The 4 + 2 Formula Part II (adapted from What (Really) Works by William Joyce et al)

In the prior Weekly Insight (Volume 3, Issue 1), I shared how the authors of What (Really) Works discovered eight practices that the data connected to excellent performance and they classified these eight practices into two categories:

·        primary (strategy, execution, culture, and structure)

·        secondary (talent, leadership, innovation, and mergers/partnerships)

Companies with high scores on each of the four primary areas and any two of the secondary areas had a better than 90% chance of superior performance.  This led the authors to a 4 + 2 formula for success.  In this Weekly Insight we will discuss the SECONDARY management practices.  As we discuss each one, rate your own company on its ability to perform (low, average, high) on each management practice. 

SECONDARY

Talent

Promoting from within using internal talent is a hallmark of superior-performing organizations.  These companies also commit resources in providing top quality training and education programs to develop candidates for internal promotion.  They also keep their people engaged by empowering them and decentralizing decision making.  Senior executives are highly involved in the competition for the best talent.  HR is not the only one tasked with recruiting talent.

Rate Your Company on Talent:  __________ (Low, Average, High) 

Leadership

Chief executives from these winning companies work hard to strengthen management’s relationships with people at all levels throughout the organization.  Management is focused on seeing opportunities and problems early, encouraging employees to anticipate change and be more proactive (rather than reactive).  These companies also require board members to have a significant financial stake in the company.  This tends to encourage the board to seek and retain stronger chief executives.

Rate Your Company on Leadership:  __________ (Low, Average, High)

Innovation

Where new ideas come from made no difference to these high-performing companies.  These leaders were willing to cannibalize existing products in introducing disruptive technologies to lead their industry.  Technological innovation is encouraged both externally to produce new products and internally to improve efficiency.

Rate Your Company on Innovation:  __________ (Low, Average, High) 

Mergers and Partnerships

Winning companies create value in mergers and acquisitions by taking advantage of existing customer relationships when acquiring new businesses.  They entered businesses that were complementary to existing strengths, picking companies with compatible cultures.  Partnerships were developed with an eye toward providing benefits neither partner could achieve alone.  And they developed (over time) an ability to successfully identify, screen and close good deals. 

Rate Your Company on M&A:  __________ (Low, Average, High) 

This 4 + 2 model focuses managers on but six key elements in their management practices.  The authors discovered in their research that investors in “4 + 2” companies saw a 10-fold increase in their investment over a 10-year period while non “4 + 2” companies provided but a 62% gain for the entire decade.  The authors performed a follow-up study of over 40 of the original study companies for 1997-2002 and the earlier study’s conclusions were affirmed. 

So how did your organization score on the following? 

·        primary (strategy, execution, culture, and structure)

·        secondary (talent, leadership, innovation, and mergers/partnerships)

Can you see areas of strength upon which to build future success?  Have you determined which areas need some continuous improvement attention?   

If you own your own business, why not ask several of your key employees to rate your company on these factors.  See if their conclusions match yours.  As someone once said, defining the problem can be half of the solution. 

What changes do you need to make in this New Year? 

Keith 

Subscribe to these Weekly Insights at no cost at www.daystarconsulting.com

Weekly Insight answers to executive questions at http://www.daystarconsulting.com/faq.asp 

If for any reason you would like to be removed from our email list, please email Remove@daystarConsulting.com