WHY DO WE UNDERVALUE COMPETENT MANAGEMENT? (ACHIEVING OPERATIONAL…
WHY DO WE UNDERVALUE COMPETENT MANAGEMENT?
NEITHER GREAT LEADERSHIP NOR BRILLIANT STRATEGY MATTERS WITHOUT OPERATIONAL EXCELLENCE
How core management processes affect
a company’s performance.
Companies that manage these fundamentals well tend to have high levels of overall operational excellence
PROCESS DOCUMENTATION USE OF KEY PERFORMANCE INDICATORS
DISCUSSION OF RESULTS
CONSEQUENCES FOR MISSING TARGETS
CHOICE OF TARGETS
CONNECTION TO STRATEGY, EXTENT TO WHICH TARGETS CASCADE DOWN TO INDIVIDUAL WORKERS
LEVEL OF CHALLENGE
CLARITY OF GOALS AND MEASUREMENT
USE OF LEAN TECHNIQUES
REASONS FOR ADOPTING LEAN PROCESSES
TALENT MINDSET AT THE HIGHEST LEVELS
MANAGEMENT OF LOW PERFORMANCE
EMPLOYEE VALUE PROPOSITION
ACHIEVING OPERATIONAL EXCELLENCE IS STILL A MASSIVE CHALLENGE FOR MANY FIRMS
The costs involved in improving management practices are as high as those associated with capital investments such as buildings and equipment
The large, persistent gaps in basic managerial practices we documented were associated with large, persistent differences in firm performance.
Some of the variation in management practice is
driven by external factors
The intensity of competition is one; competition creates a strong incentive to reduce inefficiencies and kills off badly managed firms.
A LARGE NUMBER OF MANAGERS CAN’T OBJECTIVELY JUDGE HOW WELL THEIR FIRMS ARE RUN
Labor regulations play a role as well; they can make it difficult to give opportunities to employees on the basis of merit or to adopt performance-related compensation.
OVERCONFIDENCE IS A PROBLEM
IT’S UNWISE TO TEACH LEADERS THAT STRATEGY AND BASIC MANAGEMENT ARE UNRELATED
Skill deficits. Good management practices require capabilities (such as numeracy and analytical skills) that may be lacking in a firm’s workforce, especially in emerging economies.
While to some extent the availability of skills is shaped by a firm’s specific context, managers can play a critical role by recognizing the importance of employees’ basic skills and providing internal training programs.
Organizational politics and culture. Even when top managers correctly perceive what needs to be done, are motivated to make changes, and have the right skills, the adoption of core management processes can be a challenge.
Though core management practices may appear to be relatively simple—in that they often rely on nontechnological investments—they are not light switches that can be flipped on and off at will. They require a profound commitment from the top, an understanding of the types of skills required for adoption, and— ultimately—a fundamental shift in mentality at all levels of the organization
Just as the ability to discern competitive shifts is important to firm performance, so too is the ability to make sure that operational effectiveness is truly part of the organization’s DNA.
One frequent suggestion in this era of flattened organizations is that everyone has to be a strategist. But we’d suggest that everyone also needs to be a manager. Core management practices, established thoughtfully, can go a long way toward plugging the execution gap and ensuring that strategy gets the best possible chance to succeed