What Actually Works

Saunders College of Business @ RIT

December 2017
Background
 Presentation based on multiple empirical studies
 One study included 200+ management practices
implemented over 10 years in 160 companies. Financial
performance tracked for an additional 5 years
 Another study examined 15 companies with sustained
superior performance over 25 years
 Conclusions from studies supplemented with multiple
case studies and my engagement with business
executives from my consulting experience
Study Results: What Works
 Absolutely required:
 Leadership
 Strategy
 Execution

 Enablers of superior performance

 Performance oriented culture
 Structure
 Talent
 Innovation
Winning is Hard!
 Success is difficult:
 Less than 5% of all publicly traded companies maintain a
total return to shareholders greater than their industry
peers for more than 10 years.

 None of the firms in the original Fortune 500 list

published in 1929 achieved shareholder returns over the
past 80+ years equal to the return of the S&P 500 Index
 GE and Kodak did outperform the S&P 500 through 2000,
but their performance has sharply declined since then.
Leadership: Professional Will and
Personal Humility
 Professional will
 Uncompromising commitment success
 Sets the example
 Builds a winning team
 Looks “out the window” at employees not “in the mirror” to
credit success
 Personal humility
 Acts with quiet calm determination
 Compelling modesty; not boastful
 Builds a team that will perpetuate the business

“Passionate obsession and intensity creates leaders who are results

driven and provide energy to the team”
“Ethical and respectful – a leader with integrity”
Strategy
 Clearly stated and focused strategy.
 Strategy based on a simple value proposition and deep
understanding of customer needs
 Strategy communicated to internal and external
stakeholders
 Grow the core business. Focus; beware of the unfamiliar

“Consistency of purpose creates leaders who can

communicate and energize others”
“Customer focus sets the priorities for the organization”
Execution
 Attention to the details of execution
 Disciplined focus on the critical few actions
 Winners increase productivity about 2X industry
average

“Senior managers lead by example, are detailed oriented, and

mentor other leaders who are valued by their team, increasing
team unity and success”
Performance Oriented Culture
 High performance and ethical behaviors
 Accountability
 Measure
 Cascade metrics throughout the organization
 Tie compensation to performance
 Create, encourage, recognize, reward outstanding
employees
 95% of winning companies paid bonuses for
performance; only 15% of losers did

“Focus on execution; create an organization that is results driven

and accountable”
Structure
 Flexible flat organization – decisive, fast, responsive
 Eliminate bureaucracy
 Management layers
 Unproductive policies
 Empower employees for rapid decision-making
 Simplify work
 Make it easy for customers and suppliers to do business
with you
 Drive results metrics as low as possible in the
organization
Talent
 Retain talented employees; find more.
 Can a manager who leaves be replaced from within?
 It’s cheaper to develop a star internally than to buy one –
and more likely to be successful
 Management succession planning
 Identify high-potential employees
 Development and training, variety of experiences
 Commitment to diversity
 Create “golden handcuffs” to retain star employees

“We are looking for leaders who are aggressive thinkers and who
provide their teams with an edge”
Technological Innovation
 Develop transforming innovations
 Invest in a full portfolio of new product innovations
 Introduce steady stream of new products
 Management commitment to innovation leadership
 Technology deployed to
 Improve internal processes most important to customer value
creation
 Improve productivity
 Position the organization for future success

“We must leverage technology to continue to achieve results and

give our team an edge”
“We encourage entrepreneurial thinking to encourage new creative
ideas”
Summary:
 Strategy, leadership, and execution are fundamental
 Culture, structure, talent, and innovation are the key enablers
of success