Believing our own rhetoric

by | Sep 23, 2019

Comparing the performance of your business, organisation or industry with others in your patch is risky. It invites a false sense of security on the urgency and the priorities for change. The real gap to monitor is where we stand relative to world class – and whether it’s narrowing or growing.

These comparisons can be a sobering experience and provide a potent means of reframing our thinking, challenging complacency and setting better priorities and metrics.

External comparisons are a vital part of your toolkit for accelerating innovation.

A good example arrived last week with the Department of Industry, Innovation and Science report on the Development of Management Capability Scores. Management practices are known to be a key driver of enterprise performance and the researchers assessed the situation across industries in Australia.

They found that the best performing industry sector on overall management capabilities was Health Care and Social Assistance, which was 66 per cent ahead of the lowest performing industry: Agriculture, Forestry and Fishing.

On the digital management capability score the difference was even larger, at around 279 per cent between the top, Financial and Insurance Services, and the bottom performer – once again, Agriculture, Forestry and Fishing.

Overall, they found that innovation-active firms did better and that there is a significant positive association between management capabilities and labour productivity and between supply chain management and export performance. These are all imperatives for the success of Australian industries like agriculture.

For those industries that performed best relative to other Australian industries, don’t get too excited. The study also found that American business managers outperformed Australian managers across all measures.

The key implication is that management capability is a big deal, especially if exports and productivity are vital to the future prosperity of your business and industry. However, quantitative analysis of management capability suggests that: Australian businesses lag American businesses; there is much variance across Australian industries; and that the agriculture, fishing and forestry industry is at the bottom.

We hear lofty visions and hype about growth, but success requires world class management capability. How does your firm and industry stack up? Is the gap narrowing or growing wider?

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