Researchers at Harvard Business Review have come up with the three essentials of management, based on an extensive survey of over 10,000 firms in over 20 countries.

1. Rigorous monitoring

Best practice firms are ruthless in monitoring their entire production process… The basic message: information is king, and firms that collect, process, and exploit information are beating firms that do not.

Information is king, and to gather it it effectively, you need to have a consistent view across disparate business systems inside and outside the organization, and business analytics tools to exploit it.

2. Challenging targets

Best practice firms also set tough short-run and long-run targets for every stage of their process… These targets were tough but fair, so that developing them takes time and effort. But we find firms with broad and challenging targets are comprehensively outperforming their competitors.

Measurement isn’t enough: you need to turn information into action and make changes to business process. The first step is to use strategic processes to develop appropriate targets for every level of the organization, so that everybody knows how their actions affect the organization as a whole.

3. Rewards and incentives

The best firms acknowledge and reward their top performers with a range of bonuses and promotion… This motivates employees to outperform, driving firms with strong rewards and to overtake their weaker competitors.

The second step of turning strategy to execution is incenting employees to do the “right thing”. This is a difficult and nuanced task that can’t be automated, but performance measurement systems are essential to have an informed discussion with employees.

Bringing it together

These practices are most effective when used together. Good incentives need thorough monitoring and wide-ranging goals to help companies spot their top performers. As a result, we see that the best firms are implementing these practices widely. The benefits are impressive — improving management from poor to good leads to a 3% increase in return on capital, a 26% boost in market value, and 70% faster growth.

Good IT, business analytics, and performance management systems aren’t a “nice to have” – they’re an essential part of modern management.