Andreas Seidl believes McLaren can continue to close the gap to Mercedes, Ferrari and Red Bull with the team's 2020 car.
McLaren enjoyed a restorative 2019 campaign, jumping up to fourth in the constructors' championship and securing a first podium finish since 2014 at the Brazilian GP.
Carlos Sainz also secured 'best-of-the-rest' status among drivers by finishing sixth in the standings.
McLaren will switch engine supply from Renault to Mercedes for 2021, but team principal Seidl believes the team can continue its rise through the standings.
"I am very happy with the progress I see in the factory regarding the preparations for the 2020 season," Seidl said.
"I think we have a very good understanding of the weaknesses the MCL34 had in 2019 and it is great to see how the entire team is working together very hard on improving.
"I'm optimistic that we can make the next step, which is to further reduce the lap time deficit to the top three teams."
With F1 falling under vastly changed regulations in 2021, teams face a balancing act as to when to switch focus to the new car, but Seidl says immediate achievements will retain focus.
"The speed of your 2020 car will determine to some degree when you switch all your resources towards 2021," he said. "It's a juggling act that we have every year, but it's more extreme this time because of the change in technical regulations for 2021.
"We're not going to sacrifice 2020; we want to have another good season because it's important for the development of the team to have continuous improvement."