REPOST: Look After The Suits - They Drive Competitive Advantage More Than Strategy Or Innovators

Sebastian Bailey shares in his article that every individual has a unique contribution to a business' success or failure.

Image Source: forbes.com

What makes the biggest difference to revenue, brilliantly creative people, a ground breaking strategy, lean processes or strong middle management?

In 2008, MIT School of Management researcher Ethan Mollick set about to discover what has a greater impact on performance within the computer game industry: people or process. Armed with data about the revenue and ratings of 1,536 games across 602 firms, he looked at what proportion of performance could be accounted for by individual contributors – the game designers and managers – and organizational factors. Controlling for team size, the year the game was released, the genre, publisher and whether the game was a sequel or included licensed content, he discovered that individual contributors accounted for 25% of the difference in revenue generated and 19% of the difference in ratings. This was at least equal to the variance accounted for by organizational factors. What’s more, individuals in managerial roles had a greater impact on performance than the creative designers. When the blockbusters and flops were removed – the top and bottom 10% according to revenue – designers accounted for just 7% of the variance, compared to 27% accounted for by managers.

Far from being interchangeable, individuals uniquely contribute to firms’ success or failure. And even in an industry which rewards creativity, managers had a greater influence on performance than the innovators. For all the hoopla surrounding the innovation process and the attention and rewards lavished on innovative individuals, managers are the ones who facilitate communication, encourage organizational commitment and, ultimately, translate that innovation into reality. Perhaps it is no surprise that Tim Cook went from COO to CEO – for all its emphasis on the shiny and new, Apple knows that what really drives success is good quality operations.

Of course, a single entrepreneur can influence an entire market; some say that top computer programmers produce the same amount of work as 10 – 20 average programmers and, according to some estimates, 6% of publishing scientists account for 50% of published articles. Clearly, individuals do matter. But few industries pay as much attention to individuals at the lower level, like middle managers, who are often largely responsible for making the strategic vision happen.

The lesson for business leaders from Mollick’s research? Middle managers matter more than you think – so it pays to invest in them. 

Follow this Bertrand Management Twitter page for more updates on the management consultancy industry.