Management by objectives in the agile era

N°285a – Synopsis (8p.) – Performance Management
Management by objectives in the agile era
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When management by objectives takes into account the constraints of the agile era, it remains a formidably effective tool. How can you help your teams choose and reach their objectives in a context of uncertainty and permanent change?

Leading a company consists in setting objectives to the teams, and to support them in their realization. This is in any event the vision of management by objectives, a management model inherited from hierarchical pyramid organizations.

This approach seems at odds today with the new business environment, which forces companies to be agile. What is the point of annual targets, when technological disruptions and market evolutions dictate constant adjustments? Are managers still legitimate to impose an objective, while staff are increasingly asked to self-organize and work in networking mode? How can they still point out the progress and lapses of their team members without newer, high potential generations losing motivation when confronted to a supervision they see as over-imposing?

Should we then turn away from this approach? Definitely not—even if, obviously, management by objectives must be modernized. Thus, some high-performance organizations have reinforced it. They have even made it into a key competency, on which they rely for competitive advantage. The most famous example is this of Intel. When its competitor Motorola did, for the first time, outperform it with a more powerful processor, Intel leaders immediately reacted by launching the “Crush Operation”. A few weeks were sufficient for Intel to reorient its strategy, with a single objective for the entire staff: contribute, at their individual scale, to the recapture of the market leadership. Teams took the challenge on board, broke it down so they could adapt it to their activities, identified new priorities and organized to implement them—all of this at a disconcertingly fast speed. It only took Intel one year to gain back its lost market share.

This example is not an isolated case. Nowadays, to face the mutations of their markets, many companies such as Google, IBM and Marriott Hotels have refreshed their management by objectives methods, to ensure they combine effectiveness, flexibility and staff autonomy. How can you learn from them to associate objective setting with agility in your organization?

In this synopsis:
– Choose a few key objectives
– Reinforce your staff’s ability to reach their objectives
React when objectives are not met


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