Management as a Technology - Nicholas Bloom, Raffaella Sadun, John Van Reenen, Harvard Buisness School Working Paper 16-133

This resource first appeared in issue #90 on 02 Sep 2021 and has tags Becoming A Manager: Other

Management is important, and the issues involved are complex, and like a lot of things that are important but complex, it’s the subject of a lot of study. That study looks different than those of us who came up in the natural sciences are used to - people systems are way harder to examine than, say, fluid systems - but it can be every bit as insightful.

This working paper from a few years ago results from interviews with 11,000(!) manufacturing firms in 34 countries, asking questions about whether the company followed industry best practices, and their practices around process improvements, performance review and tracking, feedback given, clear targets, high performers rewarded, low performers removed, and hiring and retaining staff. (The anonymized data is available by filling out a form at http://worldmanagementsurvey.org/)).

They then analyzed the data in a slightly unusual way - using the existing framework of analyzing the adoption of a new technology across firms and companies, and looking to see if the new technology improved productivity or not. But here the “technology” is good managerial practices.

The technology of management (literally a body of knowledge and techniques) might be a useful mental model. It’s not magic, it doesn’t require inspiration or a particular personality type - it’s the roll-out of a well understood set of practices. That doesn’t make it easy, but hey, adopting new technology can be challenging.

Bloom et al. find that management “technology adoption” accounts for 30% changes in total factor productivity across entire organizations, or even between countries. If anything, I’d guess that number is understated, since management approaches can be pretty heterogenous within an organization so there’s likely an averaging effect. I don’t find it hard to imagine at all that well-managed teams are at least 30% more productive than replacement-level management of teams; just take a look at the software development waste article below.