Why Do We Undervalue Competent Management?

Raffaella  Sadun; Nicholas  Bloom; John  Van Reenen

Article | Harvard Business Review | September–October 2017

Why Do We Undervalue Competent Management?: Neither Great Leadership Nor Brilliant Strategy Matters Without Operational Excellence

by Raffaella Sadun, Nicholas Bloom and John Van Reenen

Abstract

A recurring message in business education is that you can’t compete on the basis of management processes because they’re easily copied. Operational effectiveness is table stakes in the competitive universe, it is often assumed, and thus cannot serve as a sustainable source of competitive advantage. But data from a decade-long research project involving 12,000 firms challenges that thinking. The study examined how well companies performed 18 core management practices. It found vast differences in how they execute basic tasks like setting targets, running operations, and grooming talent, and that those differences matter: Firms with strong managerial processes do significantly better on high-level metrics such as profitability, growth, and productivity. What’s more, the differences in process quality persist over time, suggesting that competent management is not easy to imitate. In this article the authors review the findings of the research and explore what prevents executives from investing in management capabilities, arguing that such investments are a powerful way to become more competitive.

Keywords: Management; Management Analysis, Tools, and Techniques; Management Practices and Processes; Performance Effectiveness;

Format: Print

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Citation:

Sadun, Raffaella, Nicholas Bloom, and John Van Reenen. "Why Do We Undervalue Competent Management? Neither Great Leadership Nor Brilliant Strategy Matters Without Operational Excellence." Harvard Business Review 95, no. 5 (September–October 2017): 120–127. (Winner of 59th Annual HBR McKinsey Award.)

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Why Do We Undervalue Competent Management?: Neither Great Leadership Nor Brilliant Strategy Matters Without Operational Excellence

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