Why do some firms consistently produce more than others with the same number of similarly skilled workers and the same machinery and technologies, even when operating within narrowly defined industries? Part of the answer to this question lies in the quality of their management. Better-managed firms set clearer targets, monitor performance more effectively, solve operational problems more rapidly and are better able to adopt new technologies. These capabilities may not be glamorous, but they are an important driver of productivity (Bloom, Sadun, Van Reenen, 2016).
This note places recent findings on management and strategy consulting in Belgium into a broader discussion on productivity. It argues that management capacity should be treated as an organizational technology: it can be accumulated, improved and diffused, but it also requires investment, time and complementary skills. In terms of internal firm policy, this means that developing robust management capacity is neither a vague question of organizational culture nor something that can be done quickly. Rather it is a capability that can increase the return on digitalization, innovation and training when firms have the incentives and support to implement change.
