What Is Management?

What Is Management? And Does Management Consulting Actually Help?

Author’s Note:  This is one of a series of essays I am posting in connection with my upcoming Harvard summer school course, Management Consulting in the Age of AI.  The first essay in the series is: Why Do Major Corporations Hire a Management Consultancy? To receive email notifications when I publish new essays, please subscribe to my blog.

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Perhaps the world’s first recorded management consultant was Jethro (Moses’s father-in-law). In Exodus 18:13–27, he sees Moses trying to handle every dispute himself, and warns him that he’ll wear himself out. Jethro tells him to delegate—to appoint capable leaders with responsibility for groups of various sizes (described as thousands, hundreds, fifties, and tens) – so that only the hardest cases escalate to Moses. This remains excellent, commonsense advice for any leader.

But what exactly is management?

About 20 years ago, a group of academics sat down and tried to answer that question systematically (Scur et al, 2021). They created something called the World Management Survey, drawing on input from both academics and practitioners to define what management actually is, and what good management looks like. At a high level, they identified four key dimensions:

Operations management and process improvement: Does the organization have well-structured processes for getting work done? And crucially, does it have ways to improve those processes over time?

Performance monitoring: Does the organization actually track how individuals, teams, and operations are performing? When something goes wrong, does it have a way to figure out why?

Target-setting: Does the organization set clear goals? Are those goals realistic given the timeframe? And does it have some stretch goals to push itself?

Talent management: How does the organization hire, promote, and pay people? Does it reward and retain high performers? What does it do about low performers?

(Note: The list isn’t intended to imply that this is all of management. Think of these as a core, around which other management and leadership approaches are often built.)

We’ll dig into the implications of AI for management consulting in later essays, but for now, just note that these basic categories aren’t going away. Operations will still need to be managed. Performance will still need to be tracked. What’s changing is how these things get done. AI is already transforming how organizations execute their processes—which, by the way, suggests that we’ll see continued (and possibly increased) demand for management consultants over the next few years.

Now, back to the World Management Survey. The researchers developed a methodology based on this framework and applied it to about 17,000 organizations, across 35 countries and multiple sectors. The results show—and yes, it’s just correlation at this point—that firms with better management practices tend to have better outcomes: not just improved financial outcomes, but also improved quality. For example, better management practices are correlated with better health care results (Tsai et al, 2015) and educational outcomes (Bloom et al 2015).

So far, so encouraging. But as you’ve probably heard (ad nauseam, ad infinitum), correlation is not causation. Even if we accept that good management practices correlate with good results, how do we know that management consultants can actually improve those practices? Maybe best practices need to develop organically inside a firm. Maybe you can’t just parachute in consultants for a few months and expect lasting change.

To answer these questions, researchers ran a randomized field experiment with large Indian textile plants (Bloom et al, 2013). Control plants got only a one-month diagnostic. Other plants (“treatment plants”) got five months of hands-on consulting: one month of diagnosis, then four months of intensive implementation support.

The results were striking. Treatment plants increased their adoption of management best practices by 38 percentage points (from 26% to 63%), compared to just 12 points in the control group. More importantly, this translated into real performance gains in the treatment group: quality defects fell by over 50%, inventory dropped by about 40%, and output rose by around 9%. Overall, the researchers found a 17% productivity gain in the first year—and within three years, the treatment firms had opened additional plants. The control group showed only modest gains.

OK, but here’s an obvious follow-up question: Does any of this stick? Maybe performance improves for a year or two and then slides back to baseline. The research team went back to these same firms nine years later to find out (Bloom et al, 2020).

The answer: yes, with caveats. The treatment plants still maintained a significant edge—about 20 percentage points higher in management practice adoption, essentially unchanged from the end of the original intervention. And treatment plants showed a 35% improvement in labor productivity (compared to control firms) eight years after the experiment ended.

But there was also decay. About half of the management practices originally adopted had been dropped by 2017. How can both things be true? Because the control plants also dropped practices over the same period. Even though treatment plants lost ground in absolute terms, they maintained their relative advantage. Interestingly, the control plants actually showed steeper percentage decay than the treatment plants, suggesting that adopting a fuller bundle of complementary practices makes the whole system more stable.

The researchers identified two main culprits for the decay: plant manager turnover and lack of senior leadership time. When the manager who’d implemented the new practices left, the improvements often collapsed—nearly 60% of the practice abandonment was tied to managerial turnover. The lesson here is important: best practices don’t sustain themselves. Organizations need to embed them in their culture through training, documentation, and institutional memory—not just rely on the knowledge living in one person’s head.

One more insight is worth mentioning: knowledge spillovers. They happened within firms but rarely between them. The non-experimental plants in treatment firms gradually picked up the new practices from their sister plants, eventually catching up by 2017. But the control firms? They didn’t learn much from the treatment firms. Management knowledge, it seems, flows more easily within a company than between companies.

Beyond this Indian study, several other randomized controlled trials have used management consulting as an intervention (see Bruhn, Karlan, & Schoar, 2018; Iacovone, Maloney, & McKenzie, 2022). The findings are consistent: on average, consulting has a significant positive impact.

Now, the studies I’ve described so far were experiments—great for causal rigor, but you might wonder whether the results generalize to real-world consulting relationships. A recent large-scale observational study helps fill that gap (Bijnens et al, 2025).

Here’s what the researchers did. They got access to Belgium’s VAT records, which capture every business-to-business transaction in the economy. By linking invoices from the ten largest strategy consultancies to their clients’ financial and workforce data from 2002 to 2023, they could see what happened to firms before and after major consulting engagements—defined as spending spikes of at least three times the prior average. Using difference-in-differences methods with carefully matched control firms, they found that consulting led to a sustained 3.6% increase in labor productivity over five years.

And here’s something important: the gains didn’t come at workers’ expense. Wages rose 2.7% with no decline in labor’s share of income—which directly contradicts the “rent-shifting” critique (i.e., that consultants just redistribute value from employees to shareholders). The study did find evidence of restructuring: more outsourcing, less reliance on temp workers, and modestly higher dismissal rates. Perhaps most intriguingly, the productivity boost was largest for initially less productive firms. Consultants, it seems, help laggards catch up to the frontier.

So, taking all this together, it appears that management consulting—done well—can meaningfully improve firm performance. Which raises an obvious question: why don’t more underperforming firms try to fix themselves? They could either do it themselves (let’s be honest, this isn’t quantum mechanics—the basics of good management are taught in any decent management program), or hire outside help.

A few reasons come to mind. First, as I mentioned in a prior essay, the firms that most need help are often the ones least able to afford it. Second, there’s the Dunning-Kruger effect: people with low skill in a domain tend to overestimate their competence, partly because the skills needed to perform well are the same skills needed to recognize poor performance. So the organizations that would benefit most from intervention often don’t realize they need it—or can’t pay for it. My guess (and let me be clear, it’s a guess) is that truly low-performing organizations usually only seek help after a change in ownership or senior leadership brings fresh perspective and possibly new funding.

So what about all those news reports and books (Bogdanich & Forsythe, 2022; Mazzucato & Collington, 2023) suggesting consultants are useless or corrupt? Here’s the thing: my claim is that consulting on average improves outcomes. That’s not the same as saying every engagement will succeed, or that all consultants are ethical. If you’re hiring a consultancy, caveat emptor still applies. But one purpose of these essays is to help people who buy consulting services—or work alongside consultants at client firms—understand how to get real value from them in this new age of ubiquitous AI. And, I will dive deeper into the subject of management consulting ethics in a later essay in this series.

But, in the next essay, we’ll start looking at the changes already happening inside consulting teams themselves as a consequence of AI.

About Steven Strauss: From 2014 to 2025, Strauss was the John L. Weinberg/Goldman Sachs Visiting Professor at Princeton University. Immediately prior to Princeton, he was on the faculty of the Harvard Kennedy School and was a 2012 Harvard University Advanced Leadership Fellow. Before Harvard, he served in the Bloomberg administration in New York City and as a management consultant with McKinsey’s London office. He holds a Ph.D. in Management from Yale University.

Bibliography

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• Bloom, N., Eifert, B., Mahajan, A., McKenzie, D., & Roberts, J. (2013). Does Management Matter? Evidence from India. The Quarterly Journal of Economics, 128(1), 1–51. doi:10.1093/qje/qjs044

• Bloom, Nicholas, Renata Lemos, Raffaella Sadun, and John Van Reenen. 2015. “Does Management Matter in Schools?” The Economic Journal 125 (May): 647–674.

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• Iacovone, L., Maloney, W., & McKenzie, D. (2022). Improving Management with Individual and Group-Based Consulting: Results from a Randomized Experiment in Colombia. The Review of Economic Studies, 89(1), 346–371. doi:10.1093/restud/rdab005

• Mazzucato, M., & Collington, R. (2023). The Big Con: How the Consulting Industry Weakens Our Businesses, Infantilizes Our Governments, and Warps Our Economies. Penguin Press.

• Scur, D., Sadun, R., Van Reenen, J., Lemos, R., & Bloom, N. (2021). The World Management Survey at 18: Lessons and the Way Forward. Oxford Review of Economic Policy, 37(2), 231–258. doi:10.1093/oxrep/grab009

• Tsai, Thomas C., Ashish K. Jha, Atul A. Gawande, Robert S. Huckman, Nicholas Bloom, and Raffaella Sadun. 2015. “Hospital Board and Management Practices Are Strongly Related to Hospital Performance on Clinical Quality Metrics.” Health Affairs 34 (8): 1304–1311.