Study reveals optimization potential through improved management
What do proper organizational structures, processes and control mechanisms mean for the success of a company? Three scientists from the Massachusetts Institute of Technology investigated this question in a study. They offered some Indian textile companies with several production plants free advice on modern management methods. They then compared the success of these companies with a control group that had stuck to their traditional methods.
The researchers identified three key effects in their extensive field experiment1: productivity in the companies increased by an average of 11% due to better quality, higher efficiency and lower inventories. Thanks to the increased flow of information and the controlling instruments, the owners were able to delegate decisions to plant managers and thus decentralize them to a greater extent. And thirdly, IT applications were used much more intensively to collect and analyze the necessary data.
So why didn’t companies think about external consulting earlier? And why were the improvement concepts not immediately taken up by the competitor companies? The sobering result of the study: many companies did not know that they could improve, but thought that everything was in perfect order.
You can find a report on the entire study here:
www.stanford.edu/~nbloom/DMM.pdf
1 Bloom, N.; Eifert, B.; Mahajan, A.; McKenzie, D.; Roberts, J.: DOES MANAGEMENT MATTER? EVIDENCE FROM INDIA
