28. Implementing Drucker’s Management by Objectives

Setting objectives is a useful start to getting your business focused and firing on all cylinders; if you employ people, it will help their focus to be aligned with yours, and if you do not, it will help you avoid getting distracted from where you want to get to. But it’s impact will be severely limited if it goes no further.

In setting the objectives, these can be overall objectives, and more detailed ones for specific areas or facets of the business, but they should be SMART – standing for: Specific and Measurable (i.e. to achieve 8% growth, not to grow at a reasonable level); Achievable (i.e. you need to have done your research and understand what is realistic); Relevant (i.e. you must be measuring elements which are critical to business success, not something which is just easy to measure but not of prime importance) and Time-specific (i.e. new product launched by September next year.)

The importance of this is that it leads to a management process which helps prevent the day to day from taking over your awareness of where you want to go and what you need to do to get there. Specific objectives with defined times for achievement can be monitored, and usually will be, which leads to feedback (especially important if you have staff). But even if it is just yourself asking the question: why have I under-achieved or over-achieved in this area, it will lead to a re-evaluation of your objectives and your business. It may lead to more research, changing resources, reviewing prices, seeking investment etc. But it will lead to your business staying more in touch with its market and environment, and also not drifting into a different direction from that which you set for it – at least not without you making a conscious decision to change course.

You could compare it to a boat at sea. You have a destination; you plan a course – identifying landmarks on the way – and set off. But winds and tides can have unforseen impacts and take you to a different place even though you have kept the rudder in the planned direction. Only if you can get feedback on your position, can you adjust your course to get to your planned destination, and if you keep on regardless, you may end on the rocks.

The reult of this process of measuring against objectives, and getting feedback is a modified plan and the feedback loop begins all over again. Like all management processes, it is not automatic and needs to be applied with wisdom. Government in recent years has put a lot of faith in setting targets – on Drucker’s principle that ‘What is measured improves’. And that has led to improvements but also to problems. Were the important targets always measurable, and did they compromise with what they could measure rather than what was most important – had they chosen the relevant target? Were the targets achievable – setting unrealistic targets leads people to cheat the system. And so the law of unintended consequences is brought into play. Thus desire to reduce waiting times for patients to get treatment in the NHS led to the backlog moving from treatment to getting to see a consultant; similarly when they targeted general practitioners to see patients more promptly, the GPs responded by not taking advanced bookings that would stretch their average. In both cases the quality of real service was not improved.

So be careful with your targeting; set well considered objectives, and monitor and evaluate against these, and replan accordingly. It does not guarantee success, but you will have a much better chance of your business avoiding the rocks.