An international management study conducted by researchers at Stanford, the London School of Economics, and McKinsey & Company¹ assessed the actual management practices of 4,000 medium-sized manufacturers around the world. The conclusion… better management practices are strongly linked with better financial performance.

Surprisingly, the study found little relationship between managers perception of their firm’s management practices and their actual practices (regardless of the firm’s performance). In other words, we are blind to our strengths and weaknesses.

What the study uncovered was that strong management practices were linked with companies in more competitive environments and companies with external ownership (or in the case of family owned businesses, an external CEO).

Firms in less competitive markets or firms that are founder or family owned and managed typically lack the external feedback loops common needed to see themselves clearly. We may be blind to ourselves, but not to others strengths and weaknesses.

Shareholders and competitors can be useful, but still relatively difficult to understand. A better solution is to find an insultant—someone who will give you a clear, unvarnished outside perspective on your management practices. Consider:

• Joining an executive forum like Vistage, Renaissance, or YPO;
• Use an assessment like the Breakthrough Assessment from bpstrategy;
• Finding a retired executive to be your mentor;
• Creating an internal team whose job it is to take the outside perspective; and
• Having quarterly “Start-Stop-Continue” discussions with your team.

¹ http://www.stanford.edu/~nbloom/MeasuringManagement.pdf