Successful companies don’t just grow simply through good luck or fortune. There are many similarities between those who have succeeded in expanding their businesses. The Evergreen Project researched 160 companies in equivalent industries during a 10-year period and found there are eight management practices directly correlated with superior performance.
The research not only looked at successful companies and unsuccessful companies, it looked at companies whose performance changed for better or worse and identified the cause and effect of these changes – thus identifying which management practices really work.
Here’s what really works:
The four primary practices: (excellence in all four is required for superior performance)
1. Strategy – make your strategy clear and narrowly focused
2. Execution – flawless execution
3. Culture – build a performance-based culture
4. Structure – make your organization fast & flat.
The four secondary practices: (excellence in 2 out of 4 is required)
i. Talent: Make talent stick around anddevelop it
• Senior managers must be personally involved in finding and retaining talent
• Preference for developing talent from within the company (hired guns are less loyal)
• Provide top education and training for staff at all levels
• Retain talent with work that is meaningful and challenging for them
• Always have replacements for each role groomed from within the organisation.
ii. Leadership: Make your leaders are committed to your business
• The leader’s style or personal characteristics do not matter – but
the leader must be fully committed to the business
• The CEO accounts for 15% of a company’s performance (good or bad)
• On average 50% of executive pay was linked to performance in winning companies. Miss your target – miss
your bonus
• Leaders need to communicate their vision convincingly so others will adopt it
• Leaders need integrity in their words and actions so people trust them
• Future focused – leaders need to see opportunities and spot problems early
• Leaders and managers need to build strong relationships with their people
• Board of Directors must have a substantial financial stake in the business, thoroughly understand the business, and be passionately committed to its long- term success
• The board must not rubber stamp CEO decisions – they must play an active strategic role.
iii. Innovation:
Make industry-transforming innovations
• Introduce disruptive technologies and business models (not just focus on continuous improvement)
• Anticipate rather than react to industry changes
• Continually create new products to make your existing products redundant (launch a new model, open another branch etc).
iv. Mergers and partnerships: Make growth happen with mergers and partnerships
• Merge for growth and synergy, not for diversification
• Buy a business for its customer base, or one that complements your strengths
• Partner with companies to create synergies for both parties
• Make small regular strategic deals rather than occasional mega-mergers
• Have a planned process for spotting and processing deals, not ad-hock spur of the moment acquisitions.
What doesn’t work: The project found no correlation between the following and total shareholder returns:
• Investment in information technology
• Corporate change programs
• Supply chain management programs
• Learning organisations
• Team-based management
• Total Quality Management (TQM) or outsourcing execution
• Enterprise Resource Planning (ERP) or Customer Relationship Management (CRM)
• Whether business is structured geographically, or by product
• Whether business units have profit and loss responsibility or not
• The quality of HR staff or fast track development programs
• Formal mentoring programs or 360 degree performance appraisals
• CEO’s personal characteristics or attracting high quality outside directors.
Which two out of the four secondary practices is your company truly excellent in?
Article kindly supplied by business execution experts RESULTS.com.
For more information visit www.results.com
