Management by Objectives is wishful thinking

“This quarter we want revenue up by 10%” - but is it really that simple? Or is Management by Objectives a travesty?

There are 2 ways of managing.

One is hard, requires knowledge and understanding, and will expose your mistakes when you make any.

The other one doesn’t work, is delusional, and betrays both the top and the bottom. But it’s easy, comes at zero personal risk and effort, and works the same across any company, without any prerequisite knowledge.

Guess which one is so ubiquitous in the software product development industry that many people assume it’s the only possibility? Which one do you think is pushed by the certification industry and the business schools? Which one do you reckon is hinted at or directly asked for in almost every management job spec?

Thought so. As sad as it still feels after so many years, let’s look at what this nonsensical idea about management looks like, why it’s appealing even if delusional, and what the sane alternative works like.

Management by Objectives

The main idea behind Management by Objectives is that, as a manager, you manage people by assigning objectives to them. Their goal becomes then meeting those objectives. You, the manager, are part of “the business”, while “they”, the makers, are part of the workforce, not to be trusted or consulted, but to be directed and controlled. Because without control, people will skive off.

In virtue of the extensive knowledge and understanding you were imparted in business school, you can join any company, and come up with objectives for the people and the processes that you manage.

M: “How many screws do we produce per day?”

E: “400,000”

M: “So by the end of Q2 you’ll need to be producing 440,000 screws a day, a 10% increase”

Some employees might push back to this nonsense, but most are already too jaded to even try, and even the ones that do soon give up or get forced out. So 440,000 becomes the objective.

How though? Why? And why now?

Because if producing 440,000 screws a day was simply a matter of willing to do so, why were we not doing it this quarter? If it was that easy, why would we not do 500,000 instead?

What follows here is usually 1 of these 3 scenarios:

1. The employees fail to achieve the objective, and get blamed for it.
2. The employees achieve the objective, at the cost of screwing up important things that were not explicitly included in the targets.
3. The employees achieve the target, by improving the way the work works.

Can you guess what’s common about all 3 possible outcomes? The manager risks nothing, and if things turn out okay they’ll be hailed as the hero of the situation.

So what happens in these scenarios? Let’s have a look.

Scenarios

Failing to achieve the objective

When the employees fail to achieve the objective, nobody questions the objective itself. Nobody goes like “uh, how do we know this was even possible?”, the blame inevitably falls on the makers. “The business asked you to achieve X, and you failed, so you’re bad. Get your game together, or there will be repercussions”.

What effect does this have on the makers? Well, the best leave pretty soon. They get what game they’re forced to play, have options, and decide to take their expertise and domain knowledge somewhere else. They are typically addressed by “the business” as “B players”, despite their history of amazing performance reviews.

The rest? Well, the rest adjust. If meeting the objective is what matters, they’ll ensure the objective is met. At least on paper. Story points? Lines of code? Shipping? Test coverage? Any metric can be gamed, or achieved at the expense of something important, but not measured or measurable.

Achieving the objective at the cost of harming other important things

Sometimes employees achieve the objective by harming other important things that were not kept under observation. The manager is hailed as hero, and the makers as well. Sounds great? Well, not really. What’s likely to happen the next time? The manager is still euphoric about the “personal achievements” recently conquested, and the employees have found a path to success theatre.

M: “So this time we’re aiming at 484,000, another 10% increase”.

E: “Uh, uh, yes sir (here we go again)”.

The employees achieve the objective, due to improving how the work works

First of all, let me say that this is exceedingly infrequent. Employees rarely have the autonomy to try anything new, not to mention anything substantial, which involves processes and spans across departments.

But hey, sometimes miracles happen. And when they do, guess who gets all the merit? The manager, of course.

M: “See? I pushed them hard and improved things! Wait until you see where we’re going to be the next quarter!”

So what?

Well, you have managers who know and risk nothing, and get all the recognition. From executives to line managers, through middle-managers, the song remains the same. No accountability whatsoever.

In the meantime, employees get blamed, become disenchanted, burn out, or leave altogether. Quality and reputation inevitably go down, the best talent leaves the company, and the message for the makers is “figure out the quickest way to get into management, so that you can do nothing and risk nothing, while being paid more and celebrated for success that wasn’t your own”.

Management by Means

On the opposite scale of convenience lies Management by Means - like Deming used to call it. Bad news though, to figure out means of improving capacity you need to deeply understand many things, including variation, systems, and people. More importantly, though, you need to be intimate with the work and how the work works.

Compare the following statements:

M1: “The objective is +20% story points completed every 2 weeks”.

M2: “By redesigning the teams to be equivalent and cross-functional, and to pull work from a prioritized queue of initiatives, we hope that over the next quarter we’ll improve our effectiveness and resilience”.

Which one do you think has an easier job? Whose mistakes will be more evident, when any? Which manager needs to know more about software development, people, variation, processes, and software development ways of working? Which manager could more easily do their work unaltered in a completely different industry?

And yet, this is exactly what management is. Not managing people, but managing how the work works. It’s about providing insights, and directing the continuous improvement efforts, not obsessing over measurements and targets, but focusing on assessing the current demand and capacity, and continuously improving the capacity to better meet the demand.

So what?

Well, so be careful about who you hire, and recognize the people around you for who they really are. When you work for a company, don’t give in to the incessant pressure to conform with the countless instruments of management by objectives.

Because regardless of names, whether it’s OKRs, KPIs, individual goals, team goals, or performance metrics, these are tools in the hands of people who know nothing and are good for nothing. Setting a goal and “letting people figure it out” is not management, it’s wishful thinking and delusion. Worse, it’s exploitation of the fools at the top of the company.

Management is about identifying purpose, assessing demand and capacity, and then continuously improving capacity by leveraging knowledge and understanding about how the work works.