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Separate the facts from the fads: A groundbreaking, fiveyear study reveals the musthave management practices that truly produce superior results.

What Really Works
by Nitin Nohria, William Joyce, and Bruce Roberson

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This article is made available to you with compliments of SAP. Further posting, copying or distributing is copyright infringement. To order more copies go to www.hbr.org or call 800-988-0886.

Separate the facts from the fads: A groundbreaking, five-year study reveals the must-have management practices that truly produce superior results.

What Really Works
by Nitin Nohria, William Joyce, and Bruce Roberson

© 2003 BY HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED.

The dot-com boom of the 1990s had changed the rules of business forever, it seemed; all you needed was a sexy IPO, cold nerve, and the magic carpet of momentum trading. But even as entrepreneurs and venture capitalists were dismissing traditional business models as antiquated and conventional business wisdom as old school, we found ourselves wondering if they were right. For years we had watched new management ideas come and go, passionately embraced one year, abruptly abandoned the next. “What really works?” we wondered. Our curiosity prompted us to undertake a major, multiyear research effort in which we carefully examined more than 200 well-established management practices as they were employed over a ten-year period by 160 companies. Our findings took us quite by surprise. Most of the management tools and techniques we studied had no direct causal relationship to superior business performance. What does matter, it turns out, is having a strong grasp of the business basics. Without exception, companies

that outperformed their industry peers excelled at what we 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 out of four secondary management practices—talent, innovation, leadership, and mergers and partnerships. We learned, for example, that it doesn’t really matter if you implement ERP software or a CRM system; it matters very much, though, that whatever technology you choose to implement you execute it flawlessly. Similarly, it matters little whether you centralize or decentralize your business as long as you pay attention to simplifying the way your organization is structured. We call the winning combination the 4+2 formula for business success. A company that consistently follows this formula has better than a 90% chance of sustaining superior business performance. The 160 companies in our study—which we call the Evergreen Project—were divided into 40 quads, each comprising four companies in a

harvard business review • july 2003 This article is made available to you with compliments of SAP. Further posting, copying or distributing is copyright infringement. To order more copies go to www.hbr.org or call 800-988-0886.

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What Really Works

Nitin Nohria is the Richard P. Chapman Professor of Business Administration at Harvard Business School in Boston. William Joyce is a professor of strategy and organizational theory at Dartmouth College’s Tuck School of Business in Hanover, New Hampshire. Bruce Roberson is the executive vice president of marketing and sales at Safety-Kleen in Texas and was a partner at McKinsey & Company in Dallas.

narrowly defined industry. The companies in each quad began the study period (1986 to 1996) in approximately the same fiscal condition. Yet their fortunes differed dramatically over the decade. One company in each foursome emerged as a winner—it consistently outperformed its peers in the industry throughout our study period; one a loser—it consistently underperformed against its competitors; one a climber—it started off poorly but dramatically improved its performance once it applied the 4+2 formula; and one a tumbler—it began...
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