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Management by Machine: MBO as Manipulation?

Recently Adrian Wooldridge, the Schumpeter columnist for The Economist, reviewed the introduction by BetterWorks, a Silicon Valley startup, of “goal science” to the workplace. The New York Times reviewed the same company on Monday. The company “makes office software that blends aspects of social media, fitness tracking and video games into a system meant to keep employees more engaged with their work and one another. With the software, employees and their bosses set long- and short-term goals, and, over time, log their progress on a digital dashboard that everyone in their company can see and comment on.” The idea is to make the Management by Objectives (MBO) process more frequent and more “data-driven”. One wonders whether this is the real challenge with MBO. More often the problem is with the philosophy behind the technique, rather than with the technique itself.

MBO; an Elusive Philosophy

Management by Objectives (MBO) is a deceptively simple technique that is very difficult to employ effectively. The philosophical framework within which it is used is critical. Given Peter Drucker’s background, upbringing and his emphasis on self-discipline, it seems likely that his original intent was that MBO should be the civilian equivalent of the system of mission command or auftragstaktik, developed by the Prussian army in the 19^th Century. The essence of this system was that no commander should issue an order that went beyond what he could know of the actual situation. Rather he should declare an intent that created a space within which his subordinates would have the freedom to act as they saw fit. They, in their turn, would declare their slightly narrower intents and so on, down the line. This cascading set of “action spaces” preserved autonomy and creativity at every level of the organization. Helmuth von Motlke the Elder (1800-1891), who perfected the system, made no distinction between strategy development and execution – strategy could emerge bottom-up through “directed opportunism”, just as readily as it could be formulated top-down. Mission command is still the gold standard for armed forces all over the world. But, outside of small Special Forces units, it has proved extremely difficult to implement – the words are easy, but behavior and the selection and training required to produce and sustain it are difficult.

In America the management philosophy required to use MBO successfully is rarely found. The prevailing perspective is engineering, instrumental and individualistic. Strategy formulation is separated from implementation and the notion of emergent strategy is diminished if not denied. Often the assumption is that cause-and-effect in a complex organization is well understood when, in reality, it is hardly understood at all. The emphasis is on performance and efficiency at the expense of creativity and learning. “Clear objectives” are seen as the CEO’s input to the process rather than as an outcome of a process of discovery. “Clear” is usually taken to mean SMART: specific, measurable, actionable, realistic and time-sensitive but too often the default is to financial measures. These are always desirable outcomes that, of course, leave the assumptions about cause-and-effect unexamined. In addition, clarity is often mistaken for detail, which encourages senior management to get far more specific than they should. Metrics become straightjackets – targets that define performance and are linked via incentives to compensation. This raises the stakes in the organization, leading to all kinds of dysfunctional outcomes. Instead of promoting cooperation it can easily stoke competition. The worst outcome is that it turns what should be means into ends-in-themselves. This makes the true ends of the enterprise undiscussable. Purpose and meaning dwindle and the whole MBO process becomes manipulative. Thus MBO morphs into authoritarian micromanagement, a tool of oppression. The Prussian army called it befehlstaktik – detailed command. It is the bane of large bureaucracies everywhere, disengaging people and crushing creativity and innovation. It is unclear how mechanizing the MBO process can change this. Conducting a dysfunctional goal-setting process more often seems to be a recipe for disaster.