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, written by Jeremy. Read the commentary.

On the heels of my heartfelt yop – Frickin’ amazing vs. the long tail – as if guided by benevolent deities, I found “What really works.” With bemused resignation I note the publication date of July 2003 – if I am late, at least I’m earnest.

“What really works” by Nitin Nohria, Willian Joyce and Bruce Roberson (published by Harvard Business Review) lays out a “winning combination for business success”. This, of course, is exactly what we’re after.

The key is the 4+2 formula and its built on five years of research, the work of 50 academics and the stories of 160 companies. These are the basics (not the frickin’ amazings) that make for winners.

Every successful company must be all of the following: strategic, able to execute, frothing with culture, and simply structured. This company must also be any two of these four: plugged unto bursting with talent, innovative, lead as though by divinity (which is clearly one thing sift has going for it), and/or savvy in mergers and partnerships.

The successful company is clear on its strategy and clearly communicates that strategy to its customers, employees and shareholders. “It begins with a simple, focused value proposition that is rooted in deep, certain knowledge about your company’s target customers and a realistic appraisal of your own capacities.”

A clear strategy will help screen decisions. It will help determine which opportunities to pursue. It will line up action with the core business and prevent drift.

A steady winner is about twice as productive as the industry average and pays focused attention to execution. The successful company figures out where it really shines and focuses on making those processes as efficient and effective as possible.

The study made it clear that culture was important, but probably not in the way you imagine. I anticipated a riff on casual dress, open-concept networks and lots of hippy love but their work shows that promoting fun isn’t near as important as promoting champions. Every highly successful company glorifies high performance and ethical behaviour.

90% of winning companies linked the pay check to the score board. No bonuses, no stock options, and no rewards unless targets are met.

Every winning company ruthlessly purges every last vestige of vigour-sapping, innovation-cramping bureaucracy. Extra layers of management, unnecessary rules and silly processes where hacked out with the same veracity usually reserved for mosquitoes and other blood-sucking transgressors.

So there’s the four prerequisites to success. Where’s frickin’ amazing or for that matter innovation, first movers, and niche domination? We’re getting to that – well, one of them.

Sequestered in the “+2” are four options. Pick two, any two.

A successful company either: hires and holds top talent; focuses on finding brand new products, ideas or technologies; is lead by a CEO focused on relationships and able to spot opportunities/problems early; or regularly (on a small scale) makes deals to leverage existing customer relationships or complement company strengths.

Interesting aspects to note include: top talent most often comes from inside the company, innovation barely ranked as one of the top four characteristics, and only 22% of winners used mergers and acquisitions successfully. This suggests top talent and great leadership were the key two of the last four.

So, what does this mean for the sift experiment – after all I focus almost exclusively on innovation (and insight). Well, first, they use innovation to mean brand new products or ideas. I don’t. I think innovation includes new ways to do old things. It also includes new clients for old products. Second, I focus on innovation as an end result of better sifted information – clearer strategy, better execution, and bureaucracy killing insights are also positive results.

So much for sift, what about you as entrepreneur? Laser-like focus is required and this is where many entrepreneurs fall down. You might need to bring in some help – hire an adviser on retainer. A good adviser can help you stick handle through the many distractions, propositions, and opportunities the lead either to strategic drift, crap execution, and the need for bureaucracy.

Another place many entrepreneurs fail is the breeding and rewarding of talent. Many bootstrappers hire cheap people and demand top performance – bad idea. Others hire great people but keep the performance based rewards to themselves – again, short-sighted decision. Two principles of economics play here. First, if it’s cheap that’s because nobody wants it – this includes people. Second, performance requires incentives – an extra dollar is hard to beat.

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