile data from first-hand surveys from hundreds of companies over a 10 year span (1986-96) versus the typical seat-of-the-pants insights gleaned from a subway ride.

The result is a well reasoned piece that eventually identifies a code of practices to which successful companies adhere. The first set, the 4, are the primary areas, namely, strategy, execution, culture, and structure. The secondary set, the +2, is comprised of talent, leadership, innovations and mergers and partnerships. The fundamental premise is that the key to long-term success is to merge the primary 4 with any 2 of the secondary set, hence 4+2 in the title. Extensive evidence is offered by way of the aforementioned corporate surveys to demonstrate the results that arise from application (success) or neglect (failure) of the 4+2 strategy.

The key difference from traditional management strategy books is quite simple. The authors seem content to identify and codify a set of practices based upon extensive analysis of the survey data. Unlike many of the "all the rage" books of the day, one gets the feeling they did not begin with any particular conceptual axe to grind. They "pan" their data for the consistent themes and practices and, in the end, the business practitioner is pretty much left with a gold standard for guiding the enterprise. A far cry, indeed, from a field so often characterized by the newest offering from the latest tin God.

This book does a decent job fulfilling its mission, to reveal "What Really Works." And, from my experience, the authors are right on. Winning companies all have many things in common. Mostly, this is what Collins and Porras call "clock building" in "Built to Last:" designing an organizational architecture that grows, and maintains its integral core despite the changes in internal people and external strategies. "What Really Works" talks you through some of the steps necessary to make that clock. First, listen to what the customer wants. Then make filling that need your strategic focus. Make that value offering clear. Ensure that your controls and systems are top notch, so that employees can execute the strategy. Align the culture and organizational structure so performance is rewarded, again supporting the strategy. Once these major criteria are fulfilled, you can begin to think about secondary practices, namely developing people and leaders, keeping talent and innovating.

I am truly split on this Joyce and Nohria's work. It is well written and easy to read. I also like the companies presented in case studies. These weren't your typical 3M/GM/IBM/Dell case studies, but Nordstrom, Nike, and the Limited. Sort of warms my heart not to have to read the history behind Post-It-Notes for the 5000th time. But, I also have some serious issues with the book.

A former science geek in my undergrad years, I love precision. I like the thoroughness that the authors IMPLY went into the Evergreen Project. I say IMPLY, because, unlike Collins and Porras in "Built to Last," the authors do not tell us anything about their research methods. They also claim to have combed the literature and statistically eliminated all but eight of 200+ popular management practices. What were those 200+ practices? How did the Evergreen team research companies for the presence or absence of said practices? An appendix of research practices and results would be nice.

Weaknesses aside, I recommend this book on two counts. First of all, because I truly get the impression that there is some serious research behind the premises. And, if you accept the premises, the "Further Reading" section, grouped by books relating to each of the core practices, is worth the price of the book.

Finally, a book that cuts to the chase and directly attacks THE most fundamental managerial question: Which practices work and which ones don't? What should I focus on and what should I ignore? There is plenty to like about this book. No doubt its greatest strength is empirical rigor. Building off of the success of several similar studies and then improving on them by orders of magnitude makes their findings hard to ignore. So does the fact that the ultimate formula offers no easy solution. If it were easy, everyone would be winning. What Really Works doesn't oversell where it cannot. It focuses on the WHAT not the HOW. It doesn't tell me HOW to implement these practices; how arrogant would that be? However, it does offer just enough direction-illustrated with familiar case studies-so that I can translate the broad guidance into the specifics of any organized endeavor. In the end, what this book does so effectively is filter the noise, --and there's plenty of it out there. Finally, a trade book that not only doesn't ADD to the clutter, but one that helps me cut through it. To be sure, I'll be applying the authors' "4 + 2 formula" in every setting I enter to see if What Really Works, really does. Perhaps that's the ultimate praise for such a book-there is no doubt exactly what these authors' recommend. They've drawn their formula from hundreds of companies over ten years, now we get to test it ourselves.

Nitin Nohria is Professor of Business Administration at Harvard Business School, William Joyce is Professor of Strategy and Organizational Theory at Dartmouth's College Tuck School of Business, and Bruce Roberson is Vice-President of Marketing and Sales at Safety-Kleen in Texas and was a Partner at McKinsey & Co. This article was published in the July 2003-issue of Harvard Business Review.

In order to answer the question "What really works?" the authors decide to undertake a research effort, which they term the Evergreen Project. The Evergreen Project is a careful examination of more than 200 well-established management practices within 160 companies over a 10-year period (1986-1996). Although the research method is discussed in detail this article primarily discusses the findings from this project. "Our findings took us quite by surprise." The authors found that "winners" outperform excel at the four primary management practices: 1. Strategy: devise and maintain a clearly stated, focused strategy. 2. Execution: develop and maintain flawless operational execution. 3. Culture: develop and maintain a performance-oriented culture. 4. Structure: build and maintain a fast, flexible, flat organization. In addition, "winners" also master two of the four secondary management practices: (i) Talent: hold on to talented employees and find more. (ii) Innovation: make industry-transforming innovations. (iii) Leadership: find leaders who are committed to the business and its people. (iv) Mergers and acquisitions: seek growth through mergers and partnerships. "We call the winning combination the 4 +2 formula for business success." The authors point out that companies which consistently follow this formula have a 90% chance of sustaining superior business performance. Both the 4 primary and 4 secondary practices are discussed in detail. There is also a useful sidebar which explains how you can make the 4 + 2 formula work for your organization. "... we've developed a list of behaviors that support excellence in each practice." I believe that this sidebar is very useful as a checklist to remind from time to time what really works.

Yes, I do like this article. It introduces a `4 + 2 formula for business success' which highlights 4 fundamentals of business and 4 supplementary practices to the fundamentals. The formula, which is based on extensive research, is simple and easy to understand. I do believe that the "Making 4 +2 Work for You" sidebar is extremely useful and can be used as a checklist for senior management. I believe that this article, which was later followed by a book, is a useful addition to other research into high-performance organizations such as Tom Peters & Robert Waterman (In Search of Excellence, 1982), Jim Collins & Jerry Porras (Built to Last, 1994), Jim Collins (Good to Great, 2001). Recommended to all people interested in management and successful organizations.

1. "Devise and maintain a clearly stated, focused strategy":
This is the first of four essential management practices the authors found were essential for success; firms must do all four of these, plus any two of four secondary practices (which are listed under item number five below.) What is most important, say the authors, is that you develop and communicate a strategy so that it is widely understood throughout your firm.

2. "Develop and maintain flawless operational execution":

The second practice involves consistently meeting customer expectations, while continually making your operations more efficient.

3. "Develop and maintain a performance-oriented culture":
The trick is to get employees to embrace a high performance culture. The challenge is being willing to get rid of underperformers, because such people "are quite likely to corrode your culture and weaken the performance of people around them."

4. "Build and maintain a fast, flexible, flat organization":
There is no single winning organizational structure. What really matters is whether the structure you use simplfies work and reduces bureaucracy.

5. Pick any two of these secondary management practices:
The authors say it doesn't matter which two of these four practices you pick, just that you pick two and master them: "hold on to talented employees and find more," or "keep leaders and directors committed to the business," or "make innovations that are industry transforming," or "make growth happen with mergers and partnerships."

Many times the answer is simple, seemingly to simple in fact and we feel the need to make it more complex. The best ads are always very simple (Got Milk or Just Do It). Commitment and consistency to the "answer" on the other hand is not simple or even easy to come by and that is the theme of this book. As a veteran marketer I have heard all of the 200 management practices as referenced by this book. I have watched (and particpated in) many of them fail and many win. But none seemed to ensure that the company would indeed be successful. Rather they are only tools to be used as part of a process. I need evidence and science (i.e. fact) to commit. This book's research has that evidence that gives it authority to express the simple but hard to follow thruths. It outlines (in real world examples) the neccessary ingredients that have made/keep many a company successful. This not only is A MUST READ but I feel a book that should become the textbook for business and marketing students. Thank you to the authors for their commitment of ten years and the focus in preparing this book. We have no reason to fail now.

Learning about the 4 + 2 is essential. This helps to diagnose where you stand and where you should go to. Get your business intervened with the ideas in this book to learn more what you need to do to close the gap to become successful in your business. A corporate matter? Yes; bu also applicable to individual business regardless of the size... I mean if you want to grow. "That which does not grow dies."

There are big, unanswered questions that we all face as part of the human condition including: "What's the meaning of life?"; "Is there life after death?" or "Can the Mets win the World Series" ;-) All kidding aside, perhaps the biggest unanswered question facing business in general is "What Really Works?" Unfortunately, most of the proof points that business gurus and consultative experts point to in answer to that question are theoretical, pure guesswork or anecdotal at best. However, the authors of the book - "What Really Works" - decided to rigorously explore that question over a 10-year period that studied dozens of companies in search of an answer. What the 50 business consultants and academicians assigned to the project found was the "4+2 Theory." While its name smacks of ivory-tower group think it's actually a compelling formula that proposes the optimal combination of primary and secondary management practices - it's that combination of managerial fundamentals that contributes to lasting business success and may be the ultimate answer to "What Really Works."

The authors' point is, if a company wants to be a "winner," they must excel at (a) 4 mandatory areas: strategy, execution, culture, and structure, and (b) any 2 out of the following 4: talent, leadership, innovation, acquisitions and mergers. All the other things, like 360 degree personnel reviews, management training programs, etc. are not consistently statistically significant.

This is the kind of book I would bring on a plane or car ride where I could skim through it. The writing style is journalistic and sensational. As another Amazon reviewer notes, the book uses a "hero" / "villain" format, which although entertaining, is somewhat naïve. That's minus one star. The book's thesis is pretty much articulated in the first chapter. You could read that, and then follow up by reading other business books that better expound on one of these areas (e.g., Bossidy for Execution). Minus a second star.