A Good Management strategy is worth!

I am on the Advisory Council of the Harvard Business Review.  Last week I took part in the selection process to choose one article to be the winner of HBR’s most prominent prize, the McKinsey Award.

The 3 pre-selected articles were very interesting, bringing advice to companies on what their C-Suite executives must focus (one was on strategy, one on globalization and the other on the importance of management practices).  

This last one on management was ‘Why do we undervalue competent management?’ by Raffaella Sadun, Nicholas Bloom and John Van Reenen. They argued that good management practices are not valued enough, they are not considered as a possible competitive advantage because they are supposedly easy to copy, they are usually wrongly relayed after a good business strategy/[other business strategies].

They did an impressive research called ‘World management Survey’ across 34 countries interviewing more than 14.000 companies, and their results show without surprise that good management practices correlate to strong performance.  Although this was never argued, they differ from established knowledge in that it is not so easy to copy that.  Achieving operational excellence depends on people: even knowing what to do, changing mentalities and changing a company’s culture is not immediately done. Moreover, there is a positive spiral effect, because employees working in those good managed firms are motivated, and having a good reputation, those companies also attract more talented employees.

Knowing this, why is that all companies don’t go for it?  They mention different issues at play, but one that I find important to emphasize is the bias on our own evaluation:

False perceptions. our research indicates that a surprisingly large number of managers are unable to objectively judge how badly (or well) their firms are run. (Similar biases show up in other settings. for Example, 70% of students, 80% of drivers, and 90% of university teachers rate themselves as ‘above average’.)

In conclusion, improving your management practices is a good strategic movement.  I encourage you to read the full article, and let’s hope your Board and C-executives will read it too 😉

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