Management By Objectives
Prior to World War II, the concept of leading an organization through setting a variety of goals and decentralizing action to achieve those goals began to gain steam. Today, this planning and execution model’s effectiveness has been scientifically proven in all flavors of organizations: from the largest for-profit corporations on Earth to the most successful militaries the world has ever seen down to the smallest start-ups and community non-profits.
The premise: no single person or team can individually manage every aspect of the solution to the customer problem, due to a lack of time and inability to master the context surrounding every decision that needs to be made. No one is omnipotent.
Why It Matters
After discovering the customer problem to be solved at scale and deciding on your Rubicons that you’ll cross (and won’t cross) to solve it, you must do two things. First, find a way to create a differentiated strategy that separates you from your competition and measure the most important outcomes of said strategy (a relevant outcome being the proof that you’re actually solving the customer problem in a profitable way). Second, ensure your entire organization is actively contributing to that strategy. Management by Objectives accomplishes both goals in a way that unleashes the innate creativity of your entire organization.
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By deciding how you will outperform your competition and create value for the customer via a business model that cannot possibly be re-created in the short term, affixing this decision to a series of goals, and then encouraging your teams to find the best way to achieve these goals, you will create a self-reinforcing engine of purpose throughout your entire organization. Everyone on your mission will know why they’re on it and how they contribute to the endgame.
You're Doing It Right If...
yOU'RE DOING IT WRONG IF...
The strategy you set cannot possibly be duplicated by a competitor without a prohibitively high cost. You are “one of one” in the market(s) you serve.
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Every single person in your organization knows the goals of the company, why they’re the goals, and their role in achieving them.
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You don’t always achieve every goal in every quarter but do not see wild swings in the goals of the company.
The goals of various functional units don’t contribute to one another or aren’t set in concert with one another.
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People don’t know why they’re working at your organization or don’t have a voice in providing feedback on the strategy.
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Goals or work for lower levels of the organization are dictated by management layers above them.
