The MBO Process: How to Manage by Objective

What is management by objectives, or MBO? What is the MBO process?

The MBO process lets you decide goals in advance, and then manage based on achieving those goals. The process ensures you meet milestones.

Read more about the MBO process and how you can use it.

Using an MBO Process

MBO management will help you manage according to objectives. This way, everything you do will be strategic and will help increase output.

Scheduling Implementation

You only need to implement actions that need to be done in between the present moment and your next re-evaluation of the strategy you determined in step #3. For example, every year, Intel plans for the next five years. Because they plan annually, they only need to focus on implementing one year’s strategy, because they’ll look at the other four years and one new year in the next plan. 

Don’t plan too often, or you won’t have time to get the feedback you need to adjust your plan before you have to implement it.

Management by Objectives (MBO) Process

When planning for short-term concerns, you can use the “management by objectives (MBO)” technique. Because the timeline is short, you should already have a good idea of present demands on your time, so MBO focuses on steps 2 and 3 of the previous section. When using MBO, you need to determine only two things:

1. Objectives. Only choose a small number of objectives for yourself and your subordinates—if you have too many, your focus will be diluted, and none of them will be done well. Note that if your subordinates meet their objectives, this will result in your objective being met because their objectives are to execute tactics, which will lead to carrying out the strategy, which is your objective.

  • For example, in 1491, the government of Spain needed money to continue the war against the Moors. With the help of her subordinate Christopher Columbus, Queen Isabella decided to look for a new trading route. The queen’s objective was money and Columbus’s was to find the new route. If he found the route, she would get her money.

2. Milestones (indicators of pace). These need to include specific wording and dates so that it’s very clear whether they’re reached. The deadlines should be short so you can get feedback on your progress quickly. 

  • For example, some of Columbus’s milestones were to acquire ships, test the ships, and set sail. 

Subordinates can still miss objectives even if they reach all the milestones on time. However, this doesn’t necessarily mean they’ve performed badly—they may have just focused on other, equally productive opportunities.

  • For example, Columbus built the ships, tested them, and set sail, but he never found the trading route he was looking for. He did, however, find the New World, which made Spain a lot of money.

MBO management can be highly effective, and you can ensure your process is by following the steps above.

The MBO Process: How to Manage by Objective

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