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What Really Works:
Organizational Dynamics, Vol. 34, No. 2, pp. 118–129, 2005 ß 2005 Elsevier Inc. All rights reserved. www.organizational-dynamics.com
ISSN 0090-2616/$ – see frontmatter doi:10.1016/j.orgdyn.2005.03.006
What Really Works:
Building the 4 + 2 Organization WILLIAM F. JOYCE
W
hat really works? For firms that are doing well, ensuring continued success is on everyone’s mind. For a company in trouble, the issues are even more critical. Managers need to concentrate scarce resources on the factors that really help to correct the problems they are facing. A mistake can be critical, and may even cause the organization to fail. Unfortunately, we have had many more answers to this critical question, than we have had good answers. Knowing the management practices that are critical to organizational success and building a great company is essential. However, even when we have this precious knowledge, we still need to know how to implement these critical ideas in our own organizations. Building the 4 + 2 organization, an organization embodying the findings of our research, is just as important as discovering the winning practices in the first place. And, it is no less difficult. This is the topic of this paper.
WHAT REALLY WORKS AND THE EVERGREEN RESEARCH What are the factors that result in winning performance? And what is the 4 + 2 formula? The answers to these two critical questions provide the foundation for building hypercompetitive 4 + 2 organizations. Literally, thousands of books and papers have been published attempting to answer these questions. And most of these attempts have
failed. We learn, too late, that many of the ‘‘excellent’’ companies are no longer excellent, that ‘‘best’’ practices are ‘‘worst’’ practices when used in different contexts, and that today’s fad may be tomorrow’s ticket to oblivion. What really works, consistently and predictably in different situations and industries, has remained a mystery until now. In 1997, we began a study to determine what would really work to obtain and ensure continued high levels of economic performance. There was some degree of hubris in our search for the answer to a question that has eluded management consultants, researchers and authors for decades. But there was also the reassurance that we were going to approach the problem differently and in a manner that would be likely to really produce an answer to this critical question. How could we hope to succeed where so many talented researchers and managers had failed? We believed that most of these failures could be attributed to four causes. These four fatal flaws are: (1) using too few or limited resources for the research, (2) separating theory from the management practices it is intended to serve, (3) relying on preconceived ideas to determine the ‘‘truth’’ about what causes success, and (4) underestimating the serious difficulty of rigorously determining the real causes of success. Let’s think about each of these in turn. First, almost all management research is very narrow in both scope and scale. Most work is done by single researchers with fairly limited resources. Despite the importance of 118
the problem, we spend very little on determining solutions—we attack the question with resources that are modest at best. Often the research is limited to the scale that a single person can accomplish, and because of this it often focuses on a very narrow issue. Real management problems are quite different from this. They are large, both in scope and scale. No one ever encounters a problem that is only a marketing, finance, or accounting problem. Those only exist in textbooks. Real organizational problems involve finance, marketing, management, organization, accounting and a host of other factors— all at once! Real problems cannot be solved by treating them in an unreal, piece-by-piece fashion. This lack of reality is exacerbated by a separation of theory and practice. Researchers talk to other researchers, and practitioners talk to practitioners. It is as if neither one has anything to say to the other, yet they are both trying to determine the same thing: What really works. Practitioners have a rich depth of understanding of business phenomena. Researchers have rigorous methodologies and are trained in scientific analysis. One can hardly afford to ignore the other, yet this is precisely what is happening today. We need everything we can get to determine the real causes of firm performance. Research and practice are complementary and must be integrated. Both practitioners and researchers rely too much on common sense explanations of management. Management involves getting things done through people. Each of us spends every day interacting with others, attempting to influence their behavior, and trying to manage our own as well. Simply because we are human means that each one of us is something of an ‘‘expert.’’ We know more about management from our everyday experiences than we do about physics, or astronomy, or archaeology. For this reason, we usually have a starting point for our thinking: What we think works, as opposed to what really works. We need an approach that is not blinded by these often-erroneous assumptions and that lets us get to the point.
Finally, we need to take an approach that recognizes that this is a complex problem. If it were an easy problem it would have been solved a long time ago. Yet over and over, we continue to hear overly simple solutions arrived at through too simple a method. We study 10 firms, or interview 20 managers, and draw our conclusions. Who can be surprised that these lazy answers are often silly and incorrect? The research that we conducted, ‘‘The Evergreen Project,’’ was designed to avoid all of these problems. It is the largest study of its kind ever undertaken. We collected and analyzed 10 years of data on 200 firms in 50 sub-industry groupings. The firms that were studied varied in size, and we complemented these broad extensive analyses with focused, in-depth exploration of issues of special interest. We utilized a variety of methods, including interviews, surveys, and analyses of archival data. We analyzed over 60,000 pages of information comprised of reports by journalists, papers by Wall Street analysts, company documents, and numerous other sources over the 10-year time period of our study. The study team was composed of academics and practitioners, ensuring effective cross-fertilization of ideas, hypotheses and interpretation of the results. The academics represented a number of leading business schools including Dartmouth, Harvard, Wharton and others. Twenty-one practitioners implemented the study in coordination with the academic researchers. And finally, we had to invent new statistical methodology to handle the tremendous complexity of the data. When we were done we had produced results that avoided the problems identified above. We had narrowed 200 management practices down to 8 that explained the difference between winners and losers. Four of these were essential foundation practices; failing at even one of these practices is disastrous for financial performance. The remaining four practices were complementary; achieving at least two of the four was necessary to ensure success, but managers had leeway to choose from among these. Firms that achieved all 119
four of the foundation practices and at least two of the complementary practices radically outperformed losing firms over the 10-year time period of the study, based upon total returns to shareholders. Based upon the combination of practices required to excel, we called these findings the 4 + 2 formula for sustained business success.
WHAT REALLY WORKS? THE RESULTS IN DETAIL Let’s take a look at the 4 + 2 formula in detail. Each company in our study was assigned to an industry subgroup such as retailing, consumer electronics, or energy (40 in all), and then given a specific performance designation in that subgroup based on their performance relative to peers. These performance differences identified each firm as one of four types—Winner, Climber, Tumbler, or Loser—over the 10-year time frame of the study. Winners started out strong and got even better. Companies like Kohl’s Corp., Campbell Soup Co. and Nucor Corp. built on strong foundations of success to become even better performers. Tumblers started strong and then faltered. Some of these were surprising—great companies like Nordstrom Inc. that had somehow lost their way. Climbers and Losers both began with weak performance. However, Climbers were able to overcome their problems and rise to a high level of performance by the end of the 10-year time period. Sears, Roebuck & Co., after underperforming for years, finally found the keys to success. Losers muddled along, never rising above mediocre performance. Polaroid Corp. could not break out of the organizational practices that had mired it in years of lackluster earnings. The differences in performance among these firms were remarkable. Winners produced total returns to shareholders (TRS) of 945% over the 10-year time period of the study, whereas Losers were only able to grow TRS 62%. Sales rose 415% for Winners, but only 83% for Losers. Similar results held for operating income and asset growth. 120 ORGANIZATIONAL DYNAMICS
WINNING PRACTICES AND THE 4 + 2 FORMULA The foundation and complementary practices that accounted for these differences in performance were as follows.
Foundation Practices 1. Strategy: devise and maintain an engaging, focused strategy. Winners had strategies that focused the organization on a clear, engaging set of shared goals. Even though they might operate extensively, there was a focus on a clear business model. And perhaps even more important, this strategy was shared and meaningful to those within the company. Many companies manage their strategic planning activities so that the ‘‘strategic’’ goals are only the goals of management and not the organization. It is hard to lead when the direction you are leading is not meaningful to the people who have to make it happen. A lack of focus confuses everyone: your customers, your employees, and even management itself. 2. Execution: develop and maintain flawless operations and customer-focus. Winners and Climbers paid attention to their customers and constantly sought reductions in cost and improvements in productivity. For Climbers, this was often the early focus on regaining a high performance position in their industry. Execution is at the core of business success, and forms a foundation for applying the firm’s competence. 3. Culture: develop and maintain a performance-oriented culture. Essentially, this means building a culture that is meaningful to all of the employees of the firm. Allowing them to grow, to be part of something bigger than their own contributions, treating them fairly and rewarding their contributions is essential. When the whole organization is engaged, performance follows. It is the result of a positive culture.
4. Structure: build and maintain a fast, flexible, flat organization. Organizations must choose structures that facilitate execution and serve their strategies. The structures that were adopted by Winners and Climbers radically simplify the way that work is done and reduce bureaucracy. In contrast, Losers and Tumblers seem to almost consciously erect barriers to success. Excessive rules and procures, old and outdated processes, and unnecessary organizational units slow us down and frustrate those who are really trying to get things done. Most organizations are too bureaucratic, too hierarchical, and too controlling. But in all organizations, people do the work, not rules. Winners remembered that and got unnecessary structure and rules out of the way. Successful firms had all of the four foundation practices. Winners and Climbers also succeeded in at least two of the remaining four complementary practices.
Complementary Practices 1. Talent: hold on to talented employees and find more. Winners grew their own talent. Climbers had to find it, sometimes outside their organizations. Once they had it they worked hard to keep it. Tumblers and Losers lost it or were never able to obtain it from any source. As Climbers pulled out of their low performance positions, they developed human resource systems that helped them to continue to develop and retain talent. Winners, with these systems in place, could concentrate on using their talent to extend their already strong cultures. 2. Leadership: keep leaders and directors committed. Our study showed around 15% of the variance in corporate performance can be attributed to leadership quality. Who sits in the executive offices, the quality of the senior leadership team, has a clear empirical, as well as logical, link to firm performance. Since the board chooses the chief executive
officer (CEO), it is important to have directors that make good selections. Ensuring that the directors make good choices is in turn directly related to the extent to which these directors have a significant financial stake in the company. When this is the case, directors seem to be more committed to the firm’s success and make better choices of CEOs. 3. Innovation: make industry-transforming innovations. Winners tend to anticipate, and even cause, major industry disruptions, whereas Losers tend to be much more reactive. As a consequence, they are able to exploit the opportunities that occur in these disruptions. They are able to lead and not follow. These first-mover advantages give them an early head start in relation to competitors, one that is often hard to catch up with. 4. Mergers and partnerships: make growth happen. Companies that can master mergers and acquisitions are more likely to be Winners, as long as these deals are compatible with the focus mandate of the Strategy foundation practice. Doing smaller, more frequent deals seems to allow this. Losers, like Winners, also engaged in many acquisitions, as if they could buy their way out of trouble. But without the foundation practices in place these deals were often misinformed, and even worse, disastrous.
SECOND: BUILDING THE 4 + 2 ORGANIZATION The 4 + 2 formula summarizes the necessary practices to ensure Winner status. It tells us that until we are excelling at all four of the foundation practices we will never attain these exalted levels of performance. But, achieving this is not a trivial problem. For many firms, excelling at even one of the foundation practices is a daunting problem. Each firm faces its own unique set of challenges in the climb to greatness. Most firms begin the climb to excellence from a position where at least 121
one of the foundation practices is lacking. So, what advice can be given to firms aspiring to Winner status? What must firms actually do to attain this winning practice profile? The answer fundamentally depends on what kind of firm you are. Each type of firm— Losers, Tumblers, Climbers, as well as Winners—has a characteristic pattern of foundation practice levels. The actions that each must take differ as a function of these profiles. The challenges facing a Tumbler are different from those facing a Loser. Comparing these profiles tells us what particular foundation practices distinguish among our four firm types, and consequently what must be done to move from a less to a more desirable firm type. How can a Loser become a Climber? The answer to this question can be determined by contrasting the foundation practice profiles of Climbers and Losers. How can a Climber solidify its gains and move towards Winner status? Here, the answer is obtained by contrasting Winner and Climber profiles. Climbers must do different things than Losers, and Tumblers also have a different change agenda based upon their particular configuration of practices. Answering these questions therefore requires us to have a way of comparing and contrasting the foundation practices among our four quad types. These contrasts will allow us to see which practices must be focused on, and in what order, depending on the firm’s status as a Winner, Loser, Climber, or Tumbler. The foundation practices are essential; there is no possibility of improvement until they have been addressed. Once a strong foundation has been established, attention can then focus on building two supporting complementary practices.
DISTINGUISHING AMONG WINNERS, LOSERS, CLIMBERS AND TUMBLERS
help with comparing them, it is desirable to have a method for visualizing them. I have developed the concept of the ‘‘Normalized Practice Space’’ to help with this. Each of the four types engages to a greater or lesser extent in activities relating to the four foundation practices. What is needed is a way of first determining, and then comparing, these differences. For this purpose, the content analyses conducted as part of the Evergreen research are particularly useful. The content analyses identified assertions concerning the causes of each (of the 200) individual firm’s performance. These assertions (contained in published documents by Wall Street analysts, journalists, executives, and industry experts) were analyzed using a new method of linguistic content analysis that matches and clusters similar statements. The assertions were clustered, first for each of the four quad types, and then in terms of the four foundation practices contained in the 4 + 2 formula—that is, as pertaining to strategy, structure, execution or culture. As a result, we are able to identify the total number of performance related assertions in the database that pertain to each of the four firm types, for each of the four foundation practices. That is, for each type (Winner, Loser, Climber, Tumbler), and for each of the four foundation practices (Strategy, Structure, Culture, and Execution), we are able to state the total number of both positive and negative actions taken by that type that are believed to account for the relative performance level of the firm over the 10-year period of the study. Each firm type will have a different profile based upon these frequencies. Comparing these profiles—for example, those of the Winner firms in relation to Tumbler or Loser firms—then allows me to suggest sequences of actions for moving from lower to generally more desirable performance levels.
V i s u a l i z i n g P r a c t i c e P r o fi l e s : The Normalized Practice Space
The Normalized Practice Space: Distinguishing Winners, Losers, Climbers and Tumblers
Each of our four firm types has a characteristic profile of foundation practices. In order to
Fig. 1 portrays the results of these analyses for the Winner firms in what I call the ‘‘Nor-
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FIGURE 1
WINNER FOUNDATION PRACTICES
malized Practice Space.’’ Each dimension of the practice space is shown on a scale of 0– 100, and has been normalized to allow the use of a common scale for visualizing all four practices. That is, the total frequency or importance score for each foundation practice has been standardized at 100%, based upon the ratio of each quad type’s practice frequencies to those of the Winner firms. These scores are called ‘‘Practice Scores,’’ and the space defined by the scores for the Winner firms is called the ‘‘Normalized Practice Space.’’ The Winner firm occupies 100% of the Normalized Practice Space (NPS), since the Winner’s frequency or importance scores are divided by themselves. I have chosen to represent the Strategy and Execution practices on one axis of the NPS shown in Fig. 1, with Culture and Structure on the second axis. Broadly, these correspond to ‘‘Strategic’’ and ‘‘Organizational’’ dimensions of the NPS. Opposite ends of each dimension focus on longer (Strategy and Culture) and shorter (Execution and Structure) term issues in building a 4 + 2 organization, as shown in the figure. The foundation practice profiles of each of the remaining three firm types (Losers, Tum-
blers, and Climbers) may then be identified by computing the ratio of each of their four practice frequencies to those of the Winner profile shown in Fig. 1. The resulting ‘‘practice’’ scores may be interpreted as the percentage of the Winner profile scores achieved by each of the remaining three firm types (Climber, Tumbler, Loser) on each of the four foundation practices. The Winner firm occupies 100% of the Normalized Practice Space, as stated earlier. Each of the remaining three quad types occupies only a portion of this space. Losers. The profile for the Loser firm is shown in Fig. 2. It can be seen from this figure that Loser firms have very few strengths. They have a weak strategy, but do execute reasonably well against it. Perhaps their execution is adequate due to the relatively low levels of aspiration of the strategy. They have virtually no strength in either Culture or Structure. Indeed, when negative practices are superimposed on the figure, significant structural problems are observed. Losers survive, just barely, with no significant strengths and significant organizational weaknesses. 123
FIGURE 2
WINNER
VS.
LOSER
Tumblers. The profile for the Tumbler firm is shown in Fig. 3. Tumblers were once Winners, but now are significantly underperforming in relation to previous performance. There are two significant components of the failure of the Tumbler firms. First, they have significantly reduced their positive activities. The area contained in the positive Tumbler profile is substantially smaller than the much larger area contained in the Winner profile. The Tumbler is still engaged with a number of positive practices, but, unfortunately, at a level that is much reduced from its days as a Winner. Second, Fig. 4 shows that Tumblers are making many errors in the eyes of the journalists, executives, and analysts. The area in the negative practice profile indicates that Tumblers, in particular, are making many errors of execution; in fact, so many that they
FIGURE 3 WINNERS VS. TUMBLER POSITIVE
124 ORGANIZATIONAL DYNAMICS
FIGURE 4 WINNER VS. TUMBLER NEGATIVE
essentially cancel the effects of their remaining positive practices. Nordstrom overemphasized customer service to such an extent that it was making poor business decisions as a consequence. Other firms stayed too long in particular markets, refusing to let go of the old strategies and technologies that had served them well. Before Polaroid became a Loser firm it was a Tumbler. It waited far too long to embrace digital imaging technology. The same is true of Culture and Strategy. While some positives remain the large volume of poor practices stifles performance and results in an organization that is ambivalent in implementing its core practices. Climbers. The profile of the Climber is in marked contrast to the Tumbler (Fig. 5). First, there is strong accomplishment in
FIGURE 5 WINNERS
VS.
CLIMBERS
FIGURE 6 LESSONS
FROM THE
4 + 2 FORMULA
implementing the Strategy and Execution practices. In fact, the Climbers performance on these dimensions is at the same level as the Winners. Climbers are beginning to make gains in Culture and Structure, but have not yet reached the levels of the Winner firms. It seems as if Climbers attend to the Strategic practices first and then to the organizational ones. This is consistent with a large body of evidence that says organization follows from and depends upon strategy. The most significant difference between Climbers and Tumblers is in the virtual absence of mistakes by Climbers such as the ones noted above. Climbers clearly establish where they are going and execute flawlessly in getting there. With more time and continued emphasis on Structure and Culture they will become Winners.
Second, comparing the Tumbler and Loser profiles, it is apparent that the Tumbler retains some of the strengths from its time as a Winner. However, it seems to have lost its way. The news is not all bad; if it can stop making mistakes, it retains a core set of strengths to build upon and begin a process of rebuilding. It appears that a turnaround (for a Climber fallen from grace) will likely be easier that a transformation (of a Loser with few strengths). Finally, Climbers have significant strengths and relentlessly build upon them. With time they will become Winners if they are successful in supporting the strategic practices with strong structure and culture.
Summary comparing practices across quad types. The profiles of Winners, Losers, Tumblers, and Climbers are compared in Fig. 6. It is clear that all of the firms have at least a moderate ability in execution. Based upon this it appears that Execution is a survival criterion—at a minimum, execution is necessary to remain in the marketplace.
What actions should your firm adopt? Which of the critical foundation practices should be concentrated on now? Achieving all of the foundation practices is essential to success, but which ones should be the initial focus of attention? And how should our change management activities be sequenced to ensure success? The answer to these important ques-
TURNING POINTS: BUILDING THE 4 + 2 ORGANIZATION
125
tions can be determined by examining the critical ‘‘Turning Points’’ in building a 4 + 2 organization.
Turning Points Everyone aspires to being a Winner firm. Indeed, the economic rewards are substantial, as noted above. The Winner occupies an enviable position; it seeks to sustain and extend its winning practices and to achieve even higher levels of dominance in the market. But what about those in other positions, those who seek but who have not yet attained winning status? Each of these firms must go through a ‘‘Turning Point’’ that redirects its foundation practices toward a path leading to winning performance. In this path there are two critical Turning Points. The first is from a Loser or Tumbler to a Climber. We will see that the transition from Tumbler to Climber is easier. The second Turning Point is from a Climber to a Winner. Let’s look at each of these in turn. Turning Point 1: from a Loser or Tumbler to a Climber. No one wants to be a Loser, and
FIGURE 7 TURNING POINT:
126 ORGANIZATIONAL DYNAMICS
certainly not for very long. But what if you do find yourself in this unenviable position? You must work swiftly to alter the foundation practices and begin to transition to a Climber firm. This Turning Point is shown graphically in Fig. 7. Comparing the profiles of the Loser and Climber firms indicates what practices should b focused on in this situation. Three actions are essential. First, the firm must cease making errors. Essentially, this means that accountability in the organization must increase. This is generally a hard problem for most organizations, but it can be radically improved with effective performance management systems and clear performance metrics. Second, the firm must rededicate itself to execution. Unnecessary costs must be eliminated and the customer must be in the forefront of all decision-making. Finally, the organization must refocus its strategy. It is critical to eliminate bad products, projects and even businesses. This can be a hard thing to do if they are projects and businesses that we ourselves created, but if they do not fit the mandates of the 4 + 2 formula concerning focusing on the core business they must
FROM A
LOSER
TO A
CLIMBER
go, no matter what our emotional attachment. A Tumbler must take similar actions. Mistakes are canceling the benefits of the positive practices it is still engaging in. The Tumbler was once a Winner but has begun to make mistakes. These must be eliminated quickly, and its remaining strengths re-invigorated. Beginning the climb to excellence is easier for the Tumbler than the Loser. With little foundation to build on, the Loser must create almost everything from scratch. Turning Point 2: from a Climber to a Winner. A Climber already excels on the Strategy and Execution practices (Fig. 8). In fact, they have already achieved the levels on these practices that Winners enjoy. Now, they must support these strategic practices with organizational ones. In particular, they must act to build fast, flat, and flexible organizational structures and then build a long-term culture that is consistent with both the structure and the demands of the strategy. The first step in this process is to eliminate unnecessary bureaucracy. We all have it—it
FIGURE 8
TURNING POINT:
is now time to purge it and get out of the way of high performance. With thoughtful implementation such as that employed by General Electric Co. in the Work-Out! process and by General Motors Corp. in GoFast!, the process of eliminating bureaucracy can be the primary mechanism for achieving sustained cultural change. Once the Climber has established the four foundation practices, it is time to begin focusing on the complementary practices with renewed vigor. Taking the action steps discussed above will build the 4 + 2 organization. Building an organization using the 4 + 2 formula will not be easy—each step in the process is challenging and implementation may take awhile. Managers will need to be skillful at managing a large complex transformation effort. Using the 4 + 2 formula as a guide ensures ‘‘Strategic’’ control. Most management controls are based on accounting measures, but, unfortunately, these are all historical in nature. While some argue that a good strategy is the ‘‘one that wins,’’ we cannot wait until the battle is over to know if we have a good plan for success! The 4 + 2 formula points the way to success and pro-
FROM A
CLIMBER
TO A
WINNER
127
vides guideposts for achieving radically higher levels of performance. It tells us what to do now to be even more successful in the future. It sidesteps fads and poorly developed ideas that often create more problems than they solve. Building a 4 + 2 organization is challenging but it is worth it. It is worth it in knowing that what we have done is likely to have real effects, and that when we are
128 ORGANIZATIONAL DYNAMICS
asking more of our people it is with real evidence that what we are asking for will work. Building at 4 + 2 organization results in higher levels of performance, efficacy and profitability for everyone.
SELECTED BIBLIOGRAPHY This research extends the findings of the Evergreen Studies, described in What Really Works: The 4 + 2 Formula for Sustained Business Success, by William Joyce, Nitin Nohria, and Bruce Roberson (HarperBusiness, 2003); and in ‘‘What Really Works,’’ Harvard Business Review, by Nohria, Joyce, and Roberson, July 2003, 1–13. Other research taking a narrower, less extensive, or less rigorous approach to determining the causes of firm performance can be found in In Search of Excellence, by Tom Peters and Robert Waterman (Warner, 1988), which was one of the early books in this area, or Good to Great, by Jim Collins (HarperBusiness, 2001). The statistical methodology for linguistic sequence comparison utilized in this work is described in its simplest form in ‘‘Designing Lateral Organizations: An Analysis of the Benefits, Costs, and Factors Enabling NonHierarchical Organizational Forms,’’ by William Joyce, Victor McGee, and John Slocum, Decision Sciences, 28 (1997), 1–29. The foundation practices have been discussed by a number of authors, but rarely in an integrated way. What Really Works: The 4 + 2 Formula for Sustained Business Success was
the first large-scale empirical discussion of an integrated perspective. A slightly earlier work, MegaChange, by William Joyce (Free Press, 2000) provided an integrated model of firm performance and large-scale change consistent with the 4 + 2 formula, based upon a large and diverse integration of the available academic literature. This work could be read before What Really Works to provide key linkages to the organizational literature. Numerous books look at particular foundation practices. MegaChange provides an indepth treatment of each as part of the development of the integrated perspective described above. Others include Execution (for the Execution dimension), by Lawrence Bossidy and Ram Charan (Crown Business, 2002); ‘‘Designing Lateral Organizations: An Analysis of the Benefits, Costs, and Factors Enabling Non-Hierarchical Organizational Forms,’’ by Joyce, McGee, and Slocum, Decision Sciences; Lawrence Hrebiniak and William Joyce, Implementing Strategy (New York: MacMillan, 1984); and Designing Organizations, by Jay Galbraith (Jossey-Bass, 1999), for the Structure dimension.
William F. Joyce is a professor of strategy and organization science at the Amos Tuck School of Business of Dartmouth College, Hanover, NH, USA. He is the author of four books and numerous articles dealing with strategy implementation, organizational design, and cultural change. This work is widely cited in both the academic and professional literatures, and he is recognized as an international authority on strategy and organizational design. His newest book, What Really Works: The 4 + 2 Formula for Business Success, was published by HarperBusiness in May 2003. Joyce served as a consultant to the General Electric Company on the Work-Out! process, one of the largest applied change projects in the history of American enterprise. Recently, he worked with General Motors Corp. to design and implement the GoFast! program. GoFast! has superceded the Work-Out! project as the largest organizational change and cultural transformation project ever undertaken (Tel.: +1 603 696 2402; e-mail: [email protected]). 129
ISSN 0090-2616/$ – see frontmatter doi:10.1016/j.orgdyn.2005.03.006
What Really Works:
Building the 4 + 2 Organization WILLIAM F. JOYCE
W
hat really works? For firms that are doing well, ensuring continued success is on everyone’s mind. For a company in trouble, the issues are even more critical. Managers need to concentrate scarce resources on the factors that really help to correct the problems they are facing. A mistake can be critical, and may even cause the organization to fail. Unfortunately, we have had many more answers to this critical question, than we have had good answers. Knowing the management practices that are critical to organizational success and building a great company is essential. However, even when we have this precious knowledge, we still need to know how to implement these critical ideas in our own organizations. Building the 4 + 2 organization, an organization embodying the findings of our research, is just as important as discovering the winning practices in the first place. And, it is no less difficult. This is the topic of this paper.
WHAT REALLY WORKS AND THE EVERGREEN RESEARCH What are the factors that result in winning performance? And what is the 4 + 2 formula? The answers to these two critical questions provide the foundation for building hypercompetitive 4 + 2 organizations. Literally, thousands of books and papers have been published attempting to answer these questions. And most of these attempts have
failed. We learn, too late, that many of the ‘‘excellent’’ companies are no longer excellent, that ‘‘best’’ practices are ‘‘worst’’ practices when used in different contexts, and that today’s fad may be tomorrow’s ticket to oblivion. What really works, consistently and predictably in different situations and industries, has remained a mystery until now. In 1997, we began a study to determine what would really work to obtain and ensure continued high levels of economic performance. There was some degree of hubris in our search for the answer to a question that has eluded management consultants, researchers and authors for decades. But there was also the reassurance that we were going to approach the problem differently and in a manner that would be likely to really produce an answer to this critical question. How could we hope to succeed where so many talented researchers and managers had failed? We believed that most of these failures could be attributed to four causes. These four fatal flaws are: (1) using too few or limited resources for the research, (2) separating theory from the management practices it is intended to serve, (3) relying on preconceived ideas to determine the ‘‘truth’’ about what causes success, and (4) underestimating the serious difficulty of rigorously determining the real causes of success. Let’s think about each of these in turn. First, almost all management research is very narrow in both scope and scale. Most work is done by single researchers with fairly limited resources. Despite the importance of 118
the problem, we spend very little on determining solutions—we attack the question with resources that are modest at best. Often the research is limited to the scale that a single person can accomplish, and because of this it often focuses on a very narrow issue. Real management problems are quite different from this. They are large, both in scope and scale. No one ever encounters a problem that is only a marketing, finance, or accounting problem. Those only exist in textbooks. Real organizational problems involve finance, marketing, management, organization, accounting and a host of other factors— all at once! Real problems cannot be solved by treating them in an unreal, piece-by-piece fashion. This lack of reality is exacerbated by a separation of theory and practice. Researchers talk to other researchers, and practitioners talk to practitioners. It is as if neither one has anything to say to the other, yet they are both trying to determine the same thing: What really works. Practitioners have a rich depth of understanding of business phenomena. Researchers have rigorous methodologies and are trained in scientific analysis. One can hardly afford to ignore the other, yet this is precisely what is happening today. We need everything we can get to determine the real causes of firm performance. Research and practice are complementary and must be integrated. Both practitioners and researchers rely too much on common sense explanations of management. Management involves getting things done through people. Each of us spends every day interacting with others, attempting to influence their behavior, and trying to manage our own as well. Simply because we are human means that each one of us is something of an ‘‘expert.’’ We know more about management from our everyday experiences than we do about physics, or astronomy, or archaeology. For this reason, we usually have a starting point for our thinking: What we think works, as opposed to what really works. We need an approach that is not blinded by these often-erroneous assumptions and that lets us get to the point.
Finally, we need to take an approach that recognizes that this is a complex problem. If it were an easy problem it would have been solved a long time ago. Yet over and over, we continue to hear overly simple solutions arrived at through too simple a method. We study 10 firms, or interview 20 managers, and draw our conclusions. Who can be surprised that these lazy answers are often silly and incorrect? The research that we conducted, ‘‘The Evergreen Project,’’ was designed to avoid all of these problems. It is the largest study of its kind ever undertaken. We collected and analyzed 10 years of data on 200 firms in 50 sub-industry groupings. The firms that were studied varied in size, and we complemented these broad extensive analyses with focused, in-depth exploration of issues of special interest. We utilized a variety of methods, including interviews, surveys, and analyses of archival data. We analyzed over 60,000 pages of information comprised of reports by journalists, papers by Wall Street analysts, company documents, and numerous other sources over the 10-year time period of our study. The study team was composed of academics and practitioners, ensuring effective cross-fertilization of ideas, hypotheses and interpretation of the results. The academics represented a number of leading business schools including Dartmouth, Harvard, Wharton and others. Twenty-one practitioners implemented the study in coordination with the academic researchers. And finally, we had to invent new statistical methodology to handle the tremendous complexity of the data. When we were done we had produced results that avoided the problems identified above. We had narrowed 200 management practices down to 8 that explained the difference between winners and losers. Four of these were essential foundation practices; failing at even one of these practices is disastrous for financial performance. The remaining four practices were complementary; achieving at least two of the four was necessary to ensure success, but managers had leeway to choose from among these. Firms that achieved all 119
four of the foundation practices and at least two of the complementary practices radically outperformed losing firms over the 10-year time period of the study, based upon total returns to shareholders. Based upon the combination of practices required to excel, we called these findings the 4 + 2 formula for sustained business success.
WHAT REALLY WORKS? THE RESULTS IN DETAIL Let’s take a look at the 4 + 2 formula in detail. Each company in our study was assigned to an industry subgroup such as retailing, consumer electronics, or energy (40 in all), and then given a specific performance designation in that subgroup based on their performance relative to peers. These performance differences identified each firm as one of four types—Winner, Climber, Tumbler, or Loser—over the 10-year time frame of the study. Winners started out strong and got even better. Companies like Kohl’s Corp., Campbell Soup Co. and Nucor Corp. built on strong foundations of success to become even better performers. Tumblers started strong and then faltered. Some of these were surprising—great companies like Nordstrom Inc. that had somehow lost their way. Climbers and Losers both began with weak performance. However, Climbers were able to overcome their problems and rise to a high level of performance by the end of the 10-year time period. Sears, Roebuck & Co., after underperforming for years, finally found the keys to success. Losers muddled along, never rising above mediocre performance. Polaroid Corp. could not break out of the organizational practices that had mired it in years of lackluster earnings. The differences in performance among these firms were remarkable. Winners produced total returns to shareholders (TRS) of 945% over the 10-year time period of the study, whereas Losers were only able to grow TRS 62%. Sales rose 415% for Winners, but only 83% for Losers. Similar results held for operating income and asset growth. 120 ORGANIZATIONAL DYNAMICS
WINNING PRACTICES AND THE 4 + 2 FORMULA The foundation and complementary practices that accounted for these differences in performance were as follows.
Foundation Practices 1. Strategy: devise and maintain an engaging, focused strategy. Winners had strategies that focused the organization on a clear, engaging set of shared goals. Even though they might operate extensively, there was a focus on a clear business model. And perhaps even more important, this strategy was shared and meaningful to those within the company. Many companies manage their strategic planning activities so that the ‘‘strategic’’ goals are only the goals of management and not the organization. It is hard to lead when the direction you are leading is not meaningful to the people who have to make it happen. A lack of focus confuses everyone: your customers, your employees, and even management itself. 2. Execution: develop and maintain flawless operations and customer-focus. Winners and Climbers paid attention to their customers and constantly sought reductions in cost and improvements in productivity. For Climbers, this was often the early focus on regaining a high performance position in their industry. Execution is at the core of business success, and forms a foundation for applying the firm’s competence. 3. Culture: develop and maintain a performance-oriented culture. Essentially, this means building a culture that is meaningful to all of the employees of the firm. Allowing them to grow, to be part of something bigger than their own contributions, treating them fairly and rewarding their contributions is essential. When the whole organization is engaged, performance follows. It is the result of a positive culture.
4. Structure: build and maintain a fast, flexible, flat organization. Organizations must choose structures that facilitate execution and serve their strategies. The structures that were adopted by Winners and Climbers radically simplify the way that work is done and reduce bureaucracy. In contrast, Losers and Tumblers seem to almost consciously erect barriers to success. Excessive rules and procures, old and outdated processes, and unnecessary organizational units slow us down and frustrate those who are really trying to get things done. Most organizations are too bureaucratic, too hierarchical, and too controlling. But in all organizations, people do the work, not rules. Winners remembered that and got unnecessary structure and rules out of the way. Successful firms had all of the four foundation practices. Winners and Climbers also succeeded in at least two of the remaining four complementary practices.
Complementary Practices 1. Talent: hold on to talented employees and find more. Winners grew their own talent. Climbers had to find it, sometimes outside their organizations. Once they had it they worked hard to keep it. Tumblers and Losers lost it or were never able to obtain it from any source. As Climbers pulled out of their low performance positions, they developed human resource systems that helped them to continue to develop and retain talent. Winners, with these systems in place, could concentrate on using their talent to extend their already strong cultures. 2. Leadership: keep leaders and directors committed. Our study showed around 15% of the variance in corporate performance can be attributed to leadership quality. Who sits in the executive offices, the quality of the senior leadership team, has a clear empirical, as well as logical, link to firm performance. Since the board chooses the chief executive
officer (CEO), it is important to have directors that make good selections. Ensuring that the directors make good choices is in turn directly related to the extent to which these directors have a significant financial stake in the company. When this is the case, directors seem to be more committed to the firm’s success and make better choices of CEOs. 3. Innovation: make industry-transforming innovations. Winners tend to anticipate, and even cause, major industry disruptions, whereas Losers tend to be much more reactive. As a consequence, they are able to exploit the opportunities that occur in these disruptions. They are able to lead and not follow. These first-mover advantages give them an early head start in relation to competitors, one that is often hard to catch up with. 4. Mergers and partnerships: make growth happen. Companies that can master mergers and acquisitions are more likely to be Winners, as long as these deals are compatible with the focus mandate of the Strategy foundation practice. Doing smaller, more frequent deals seems to allow this. Losers, like Winners, also engaged in many acquisitions, as if they could buy their way out of trouble. But without the foundation practices in place these deals were often misinformed, and even worse, disastrous.
SECOND: BUILDING THE 4 + 2 ORGANIZATION The 4 + 2 formula summarizes the necessary practices to ensure Winner status. It tells us that until we are excelling at all four of the foundation practices we will never attain these exalted levels of performance. But, achieving this is not a trivial problem. For many firms, excelling at even one of the foundation practices is a daunting problem. Each firm faces its own unique set of challenges in the climb to greatness. Most firms begin the climb to excellence from a position where at least 121
one of the foundation practices is lacking. So, what advice can be given to firms aspiring to Winner status? What must firms actually do to attain this winning practice profile? The answer fundamentally depends on what kind of firm you are. Each type of firm— Losers, Tumblers, Climbers, as well as Winners—has a characteristic pattern of foundation practice levels. The actions that each must take differ as a function of these profiles. The challenges facing a Tumbler are different from those facing a Loser. Comparing these profiles tells us what particular foundation practices distinguish among our four firm types, and consequently what must be done to move from a less to a more desirable firm type. How can a Loser become a Climber? The answer to this question can be determined by contrasting the foundation practice profiles of Climbers and Losers. How can a Climber solidify its gains and move towards Winner status? Here, the answer is obtained by contrasting Winner and Climber profiles. Climbers must do different things than Losers, and Tumblers also have a different change agenda based upon their particular configuration of practices. Answering these questions therefore requires us to have a way of comparing and contrasting the foundation practices among our four quad types. These contrasts will allow us to see which practices must be focused on, and in what order, depending on the firm’s status as a Winner, Loser, Climber, or Tumbler. The foundation practices are essential; there is no possibility of improvement until they have been addressed. Once a strong foundation has been established, attention can then focus on building two supporting complementary practices.
DISTINGUISHING AMONG WINNERS, LOSERS, CLIMBERS AND TUMBLERS
help with comparing them, it is desirable to have a method for visualizing them. I have developed the concept of the ‘‘Normalized Practice Space’’ to help with this. Each of the four types engages to a greater or lesser extent in activities relating to the four foundation practices. What is needed is a way of first determining, and then comparing, these differences. For this purpose, the content analyses conducted as part of the Evergreen research are particularly useful. The content analyses identified assertions concerning the causes of each (of the 200) individual firm’s performance. These assertions (contained in published documents by Wall Street analysts, journalists, executives, and industry experts) were analyzed using a new method of linguistic content analysis that matches and clusters similar statements. The assertions were clustered, first for each of the four quad types, and then in terms of the four foundation practices contained in the 4 + 2 formula—that is, as pertaining to strategy, structure, execution or culture. As a result, we are able to identify the total number of performance related assertions in the database that pertain to each of the four firm types, for each of the four foundation practices. That is, for each type (Winner, Loser, Climber, Tumbler), and for each of the four foundation practices (Strategy, Structure, Culture, and Execution), we are able to state the total number of both positive and negative actions taken by that type that are believed to account for the relative performance level of the firm over the 10-year period of the study. Each firm type will have a different profile based upon these frequencies. Comparing these profiles—for example, those of the Winner firms in relation to Tumbler or Loser firms—then allows me to suggest sequences of actions for moving from lower to generally more desirable performance levels.
V i s u a l i z i n g P r a c t i c e P r o fi l e s : The Normalized Practice Space
The Normalized Practice Space: Distinguishing Winners, Losers, Climbers and Tumblers
Each of our four firm types has a characteristic profile of foundation practices. In order to
Fig. 1 portrays the results of these analyses for the Winner firms in what I call the ‘‘Nor-
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FIGURE 1
WINNER FOUNDATION PRACTICES
malized Practice Space.’’ Each dimension of the practice space is shown on a scale of 0– 100, and has been normalized to allow the use of a common scale for visualizing all four practices. That is, the total frequency or importance score for each foundation practice has been standardized at 100%, based upon the ratio of each quad type’s practice frequencies to those of the Winner firms. These scores are called ‘‘Practice Scores,’’ and the space defined by the scores for the Winner firms is called the ‘‘Normalized Practice Space.’’ The Winner firm occupies 100% of the Normalized Practice Space (NPS), since the Winner’s frequency or importance scores are divided by themselves. I have chosen to represent the Strategy and Execution practices on one axis of the NPS shown in Fig. 1, with Culture and Structure on the second axis. Broadly, these correspond to ‘‘Strategic’’ and ‘‘Organizational’’ dimensions of the NPS. Opposite ends of each dimension focus on longer (Strategy and Culture) and shorter (Execution and Structure) term issues in building a 4 + 2 organization, as shown in the figure. The foundation practice profiles of each of the remaining three firm types (Losers, Tum-
blers, and Climbers) may then be identified by computing the ratio of each of their four practice frequencies to those of the Winner profile shown in Fig. 1. The resulting ‘‘practice’’ scores may be interpreted as the percentage of the Winner profile scores achieved by each of the remaining three firm types (Climber, Tumbler, Loser) on each of the four foundation practices. The Winner firm occupies 100% of the Normalized Practice Space, as stated earlier. Each of the remaining three quad types occupies only a portion of this space. Losers. The profile for the Loser firm is shown in Fig. 2. It can be seen from this figure that Loser firms have very few strengths. They have a weak strategy, but do execute reasonably well against it. Perhaps their execution is adequate due to the relatively low levels of aspiration of the strategy. They have virtually no strength in either Culture or Structure. Indeed, when negative practices are superimposed on the figure, significant structural problems are observed. Losers survive, just barely, with no significant strengths and significant organizational weaknesses. 123
FIGURE 2
WINNER
VS.
LOSER
Tumblers. The profile for the Tumbler firm is shown in Fig. 3. Tumblers were once Winners, but now are significantly underperforming in relation to previous performance. There are two significant components of the failure of the Tumbler firms. First, they have significantly reduced their positive activities. The area contained in the positive Tumbler profile is substantially smaller than the much larger area contained in the Winner profile. The Tumbler is still engaged with a number of positive practices, but, unfortunately, at a level that is much reduced from its days as a Winner. Second, Fig. 4 shows that Tumblers are making many errors in the eyes of the journalists, executives, and analysts. The area in the negative practice profile indicates that Tumblers, in particular, are making many errors of execution; in fact, so many that they
FIGURE 3 WINNERS VS. TUMBLER POSITIVE
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FIGURE 4 WINNER VS. TUMBLER NEGATIVE
essentially cancel the effects of their remaining positive practices. Nordstrom overemphasized customer service to such an extent that it was making poor business decisions as a consequence. Other firms stayed too long in particular markets, refusing to let go of the old strategies and technologies that had served them well. Before Polaroid became a Loser firm it was a Tumbler. It waited far too long to embrace digital imaging technology. The same is true of Culture and Strategy. While some positives remain the large volume of poor practices stifles performance and results in an organization that is ambivalent in implementing its core practices. Climbers. The profile of the Climber is in marked contrast to the Tumbler (Fig. 5). First, there is strong accomplishment in
FIGURE 5 WINNERS
VS.
CLIMBERS
FIGURE 6 LESSONS
FROM THE
4 + 2 FORMULA
implementing the Strategy and Execution practices. In fact, the Climbers performance on these dimensions is at the same level as the Winners. Climbers are beginning to make gains in Culture and Structure, but have not yet reached the levels of the Winner firms. It seems as if Climbers attend to the Strategic practices first and then to the organizational ones. This is consistent with a large body of evidence that says organization follows from and depends upon strategy. The most significant difference between Climbers and Tumblers is in the virtual absence of mistakes by Climbers such as the ones noted above. Climbers clearly establish where they are going and execute flawlessly in getting there. With more time and continued emphasis on Structure and Culture they will become Winners.
Second, comparing the Tumbler and Loser profiles, it is apparent that the Tumbler retains some of the strengths from its time as a Winner. However, it seems to have lost its way. The news is not all bad; if it can stop making mistakes, it retains a core set of strengths to build upon and begin a process of rebuilding. It appears that a turnaround (for a Climber fallen from grace) will likely be easier that a transformation (of a Loser with few strengths). Finally, Climbers have significant strengths and relentlessly build upon them. With time they will become Winners if they are successful in supporting the strategic practices with strong structure and culture.
Summary comparing practices across quad types. The profiles of Winners, Losers, Tumblers, and Climbers are compared in Fig. 6. It is clear that all of the firms have at least a moderate ability in execution. Based upon this it appears that Execution is a survival criterion—at a minimum, execution is necessary to remain in the marketplace.
What actions should your firm adopt? Which of the critical foundation practices should be concentrated on now? Achieving all of the foundation practices is essential to success, but which ones should be the initial focus of attention? And how should our change management activities be sequenced to ensure success? The answer to these important ques-
TURNING POINTS: BUILDING THE 4 + 2 ORGANIZATION
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tions can be determined by examining the critical ‘‘Turning Points’’ in building a 4 + 2 organization.
Turning Points Everyone aspires to being a Winner firm. Indeed, the economic rewards are substantial, as noted above. The Winner occupies an enviable position; it seeks to sustain and extend its winning practices and to achieve even higher levels of dominance in the market. But what about those in other positions, those who seek but who have not yet attained winning status? Each of these firms must go through a ‘‘Turning Point’’ that redirects its foundation practices toward a path leading to winning performance. In this path there are two critical Turning Points. The first is from a Loser or Tumbler to a Climber. We will see that the transition from Tumbler to Climber is easier. The second Turning Point is from a Climber to a Winner. Let’s look at each of these in turn. Turning Point 1: from a Loser or Tumbler to a Climber. No one wants to be a Loser, and
FIGURE 7 TURNING POINT:
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certainly not for very long. But what if you do find yourself in this unenviable position? You must work swiftly to alter the foundation practices and begin to transition to a Climber firm. This Turning Point is shown graphically in Fig. 7. Comparing the profiles of the Loser and Climber firms indicates what practices should b focused on in this situation. Three actions are essential. First, the firm must cease making errors. Essentially, this means that accountability in the organization must increase. This is generally a hard problem for most organizations, but it can be radically improved with effective performance management systems and clear performance metrics. Second, the firm must rededicate itself to execution. Unnecessary costs must be eliminated and the customer must be in the forefront of all decision-making. Finally, the organization must refocus its strategy. It is critical to eliminate bad products, projects and even businesses. This can be a hard thing to do if they are projects and businesses that we ourselves created, but if they do not fit the mandates of the 4 + 2 formula concerning focusing on the core business they must
FROM A
LOSER
TO A
CLIMBER
go, no matter what our emotional attachment. A Tumbler must take similar actions. Mistakes are canceling the benefits of the positive practices it is still engaging in. The Tumbler was once a Winner but has begun to make mistakes. These must be eliminated quickly, and its remaining strengths re-invigorated. Beginning the climb to excellence is easier for the Tumbler than the Loser. With little foundation to build on, the Loser must create almost everything from scratch. Turning Point 2: from a Climber to a Winner. A Climber already excels on the Strategy and Execution practices (Fig. 8). In fact, they have already achieved the levels on these practices that Winners enjoy. Now, they must support these strategic practices with organizational ones. In particular, they must act to build fast, flat, and flexible organizational structures and then build a long-term culture that is consistent with both the structure and the demands of the strategy. The first step in this process is to eliminate unnecessary bureaucracy. We all have it—it
FIGURE 8
TURNING POINT:
is now time to purge it and get out of the way of high performance. With thoughtful implementation such as that employed by General Electric Co. in the Work-Out! process and by General Motors Corp. in GoFast!, the process of eliminating bureaucracy can be the primary mechanism for achieving sustained cultural change. Once the Climber has established the four foundation practices, it is time to begin focusing on the complementary practices with renewed vigor. Taking the action steps discussed above will build the 4 + 2 organization. Building an organization using the 4 + 2 formula will not be easy—each step in the process is challenging and implementation may take awhile. Managers will need to be skillful at managing a large complex transformation effort. Using the 4 + 2 formula as a guide ensures ‘‘Strategic’’ control. Most management controls are based on accounting measures, but, unfortunately, these are all historical in nature. While some argue that a good strategy is the ‘‘one that wins,’’ we cannot wait until the battle is over to know if we have a good plan for success! The 4 + 2 formula points the way to success and pro-
FROM A
CLIMBER
TO A
WINNER
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vides guideposts for achieving radically higher levels of performance. It tells us what to do now to be even more successful in the future. It sidesteps fads and poorly developed ideas that often create more problems than they solve. Building a 4 + 2 organization is challenging but it is worth it. It is worth it in knowing that what we have done is likely to have real effects, and that when we are
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asking more of our people it is with real evidence that what we are asking for will work. Building at 4 + 2 organization results in higher levels of performance, efficacy and profitability for everyone.
SELECTED BIBLIOGRAPHY This research extends the findings of the Evergreen Studies, described in What Really Works: The 4 + 2 Formula for Sustained Business Success, by William Joyce, Nitin Nohria, and Bruce Roberson (HarperBusiness, 2003); and in ‘‘What Really Works,’’ Harvard Business Review, by Nohria, Joyce, and Roberson, July 2003, 1–13. Other research taking a narrower, less extensive, or less rigorous approach to determining the causes of firm performance can be found in In Search of Excellence, by Tom Peters and Robert Waterman (Warner, 1988), which was one of the early books in this area, or Good to Great, by Jim Collins (HarperBusiness, 2001). The statistical methodology for linguistic sequence comparison utilized in this work is described in its simplest form in ‘‘Designing Lateral Organizations: An Analysis of the Benefits, Costs, and Factors Enabling NonHierarchical Organizational Forms,’’ by William Joyce, Victor McGee, and John Slocum, Decision Sciences, 28 (1997), 1–29. The foundation practices have been discussed by a number of authors, but rarely in an integrated way. What Really Works: The 4 + 2 Formula for Sustained Business Success was
the first large-scale empirical discussion of an integrated perspective. A slightly earlier work, MegaChange, by William Joyce (Free Press, 2000) provided an integrated model of firm performance and large-scale change consistent with the 4 + 2 formula, based upon a large and diverse integration of the available academic literature. This work could be read before What Really Works to provide key linkages to the organizational literature. Numerous books look at particular foundation practices. MegaChange provides an indepth treatment of each as part of the development of the integrated perspective described above. Others include Execution (for the Execution dimension), by Lawrence Bossidy and Ram Charan (Crown Business, 2002); ‘‘Designing Lateral Organizations: An Analysis of the Benefits, Costs, and Factors Enabling Non-Hierarchical Organizational Forms,’’ by Joyce, McGee, and Slocum, Decision Sciences; Lawrence Hrebiniak and William Joyce, Implementing Strategy (New York: MacMillan, 1984); and Designing Organizations, by Jay Galbraith (Jossey-Bass, 1999), for the Structure dimension.
William F. Joyce is a professor of strategy and organization science at the Amos Tuck School of Business of Dartmouth College, Hanover, NH, USA. He is the author of four books and numerous articles dealing with strategy implementation, organizational design, and cultural change. This work is widely cited in both the academic and professional literatures, and he is recognized as an international authority on strategy and organizational design. His newest book, What Really Works: The 4 + 2 Formula for Business Success, was published by HarperBusiness in May 2003. Joyce served as a consultant to the General Electric Company on the Work-Out! process, one of the largest applied change projects in the history of American enterprise. Recently, he worked with General Motors Corp. to design and implement the GoFast! program. GoFast! has superceded the Work-Out! project as the largest organizational change and cultural transformation project ever undertaken (Tel.: +1 603 696 2402; e-mail: [email protected]). 129