TOP PERFORMERS:SECRETS OF THE MOST SUCCESSFUL COMPANIES

Most companies understand that improving their product line and service offering to attract new business will create a higher level of success. And while increased market share is key to business growth, the true secret to long-term sustainable success is really about getting back to business basics. After looking at many top performing companies, a popular study revealed the most successful companies have something in common. It’s not the actual tools they chose that has helped them achieve greater success—but the right management practices, and engaging in certain behaviours to excel at those practices, that has allowed them to be high performers.

The Evergreen Project was a comprehensive study that looked at 160 major companies over 10 years to determine if there were specific management practices that lead to better performance. When the results came in, the researchers identified eight management practices out of more than 200 that they believed would help any business create a higher level of success. These can be divided into primary and secondary practices.

Jeff Orchard, MBA, an MNP Business Advisor, says that none of the management practices identified as useful throughout the study are innovative, but are easily overlooked in day-to-day business practices.

“These are the fundamentals of good business,” he says. “In fact, this is exactly what we at MNP focus on when we apply the Balanced Scorecard Approach to Management and Key Performance Indicators to help clients improve in the areas of clients, operations, people and finance.”

While there are many tools and techniques that can help companies excel at each of the eight management practices, there are common behaviours and techniques that lead to excellence.

MNP • TOP PERFORMERS: SECRETS OF THE MOST SUCCESSFUL COMPANIES

THE 4+2 FORMULA FOR BUSINESS EXCELLENCEThe 4+2 formula shows that successful companies tend to share a focus on four primary management practices and a focus on at least two out of four secondary management practices.

THE FOUR PRIMARY PRACTICES FOR SUCCESS

Companies that outperform their peers tend to be extremely good at four primary management practices: strategy, execution, culture and structure. “These are the behaviours that will begin to transform your business,” says Orchard, who has helped companies integrate these behaviours into their management and culture.

When looking at these four areas of your management practice, consider the following:

• Companies that build their strategy around a clear value proposition and base it on what customers and other stakeholders actually say and do rather than on what they think customers want are more likely to succeed.

• Companies that give front-line employees the authority to make decisions and continually strive to improve productivity tend to excel at execution.

• Basing pay on performance, continually raising expectations for performance, and inspiring employees to do the best job possible are some of the behaviours that lead to excellence in culture.

• Simplifying the organization so it is easy to work in and ensuring knowledge can be easily shared contribute to excellence in structure.

PRIMARY MANAGEMENT PRACTICES

To see how you rate, check each box that reflects your current business practices.

MNP • TOP PERFORMERS: SECRETS OF THE MOST SUCCESSFUL COMPANIES

STRATEGY EXECUTION CULTURE STRUCTURE

You’ve built a strategy around a clear value proposition for the customer.

You’ve developed a strategy from the outside in, based on what your customers, partners and investors have to say—and how they behave.

You continually fine-tune your strategy based on changes in the marketplace—for example, a new technology, a social trend, a government regulation, or a competitor’s breakaway product.

You clearly communicate your strategy within the organization and to customers and other external stakeholders.

You are focused and have grown your core business, while being aware of the unexpected.

You deliver products and services that consistently meet customers’ expectations.

You put decision-making authority close to the front lines so employees can react quickly to changing market conditions.

You constantly strive to eliminate all forms of excess and waste; improve productivity at a rate that is roughly twice the industry average.

You inspire all managers and employees to do their best.

You empower employees and managers to make independent decisions and to find ways to improve operations—including their own.

You reward achievement with pay based on performance, but keep raising the performance bar.

You pay psychological rewards in addition to financial ones.

You’ve created a challenging, satisfying work environment.

You’ve established and abided by clear company values.

You’ve simplified your organization by making it easy to work in and work with.

You’ve promoted cooperation and the exchange of information across the whole company.

You’ve put your best people closest to the action.

You’ve established systems for the seamless sharing of knowledge.

THE SECONDARY MANAGEMENT PRACTICES FOR SUCCESS

The Evergreen Project indicated that successful companies also excel in at least two of these four secondary management practices: talent, innovation, leadership, and mergers and partnerships.

When looking at these four areas of your management practice, consider the following:

• Promoting from within allows companies to retain and effectively develop talented employees that are committed and contribute to the overall success of the company.

• Being innovative is more than just developing new products; it is knowing your industry and anticipating disruptive events so that your organization can be proactive versus reactive.

• Companies with a proven track record of higher performance encourage open communication between management and employee groups.

• Companies with established criteria for potential partnerships, mergers and acquisitions are better able to integrate these opportunities into their overall growth strategy.

TALENT INNOVATION LEADERSHIP MERGERS & PARTNERSHIPS

You’ve filled mid- and high-level jobs with outstanding internal talent whenever possible.

You’ve created and maintained top-of-the-line training and development programs.

You’ve designed jobs that will intrigue and challenge your best performers.

You’ve kept senior management actively involved in the selection and development of people.

You relentlessly investigate disruptive technologies to develop innovative new products and services.

You don’t hesitate to cannibalize existing products.

You apply new technologies to enhance all operating processes, not just those dedicated to designing new products and services.

You closely link the leadership team’s pay to its performance.

You encourage management to strengthen its connections with people at all levels of the company.

You inspire management to hone its capacity to spot opportunities and problems early.

You appoint a board of directors whose members have a substantial stake in the company’s success.

You enter new businesses that leverage existing customer relationships and complement core strengths.

When partnering, you move into new businesses that make the best use of both partners’ talents.

You develop a system for identifying, screening and closing deals.

MNP • TOP PERFORMERS: SECRETS OF THE MOST SUCCESSFUL COMPANIES

SECONDARY MANAGEMENT PRACTICES

To see how you rate check each box that applies in two of the categories you feel are the most relevant to your business.

Following what the study authors call the 4+2 formula for business success will, they say, give companies more than a 90 percent chance of maintaining superior performance.

How many checks do you have? If the majority of the boxes are missing a checkmark, there is room for improvement within your operation.

MNP • TOP PERFORMERS: SECRETS OF THE MOST SUCCESSFUL COMPANIES

MNP’S BUSINESS IMPROVEMENT SERVICES

Jeff Orchard, MBA is a Business Advisor with MNP. Working closely with his clients, Jeff delivers the strategies and recommendations they need to enhance the performance of their business and ensure their resources are focused on the right areas now and in the future. To find out how you can successfully develop and implement these practices and set new records of achievement, contact Jeff at jeff.orchard@mnp.ca.

“The 4+2 formula all comes down to aligning your business activities with your vision and strategy,” says Orchard. “It isn’t a major undertaking but it can be difficult to take that first step and get started. Once you have prioritized the areas in which you want to improve and begin taking steps to make the required changes, the results will quickly follow.”

*About the authors of the study: Nitin Nohria is the Dean of Harvard Business School. William Joyce is a professor of strategy and organizational theory at Dartmouth College’s Tuck School of Business. Bruce Roberson is executive vice president of marketing and sales at Safety-Kleen.

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