What Really Works (HBR OnPoint Enhanced Edition)

This is an enhanced edition of HBR article R0307C, originally published in July 2003. HBR OnPoint articles include the full-text HBR article, plus a summary of key ideas and company examples to help you quickly absorb and apply the concepts. When it comes to improving business performance, managers have no shortage of tools and techniques from which to choose. But what really works? What's critical, and what's optional? Two business professors and a former McKinsey consultant set out to answer those questions. In a groundbreaking, five-year study that involved more than 50 academics and consultants, the authors analyzed 200 management techniques employed by 160 companies over 10 years. Their findings at a high level? Business basics really matter. In this article, the authors outline the management practices that are imperative for sustained superior financial performance--their "4+2 formula" for business success. They provide examples of companies that achieved varying degrees of success depending on whether they applied the formula, and they suggest ways that other companies can achieve excellence. Without exception, the companies that outperformed their industry peers excelled in what the authors call the four primary management practices: strategy, execution, culture, and structure. And they supplemented their great skill in those areas with a mastery of any two of four secondary management practices: talent, leadership, innovation, and mergers and partnerships. A company that consistently follows this 4+2 formula has a better than 90% chance of sustaining superior performance, according to the authors.