The Evergreen Project, spearheaded by 50 consultants and business school professors at top universities, was a ten-year study that analyzed 160 companies worldwide.  Its objective was to explore common themes in management practices that lead to superb performance. It provided a definitive answer to what does and what does not work in managing companies successfully.  The project also discovered what didn’t contribute to success with surprising findings that are contrary to popular management beliefs.

 What do Managers at the Best Companies do?

What do managers at the best companies know and do to keep their companies on top?  The answer, documented in What (Really) Works by William Joyce, Nitin Norhia and Bruce Roberson [Reference 1], is presented through real-life case studies of companies.  This book singles out the areas on which it is truly important for management to focus in order to achieve success.  The findings dispel some popular practices as inapplicable to good management.

Some of the notes of this CCCC Newsletter are derived from Pulse, a Schooley Mitchell newsletter [Reference 14].

The Evergreen findings are reflected in a ‘4 + 2 formula’, which covers four primary management practices and any two of four secondary practices. These six to eight practices directly correlated with superior corporate performance as measured by total return to shareholders.

 Correlating the Findings to CCCC Practices

 Naturally, CCCC has an interest in commenting on these findings since they correspond almost precisely with the Respect Revolution, namely the Caswell Management System [Reference 13].

In order to show that direct correlation here, reference is made, after each of the various Evergreen Project findings described in this paper, to one of the 12 books of the Respect Revolution listed at the end of this paper.  That is, [6] refers to Volume 6 of the Respect Revolution shown on the last page of this paper.

The Four Best Main Practices

Out of the study evolved four necessary practices, common to the best performing companies, described as follows:

  1. Strategy

Strategy must be clear and focused [8]. One of the key mandates that winning companies followed was an aim towards growth. Your strategy should enable you to increase your business by 15% each year (i.e. double your core business every five years) while simultaneously building a closely related new business to about half the size of your existing business over those same 5 years [8].

Build a strategy around a clear value proposition [11] for the customer. “A value proposition is not so much a statement of what you want to be, but what you are.” Develop strategy from the outside in; base it on what your customers, partners and investors have to say, and how they behave [7]. Test it. [6].  Maintain your antennae in a way that allows you to fine-tune your strategy to changes in the marketplace. “Winners typically monitored not just their immediate customers and competitors but also those in adjacent businesses. They recognized that competition creeps in on the edges.” [9]

  1. Execution

Execution must be flawless. You must consistently reduce operational costs [3] while increasing productivity by 6 to 7 percent every year. Investments in new technology must also be judged by this standard. “Don’t expect new technology to boost performance any more than steroids turn good athletes into gold medalists.”

Deliver products and services that consistently meet customers’ expectations. Empower the front lines to respond to customer needs [5]. “Business people have realized forever that the moment when the customer interacts with the company’s employee is crucial to the organization’s success.” Constantly strive to improve productivity and eliminate all forms of excess and waste [3].

  1. Performance-Based Culture

Culture must be performance-based [9]. “One of the best indicators of being performance-oriented is the way you deal with your own poor performers. It is easy to reward good performers. What matters is whether you have the courage to get rid of poor performers, particularly those that don’t abide by the values of your organization.” [7] [9]

Inspire all to do their best. Winning companies constantly held employees, not just managers, responsible for corporate success [9].  Along with that responsibility, they were empowered to make independent decisions and urged to improve company operations.  Reward achievement with praise and pay-for-performance, and keep raising the bar.  Create a work environment that is challenging, satisfying and fun [9].  Establish and abide by clear company values [7]. (CCCC expands the specificity of the Evergreen study in that CCCC (a) recommends that employees be encouraged to set their own standards for performance within the job measurements jointly established and (b) suggests treating both reward and praise very carefully and in a specific manner [9].)

  1. Flat Organization

The company’s organization must be fast and flat. Simpler and faster are the best goals for all organizations.

Simplify by eliminating redundant organizational layers and bureaucracies [3].  Promote cooperation and exchange of information across the whole company [10].   Put your best people closest to the action and keep your frontline stars in place [9]. “Winning companies are simply following through on their conviction that their futures rest not on the brilliance of their executives but on the dedication and inventiveness of their managers and employees” [9].

The Best Secondary Practices

Any two of the following four secondary practices (plus the four primary practices) are necessary for creating long-term success:

  1. Keep Good Talent

Take steps to ensure talent sticks around and develop more of it. The best indicator for this practice is your ability to grow talent from within, not whether you can buy outside talent in a crisis [3]. Winning companies were able to easily replace executive attrition with carefully nurtured insiders.

Fill mid-level and high-level jobs with internal talent whenever that is possible. Create and maintain top-of-the line training and education programs.  Design jobs that will intrigue and challenge your best performers. Become personally involved in winning the war for talent [9].

  1. Ensure Commitment of Leaders

Make your leaders committed to your business [12]. The study shows that chief executives influence 15% of the variance in corporate performance.

Inspire management to strengthen its relationships with people at all levels of the company [4]. Management must hone its capacity to spot opportunities and problems early [5]. Appoint a board of directors [3] whose members have a substantial financial stake in the company’s success. Closely link the pay of the leadership team to their performance.

  1. Innovate

Make industry-transforming innovations [3]. Anticipating and creating disruptive technologies was a hallmark of winning corporations, whereas losing corporations tended to be much more reactive [5].

Exploit old and new technologies to design products and enhance operations. Don’t hesitate to cannibalize or grandfather existing products or operations for the sake of progress [4].

  1. Form Mergers

Make growth happen with mergers and partnerships [3]. Companies that do relatively small deals (less than 20% of existing size) on a consistent basis (2 or 3 per year) are likely to be more successful than organizations that do large, occasional mergers or acquisitions.

Acquire new businesses that leverage existing customer relationships [3]. Enter new businesses that complement your company’s existing strengths [11].  Move into new businesses that can use a partner’s talents. · Develop a systematic capability to identify, screen and close deals [3].

Summary

The Evergreen results show why success is so elusive and why so few companies achieve it in the long term [2].  According to these findings “a company that succeeds in all four primary practices and any two secondary areas has a 90 percent chance of becoming a winner. On the other hand, a company that fails in any primary area or more than two secondary practices is in serious danger of becoming a loser. In short, a company has to run full speed on all six tracks at once in order to win, and a failure on any one of the six can be fatal.

Management Myths

 Many commonly accepted practices were discovered to not be the panaceas, many believed.  For example, information technology was not a contributing factor to success  The degree and nature of outsourcing did not influence success.  Management programs such as total quality and 360 reviews did not correlate to winners [2].

 The Winners

Winning companies highlighted in this book include:

  1. Dollar General
  2. Target
  3. Duke Energy
  4. Smithfield Foods
  5. Home Depot
  6. Walgreen
  7. Campbell Soup
  8. Nucor
  9. Valspar
  10. Schering-Plough
  11. Seagate
  12. Cardinal
  13. Avery-Dennison
  14. Polaroid

A Few Final Words

As you can surmise, none of these findings surprise CCCC for they fall within the realm of our experience.   What (Really) Works tells you WHAT to do to achieve a level of excellence.  The Respect Revolution series, on the other hand, tells you HOW to do it – to achieve that level of excellence.  Sometimes also termed ‘the practical MBA’ [15], the Respect Revolution series not only explains why the findings of What (Really) Works are so, but also the books tell you step-by-step how to lay a foundation to deal with each obstacle that would thwart your efforts.  Specifically the goal of the Respect Revolution is to take you on the path to realize the benefits of attaining, and remaining at, a level of excellence.