A Management by Objectives History and Evolution
The Goal of Management; from MBO to
Deming to Project Management and beyond
Remember MBAware
in the 90’s? Well, maybe you don’t. How
about management by objectives in the 50’s, 60’s and
70’s? How about
Deming and
quality circles? What happened to those models
for management and general productivity, and what does
it have to do with project management today? The
MBO model
sort of came and then left, without leaving much of an
overt or visible impression on most. It seemed to
exit from the fore-front of management focus by the
downsizing and work group turmoil and market downturn of
the early 90’s. Yes, every organization has to set
goals, but organizational effectiveness was going to be
accomplished by macro efforts such as down-sizing, not a
style of managing, a way of organizing what topics and
agenda to focus upon in a given day.
With the upturn
of the market and the start of the Internet gold rush,
management by objectives slipped further into the past.
The term “management” itself seemed to lose a sense of
compelling interest. Riches were made based upon
technology, upon acquisitions, upon something new, upon
association with the WEB, not (for heaven’s sake)
management of work effectiveness.
The premise of this article
is that project
management is an evolution of MBO theory, and in
need of evolvement in specific directions itself… not
necessarily more standardization. A second premise
is that the previous models have all been eclipsed in
history because their assumptions did not take into
effect certain aspects in the workplace reality.
The assumptions proved over time to be quite limiting,
forcing the evolvement of management models with a new
or improved set of assumption modifiers. The third
premise is that the current model of project management
is also limited by its assumptions, with recommendations
for needed change and expansion to the model.
In effect, all of the work
models to be discussed emphasize a certain perspective
as key to achieving a goal or objective. Project
management integrates certain perspectives pushed to the
center of workplace thinking, and then adds its own
emphasis. Each has a weakness in the assumptions
that are included in their emphasis. Let’s start
by reviewing some history, albeit in a very summarized manner.
Goals
Humans seem to need goals to achieve extraordinary outcomes. The connection between goals and elevated performance has been in the literature as long as writing has been a part of civilization. In the last 50 years there have been more than 300 studies completed demonstrating repeated findings, or “basic truths” if you will, about humans and goals. Truths incorporated in repeated findings that:
1. People accomplish beyond
their historical norm when they use goals.
2. People respond
positively to stretch goals that they judge to be
reasonable or
3. People stay attached to
goals when leaders support a goal process by both
modeling the goal related behavior and providing
feedback relative to goal
progress.
What hasn’t been written as
clearly is, “What happens when
setting objectives or goals doesn’t work?”
What happens when its effect on organizing behavior and
achieving results is relatively nil? Why are goals
so significant for some and relatively unused and
apparently unneeded by others, both in and out of work?
In this white paper we will be using goals and
objectives interchangeably. We will use the term
of goal to generally describe a goal or objective for
the purpose of describing in broad terms the process of
defining some outcome to be accomplished that is not
presently within reach.
Management by Objectives (MBO) (It’s in the
goal)
In the 60’s, 70’s and 80’s it
seemed like a good thing to manage work efforts by
goals, hence the term “management by objectives.”
The idea was to improve management and work productivity
in general by being more defined about the intended
outcomes
MBO principals contained many
precursors to the basic building blocks used by current
project management tenants. The basic MBO
principles included:
1. Establish a set of top
level strategic goals.
2.
3.
4.
5.
The assumptive strength
behind the MBO model, as commonly practiced, is the
notion that if a desired outcome is defined as a goal
and progress is measured towards reaching that goal,
then the chances of reaching that outcome are enhanced.
From a simplistic view, if you start out with a goal in
mind, you are more likely to reach it or conversely, “If
you don’t know where you are going, you’ll probably get
there.”
But MBO theory didn’t survive
very actively in the work arena. Why? One
weakness was its assumption that correcting the
traditionally broad or vague state of goals would lead
to performance improvement. goals were accurately
noted to regularly get stated and stored in a bound
annual volume somewhere and only occasionally used as a
measurement or reference device. An effort was
made to shore up this weakness with a focusing upon the
goal definition process, which became popularly known as
the acronym SMART. To put it briefly, don’t just
manage by objectives; manage by “smart” goals or smart
objectives.
Smart Goals (It’s in the goal details)
The SMART goal era of the
80’s and 90’s provided some helpful criteria about what
makes goals more or less effective in shaping behavior.
By definition, a goal that doesn’t shape behavior is
ineffective. The theory went on to suggest that
SMART parameters were good predictors of influential or
effective goals. As an example, goals that were
not specific or measurable were less likely to shape
behavior than those that were high in these
characteristics. Using a play on words, you were
smart to include these characteristics in your goal and
objective definition. SMART stood for the
characteristics of: Specific, Measurable, Actionable,
Reasonable and Time-bound.
One of the almost palpable
impressions of SMART goals is that they are pointed;
they have an edge, often a sense of energy created by
the specificity, the time limits and the measurement.
Non-SMART goals seem flat in comparison (ie. Improve
productivity); bureaucratic, like one more strategic
plan that’s going nowhere. While the enhancement
to goal definition was a helpful direction, it did not
address fundamental weaknesses in this model.
What were
the weaknesses in the MBO assumptive base that forecast
its demise in the work reality?
1. It emphasized the setting of goals over the working of a plan. Do you remember when it was in vogue to “visualize” your goal daily… as if that was going to make it come to pass?
2.
It underemphasized the
importance of the environment or context in which
the goals were set. That
context included everything from the availability
and quality of resources, to relative buy-in by
leadership and stake-holders. As an example of the
influence of management buy-in as a contextual
influencer, in a 1991 comprehensive review of thirty
years of research on the impact of Management by
Objectives, Robert Rodgers and John Hunter concluded
that companies whose CEOs demonstrated high
commitment to MBO showed, on average, a 56% gain in
productivity. Companies with CEOs who showed low
commitment only saw a 6% gain in productivity.
3.
It didn’t address the
importance of successfully responding to obstacles
and constraints as essential to reaching a goal.
The model didn’t adequately cope with the obstacles
of:
· Defects in resources,
planning and methodology,
· The increasing burden of
managing the information organization challenge,
· The impact of a rapidly
changing environment, which could alter the
landscape enough to make yesterday’s goals and
action plans irrelevant to the present.
Deming and Quality Improvement (It’s in the
product/process details)
At roughly the same time, there was an emerging model that addressed some of what the MBO model didn’t. In the face of increasing change, information demands, distance from vendors and increase in breadth of competition, Deming suggested that goals are achieved by persistent, attentive measurement of the details and quality improvement. Identify and remove the defects, the issues, the obstacles, one at a time… and ultimately the objective will be achieved. He built a model around the importance of successfully responding to goal quality issues.
Deming’s model also addressed
the environment and context - in a manner.
Essentially it created a team environment (Quality
Circles) at the mid-management level and below, to
protect and nurture the (goal) effort. This also
allowed upper management to support without
participating and yet avoid the de-motivating impact of
not-walking the talk or modeling the desired group
behavior that harpooned the MBO model. Deming’s
model provided two vehicles for addressing the
complexity of work.
1. A singular or
galvanizing focus of pursuing goals through
achieving zero defects.
2.
The weaknesses in this model,
which continues to evolve indicated as exemplified by
the Six Sigma effort, include:
1. Under estimating other (market) impact and feedback sources in the environment, with the presumption that removing defects and improving quality (making it the best) would be the determining factor in reaching a business objective.
2. De-emphasizing the value of non-metric feedback loops when attempting to achieve something new, as contrasted with optimizing the existing.
As both MBO and Quality circles began to fade, the power of personal computers, spreadsheets and computerized schedules were rapidly expanded. It set the environment for an emerging demand to manage the complex in an increasingly organized manner. The achievement of increasingly complex goals nurtured the developing model of project management with an emphasis upon the specification, scheduling and deployment of resources as the chief predictor for work success and outcome delivery.
Project Management… (It’s in the schedule)
Drawing upon the influence of
MBO theory (set clear objectives, build an action plan,
and measure progress) and Deming’s work (optimize
processes and products by identifying and practicing
listed best practices behaviors), emerged the project
management movement. In effect saying,
1. Yes set clear objectives, and get key stakeholder buy-in and definition for the participant through explicit requirement setting
2. Yes, put together a series of best practices action steps in the form of a work breakdown structure.
3. But, what primarily helps people
achieve their objective, is the planning, securing,
scheduled deployment of resources and the completion of
tasks.
Baking a
Cake from a Historical Management Perspective
Yes, I know this review is
very simplistic and full of omissions and arguable
errors in emphasis and coverage given its simplicity.
But, bear with me as I would like to make it even
simpler and more concrete. If you represented the
three models discussed as various perspectives on what
will most influence the success of achieving a goal of
baking a cake, it might look like this:
1, The MBO model would emphasize setting a goal of baking a cake with as much specificity as possible as to the nature of the cake, and the timing and metrics relative to setting up the kitchen and the desired conducting cake baking activities.
2.
The Quality
model would add to that perspective by clarifying that
you are never going to bake a cake unless you ensure that your
equipment is functioning correctly, there are no bugs in
the flour, the milk is of good quality, etc, otherwise
all the goal setting and action planning will be
severely compromised. Furthermore, you are not
going to turn cake baking into an efficient production
without measuring and optimizing each step and process
involved.
3. The
Project
Management model would lightly address the two above
and in effect state the best predictor of baking a cake
is your ability to obtain the right ingredients and
effectively complete the tasks of measuring, combining
and heating the ingredients per the recipe (work
breakdown structure). Incorrect combinations or
measurement of ingredients (resource allocation and task
completion) is the most significant contributor to
overall success, regardless of whether or not this has
been your specific goal, and regardless of whether or
not you have made sure all ingredients and equipment
meet quality specifications.
The combination of all three
models seem to fit the linear environment of cake baking
very well, even when done on a high volume manufacturing
model. However,
· What if most work goals impacting
you, and specifically management, don’t fit the cake
model?
· What if they don’t include
repeating a known recipe for success?
· What if it involves making sure
you don’t practice what you did last year?
· What if the kitchen (business)
environment is not stable and the sequence is not a
known linear formula?
· What if?
It is the author’s premise
that, in fact, today’s business and management
environment is exactly that – a non-linear, sometimes
chaotic, only roughly predictable experience.
Today’s business environment needs current management
methodology to adapt and create a better fit than it
does, at present, using the current project management
model.
PST's GAPR
model; a Needed Evolvement on the MBO to PM history
(It’s a basketball game, not a cake
bake)
Remember our premises?
In short,
1. Management models for the past 50 years, really 100 years, have been eclipsed in history because their assumptions did not take into effect certain aspects in the workplace reality.
2. The current model of project management is also limited by its apriori assumptions of emphasizing resource scheduling and task management.
3. Project management is an
evolution of MBO theory and in need of evolvement
itself.
It is our assertion that as
the work environment becomes less linear, less
predictable, the present project management model
becomes increasingly less effective and hence, the large
proportion of project outcomes that are unsuccessfully
achieved given today’s model.
For the sake of simplicity,
as the business and work environment becomes more like a
basketball game and less like cake baking, the more the
model needs to evolve – quickly.
Business is like basketball, where the environment is subject to
fast swings, sudden shifts, turn-overs, misses and
success. Where time and resources are limited and
where planning is a necessary but limited tool;
resulting in the increasing need for emphasizing
coordination, playing heads-up, capitalizing on the
emerging, brief opportunity and making adjustments.
The basketball model is full
of implications, but most of all it suggests that a
methodology that over-emphasizes resource scheduling and
completing tasks will be bulky and slow in responding to
change requirements.
Project
Management needs to embrace a broader, multiple focused
approach. Think of it as a three legged stool.
Here are a few suggestions characterized as a
GAPR three
legged stool (1. Goals, 2. Action Plan, 3. Results),
representing an evolved model for managing projects,
people and ultimately goals.
1st
Leg – Goals
First of all, goals work.
Given the choice, organizing work around goals… versus
almost anything else (ex. tasks, deadlines, crisis,
meeting job requirements, looking good, you name it)
improves performance. But goal management really
embodies a number of important functions, all of which
are essential:
1. Setting goals as specific outcomes, with defined
requirements
2. Scheduling
and planning,
3. Securing
support/resources on all fronts
A second part about what
works, is both simplifying and addressing the functional
characteristics of goals as they provide a foundational,
if not directing, role in the greater project management
process. At PST, we have moved to a
DORIP model
(our term, although not nearly as intelligent sounding
or well put together as the word SMART). It
simply stands for critical working features of goals as
they impact the worker, the customer and the project
plan.
Our findings suggest that a goal isn't
really a goal until it has some form of definition and
metrics. Otherwise, it is just a vague sense of
expecting something better. Consequently,
definitions and measurement becomes the first of several
steps in constructing a valid plan for reaching a goal.
Here’s what the letters stand for and why we emphasize
these perspectives:
DO
– Goals or objectives ultimately need to be articulated
as a Defined Outcome. Anything less and
goals become vague and don’t have much motivational
power to them, as defined before. Goals need definition
and a sense of outcome to drive the following steps of
working a plan and course correcting based upon feedback
into effective action.
R
– Requirements are an essential characteristic to
define in creating specificity and collaborative
usefulness in treating goals as defined outcomes. If a
goal is a defined outcome, than what are the
requirements it is supposed to meet?
Requirements add to goal definition, while shaping
methodology and creating a set of boundaries for the
development of an action plan. (Example: generate
those sales using the existing product version, but with
new customers, and with the existing sales staff.)
Secondly, requirements ensure that when you deliver on
the goal, the results, the outcome, will be satisfying
to the customer. Actually, all goals operate with
a set of requirements, and what we find is that it is
very important in the process of setting goals to
explicitly state the goal requirements.
I
– Issues and constraints represent the
conditions, the challenges; the hurdles that stand in
the way of completing a project as simply a walk in the
park. Defining and planning around the
issues and constraints is the single best precursor we
know of to building an accurate action plan or work
breakdown structure to follow. If requirements
provide a context for customer satisfaction, issues and
obstacle definition provides the reality base for the
work breakdown structure/action plan and the scheduling
of resources. Issues and obstacles describe the
environment in which a goal will be achieved and mandate
that the ensuing action plan address them as a reality
check.
P
– The ability to achieve goals is directly tied to the
proposed (project) plan. Goals look like
unsupported aspirations when they aren’t attached to a
plan. They simply don’t have legs. If you
have goals but no plan or measurement ... you're
dreaming. In fact, if people aren't working a
plan, they’re probably spending time putting out fires.
Fire-fighting is not correlated strongly with reaching
goals. Really effectively working a plan means it
impacts your priorities and decisions daily in a way
that pushes you closer and closer to the goal - not just
finishing a list of task or completing empty checkboxes.
2nd Leg – Working the Action Plan
Like the old Koan “What is
the sound of one hand clapping,”
goals are only half of what’s needed. As a
construct and practice, they only represent part of the
equation. In a similar fashion, attempting to
complete a project based upon setting resources and
creating a schedule needs something more, otherwise it
also is about as effective as one hand clapping.
Actually, it is worse than that. Working on goals
without the support of an accurate, realistic, informed
action plan ultimately leads to poor results,
disillusionment and playing it safe. It leads to a
work environment where goals are aspirations that are
under-resourced by the lack of a valid set of steps to
reach them; best intentions that have all the
inspirational power of a New Year’s resolution come
Valentine’s Day. Managing by the “one handed”
approach is not conducive to success.
There is, then, no
substitute for creating and working an accurate plan.
The easier it is to display the work-breakdown structure
of the plan, the important best practices, the check-off
lists, the better this leg works. Why? At
PST we stress that “follow-up creates follow-through.” Having a visible plan
supports both follow-up and follow-through.
Visibility and fighting for attention is key in this
area, as for both management and direct reports,
“working the plan” gets easily crowded out by the
challenge of managing the incoming, daily rush of
demands, to-dos, emails and crises. It’s
exemplified in that nagging thought, “Now what’s the
objective and plan we are supposed to be working on
today?”
But, as is so well pointed
out in the 5th Discipline, there’s so
much we don’t and can’t know when starting a project to
achieve a goal. Consequently, it is imperative
that the plan be both realistic and flexible… because
parts of it will be wrong, you just aren’t sure which
steps are wrong until the plan is being worked. As
we move to the 3rd leg of the stool, you’ll
find that what's really important is that people are on
track and have an easy way to document their follow
through.
3rd
Leg – Results
No matter how good your plan
is, how well crafted the schedule, the work environment
has enough volatility, unknowns and unforeseen, that
most plans will need to be approached with an
interactive-construction perspective. You can’t
foresee what you don’t know and, when not repeating the
past, you can’t know everything. Since success in
today’s business environment is less and less dependent
upon repeating the past, albeit more efficiently or
productively, obtaining and responding to feedback about
the impact of current plan implementation is absolutely
critical.
Consequently tracking and
responding to “results” is key. Put more
graphically, a plan without follow-up and feedback is
worse than lifeless, it is a resource consuming pastime
we are all too familiar with at work. Here are
some process characteristics we find consistently true
for high performing teams and individuals, and lacking
in the average organization:
1.
Document and respond to results
Follow through is critical, but feedback is a priceless scarcity. It isn’t enough to do well, you have to document. Information that can't easily be converted into action and track-ability is absolutely a burden to work with. Consequently, documentation is only of value to the extent it leverages information and expertise in a way that gets reviewed and used by others. Results without documentation (what worked, what happened, what didn’t work, what’s next) represent a huge missed opportunity in leveraging information for repeatable success across the organization.
If this makes
sense to you, you will also see why the current project
management feedback loops in the simple metric forms of
% complete, budget #s and expected days until completion
are far too limited. In fact, worse than that,
they can be used to protect against or delay course
correction rather than evoke it. It takes an
information-rich feedback loop, not single measurements,
to make effective plan changes. Lots of “what’s
happening, why, what ifs, what’s possible, potential
options, results,” etc. You can’t pre-know or plan
for everything, but you can create and reinforce a
coordinated response to project management by
emphasizing and responding to feedback loops from those
implementing the “plan.”
2. Respond to results and recognize high performance
Follow-up creates
follow-through. Reaching project objectives,
especially stretch goals, is regularly an effort of high
performance. Without supplying the reinforcement
that recognition in all of its varying forms provides,
high performance inevitably becomes a declining (limited
to crises and the need for heroics) phenomenon.
Goal and project management is also recognition
management. It’s that simple. If you don’t
pay attention to providing recognition for high
performance, plan on trying to reach those goals with
the much less effective option of pressure and all of
the accompanying problems.
Where does all this take us?
What does work? What is a model that is relevant
today and can use some of the business experience and
transitions encountered over the past 50 years?
Put another way, “What does project management need to
expand to include – especially as it becomes an
effective management model?”
What really works is to
organize management in general and project management in
particular around the three key structures which we
refer to as GAPR. In short, to adopt a management process and secondly to
support it with the needed technology. Let’s go
over both briefly.
1. The GAPR
management process (a three-legged
stool which will result in predictable floor impact when
any one of the legs are missing).
1. Set and manage
Goals,
(plan, resource, schedule)
2. Create, work and
document to an Action Plan
(create, follow and document the
progress and process of implementing the plan)
3. Document, review,
respond to and recognize
Results.
Set up feedback loops and regularly
respond
(gather and respond to feedback on the results and
status of implementing the plan with needed course
corrections). From a recognition perspective, as
the “One Minute Manager” suggested, catch people doing
the right things and
recognize
them for it.
2.
Support the GAPR management process with technology.
This is not a process to be managed with paper and
pencil, spreadsheets, to-do lists and/or email.
Nor is it a process that is adeptly handled with the
traditional project management software.
At Performance Solutions
Technology we offer the ManagePro management software
product line that provide the adaptive, flexible tools
required to support people in managing the information
and deliverables in a coordinated, collaborative,
strategic manner.
For more information about PST
products go to
http://www.ManagePro.com/managepro.asp
-----------------------------------------------------------------------------------
White paper prepared by Rodney Brim, Ph.D.
CEO, Performance Solutions Technology, LLC
Copyright 2004; all rights reserved
References:
One Minute Manager,
by Spencer Johnson and Ken Blanchard, 2000.
The Fifth Discipline, by Peter Senge,
et.al., 1994.
Out of the Crisis, by Edward Deming, 1986.
MBO History & Evolution:
- Management by Objectives (MBO) (It’s in the goal)
- Smart Goals (It’s in the goal details)
- Deming and Quality Improvement (It’s in the product/process details)
- Project Management… (It’s in the
schedule)
- PST's GAPR Model