MBO (Management by Objectives)
In 1960s had been adopted by a number of forward-thinking companies, e.g. Hewlett – Packard, which led to productivity gains of 56%.
Most common trap goals were centrally planned and sluggishly tricked down the hierarchy. Most deadly of all, MBOs were commonly tied to salaries and bonuses.
|“What”||“What” and “How”|
|Annual||Quarterly or Monthly|
|Private and Siloed||Public and Transparent|
|Top-down||Bottom-up or Sideways (~50%)|
|Tied to Compensation||Mostly Divorced from Compensation|
|Risk Averse||Aggressive and Aspirational|
Andy Grove’s Basic OKR Hygiene
Less is more: “A few extremely well-chosen objectives, impart a clear message about what we say YES to and what we say NO to. Limit three – five OKRs per cycle lead companies.
Set goals from the bottom up: to promote engagement, teams and individuals should be encouraged to create roughly half of their own OKRs, in consultation with managers.
No dictating: OKRs are a cooperative social contract to establish priorities and define how progress will be measured.
Stay flexible: if climate has changed and an objective no longer seems practical or relevant as written, key results can be modified or even discarded mid-cycle.
Dare to fail: “Output will tend to be greater, when everybody strives for a level of achievement beyond [their] immediate grasp. Such goal setting is extremely important if what you want is peak performance from yourself and your subordinates.”
A tool, not a weapon: The OKR system is meant to pace a person – to put a stopwatch in his own hand so he can gauge his own performance. it is not a legal document upon which to base a performance review.
Be Patient; be resolute. Every process requires trial and error. An organisation may need up to four or five quarterly cycles to fully embrace the system, and even more than that to build mature goal muscle.