CCK09 Management by Objectives

In The Purpose of a Business is to Create a Customer – Peter Drucker Centenary.

Another famous Drucker quote: ‘Management by objective works – if you know the objectives. Ninety percent of the time you don’t‘.

Within well-designed, loosely coupled business units there’s a lot more room for experimentation than between and within rigid ones: Hagel’s ‘institutional innovation’ centers around bringing ‘the force of attraction to bear on tens or even hundreds of thousands of participants around a common platform‘.

…We are no longer talking about flexibility in configuring modules with given performance levels.  Now we are talking about flexibility to configure modules that are rapidly improving their own performance.  This combination of flexibility plus accelerating performance improvement is what drives the real power of loosely coupled systems.

Drucker’s ‘Managers who have retired on the job‘ are notorious for inflexibly driving to illogical objectives which baffle staff and destroy their enthusiasm: modern 2.0 technologies enabling participation and collaboration around common platforms have come of age, but management thinking is mostly not yet aware of their potential.

The report that I composed in the mid 1980s: Management by Objectives in Manufacturing industry (Case Study) had proven that it worked. I hadn’t published it. The conclusions were:
1. MBO has been introduced successfully in the industrial organisation (a company)
2. From the case studies in Sales & Marketing, Production and Engineering illustrated, the positive benefits results from the MBO applications are – improvement in management performance and productivity, communication, superior-subordinate relationship, better performance measurement & appraisal and personal development
3. Effective motivational and interpersonal skills are important in enhancing successful MBO implementation. These are highlighted in the analysis and remedial actions discussed in the cases.
4. Review of MBO indicated that high reception of MBO by management in all levels, good industrial relationship, education of MBO, strong sense of belonging, good financial and marketing status are essential points which enhance MBO’s success in the company.
5. Finally MBO will help managers on all organisation levels to develop their potentials more fully, and will enhance the overall productivity of the total enterprise.

Did MBO work in companies? 

From most top management points of views, vision, mission and objectives are important in steering the organisation in the right direction.  All managers and employees would need to align their strategies and action plans to the vision and mission developed. That’s corporate leadership. 

From rank and file (most employees) (or in education – the educators and administrators) point of views, they are looking for their personal learning and development needs at work. There are many who enthusiastically align their thoughts and actions with middle and top management, and these are part of the jobs.  This is important to ensure that both organisation and team goals are met strategically. It is also imperative to get the job done effectively and efficiently (as a team leader or manager), to collaborate with top management, to build community that is attuned to the top management’s philosophy.   These could be achieved through Management by Objectives, or alternatively Management with Objectives, if flexibility and responsiveness to the environment and stakeholders including customers are taken into consideration. 

Cooperation and collaboration is the key to success, for both individuals, networks and organisations in MBO.   This could be greatly mediated via Web 2.0 and social networking.

Would MBO also work in networks?  I would like to know if there has been any researches done in this area. 

Due to the complexity nature of learning and the networks, I find it hard to conclude whether MBO would work throughout networks or community of practice.  As each network member has his/her own vision and mission, it seems hard to have common and agreed vision and mission.  However, as time evolves, some network members may be able to collaborate with others and achieve great results using an MBO approach.

Can we apply MBO to networks with Web 2.0? 

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