The Real Reasons Successful Companies Use Management By Objectives

Mad analytics, yo! With data comes optimization. And more money!

In The Practice of Management by Peter Drucker, he first introduced the idea of management by objectives. It’s when a company decides to put an objective point of view across for measuring the results that they get for the resources that they input that they can finally begin to apply analytics to these results. By applying analytics, they can at that point come up with a plan to improve the process.

Whether that’s getting rid of things or leveraging the resources that they already have available, this is an effective, logical approach to a relatively unknown and random process. Sure, there are procedures and plans in place that get things done, but a lot of times it’s harder to see results plainly.

It’s tough to effectively judge your return on investment, or ROI, without applying some objective approach. Successful companies that use management by objectives know this and they know where to go from there. Here are a couple of tips to help you on that path too.

1) All Companies Use Some Form Of It

Think about it. If you have any type of goals or a review process at your work, the your company uses this style of management. Now I’m not talking about performance appraisals, although, that does come into play at some point for this management style.

Whether you’re at Intel, DuPont, or Xerox, who are huge companies famous for using management by objectives, you use some form of this management theory to get an objective point of view on the results that you achieve. Those are numbers that you can report, that you can use to focus your inputs later, and that overall make the decision making process a little less risky.

2) Set Goals And Make Decisions

The first two parts of managing by objectives are to set the goals that your company or team is planning to go for. This is being specific and following the rules of proper goal setting, which is usually to follow the S-M-A-R-T approach or SMART goal setting.

Once you have these goals in place, you can start to make decisions that make the most sense. You want to go with decisions that have the greatest impact on your company without having too much difficulty in implementing.

3) Implementation And Feedback

Wait. So I’m not supposed to go right and REALLY not supposed to go left. Uggg.

The last two parts of managing by objectives are implementing the decisions that you’ve come up with to head towards the goals that you’re seeking and then to receive feedback for all of the process along the way. If you’re only coming up with ideas and not actually doing anything with them, you are not doing anything useful for your company.

You have to actually ‘do’ in order to get something out of the work you plan. You have to implement what you have planned in order to get results and to get any type of objective feedback that you can feed-back in to the next iteration of your process and get results that matter.

Objectively Manage or Subjectively Fail

Real companies that have an interest in growing use management by objectives in some form or another. They set their goals, they make their decisions, they implement their ideas, and then they obtain feedback to grow the future. Remember that while this process may not be best for every situation, it works and it’s been successful for many. Consider it in your company today.