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Management by Objectives in the 21st Century

When Peter Drucker introduced the concept of Management by Objectives more than half a century ago, he probably didn’t imagine that it would remain one of the most problematic responsibilities for managers even 50 years after the initial release of “The Practice of Management”. The most common root causes for this situation is probably the missing link between the goals of the organization on one hand and the actions of the professional knowledge worker on the other – despite that he is the one who has to deliver the right results. One possible approach to create (or restore) this link is to acknowledge that goals – especially yearly performance goals – are often being defined based on a plain and simple job description. While there is nothing wrong with “plain and simple” per se, a “job” itself and most of the directly related aspects like roles (“Sales Manager”) and responsibilities (“Lead Generation”) are fairly static and abstract. And so the process of setting performance goals – more often than not done by someone who lacks the time, energy and appreciation for its importance – ends up being neither very action-oriented nor results-focused.

In strong contrast, this article focuses on the characteristics of a seemingly similar but actually quite different concept called “assignment”, which is much more directed towards performance and achievements. Despite the fact that both terms are often incorrectly being used interchangeably, assignments integrate context and situation, embody concrete actions and outcomes, and demand a greater focus on accountability, authority, competencies and resources. If combined with the clear understanding that goals, objectives and targets are three different and complementary concepts rather than just three terms for the same thing, your chances for creating an execution-oriented culture rise substantially.

It all begins by starting each individual assignment definition with a concrete discussion about the right results (goals, objectives, and targets) with every member of the team. While goals should be aligned with the companies vision and mission, and can therefore be wider and more visionary, objectives should be clear, realistic and specific. Last but not least, defined targets should than focus on the measurable aspects of objectives and be aligned closely with what the business unit is expected to deliver as part of the overall corporate strategy. After these three basic aspects have been defined, it is then necessary to discuss what is expected of the assignee (accountabilities and competencies) and what support he will receive (authorities and resources) to succesfully complete his assignment. In regard to accountabilities and authorities, it is essential to understand that they are two sides of the same coin – you cannot make someone responsible for something without granting him the right to make decisions about it. In addition, expecting certain competencies from employees also means to offer them the necessary resources to get the job done.

For this approach to be successful, effective managers should also avoid to make the assignments of employees either too big or too small. As it is inherently difficult to find exactly the right balance each and every time for each and every employee, it is usually better to aim a little higher and make the job a little bigger than to demand too little from someone. This technique is – if applied wisely – a very effective way to keep people on their toes. Again, every assignment must be achievable and aligned with the current reality, otherwise it will at some point start to kill off motivation by overstressing and overburdening the assignee. After an agreement has been reached and the assignment has been put in writing, it is now time to discuss a basic action plan and a number of pragmatic controlling procedures (which will be covered in another article).

However well defined the final assignment and its related action plan might be, there is one thing for sure: Nothing is going to work as planned. That doesn’t mean that plans and predictions are worthless – they are merely one of the byproducts of something much more important: The process of planning itself. Therefore, effective managers should always integrate certain checkpoints – for example every 90 days – with every plan, which can then be used to adapt the assignments and their implementation plans to the current reality.

In the end, developing well-defined assignments for every member of a team is probably the most important skill of a manager in the 21st century – it is what managers are meant to do: Transforming resources into benefits by enabling other people to perform well in their work, achieve the right kind of results and contribute to the bigger picture.

Head, Heart & Guts – A short summary…

Leadership is probably the core differentiation factor that separates organizations with longstanding success from their competition. While hundreds of books have been written about leadership in the last decade, there are very few that introduce new concepts without resorting to advertise singular traits, skills or strategies. Instead, “Head, Heart & Guts – How the World’s Best Companies Develop Complete Leaders” tries to distinguish itself by making the case for the development of “complete leaders”. The leadership qualities they focus on are not meant to replace traditional leadership qualities like Strategic Thinking and Planning, Decision Making, Problem Solving or Goal Setting. The authors merely list reasons why those cognitive competencies are not sufficient anymore to serve as competitive advantage. As a result, it identifies the following traits as important aspects for “whole leadership”:

Head Leadership

  • Rethinking the way things are done
  • Reframing boundaries when necessary
  • Understanding the complexities of a global world
  • Thinking strategically without losing sight of short-term goals
  • Looking for ideas inside and outside a company, wherever they can be found
  • Developing a point of view

Heart Leadership

  • Balancing people and business needs
  • Creating trust
  • Developing true compassion in a diverse workplace
  • Creating environments in which people can be truly committed
  • Knowing what’s important
  • Understanding and overcoming potential derailers

Guts Leadership

  • Taking risks with incomplete data
  • Balancing risk and reward
  • Acting with unyielding integrity in spite of the difficulty
  • Tenaciously pursuing what’s required for success
  • Persevering in the face of adversity
  • Not being afraid to make tough decisions

Eleven Concrete Business Reasons for a Customer to Build or Buy an IT Product

Whenever I coach someone about the reasons why a customer usually decides to build or buy an IT product or service, I suggest for him to study my “Eleven C’s of Business Value” list. This list contains the most important business value statements that everyone who comes in contact with customers on a daily basis should know blindfolded. That list is:

  • Generate Cash
  • Attract Customers
  • Stay Competitive
  • Reduce Costs
  • Enhance Communication
  • Enable Collaboration
  • Build Connections
  • Manage Complexity
  • Ensure Compliance
  • Accelerate Change
  • Understand Consumers

All of these aspects have a common background: Enhancing the chances of success by increasing the effectiveness of the organization. Which reasons would you add to this list?

Revisiting Some Classic Zen Habits Posts

I started to read Zen Habits about 3 years ago when I discovered my passion for personal productivity and self development after I had read various books from David Allen (including Getting Things Done) and Steven R. Covey (especially The 7 Habits of Highly Effective People and First Things First). Although I have lost a bit of interest in Leo’s thoughts lately (although I read his book and found it pretty good), the classic Zen Habits posts are still a source of inspiration on its own. So in case you haven’t read them for a longer period of time or not at all, go and revisit http://zenhabits.net/2008/07/the-beginners-guide-to-zen-habits-a-guided-tour/. It’s really great.

I especially recommend 20 Things I Wish I Had Known When Starting Out in Life and The Unsurpassable Productivity List. Revisit them on a regular basis and try to learn from the mistakes others have made – it will safe you time and energy for the important things. For those of you who have already implemented GTD or another productivity system, read How to Actually Execute Your ToDo-List – it can be an eye opener for real productivity junkies (like I was once).

Offshoring the Right Kind of Work

As some of you may know, I have worked in various non-technical roles as Business Unit Director, Project Manager, Delivery Lead and Technical Pre-Sales Architect over the past 7 years before I took over as Application Maintenance Manager in a large software engineering project in the banking industry a couple of weeks ago.

Despite my passion for technology, these roles were not only very important for my career, they also shaped my thinking and helped me to understand more of the real value of software engineering. Based on that experience, I decided to write this post and to share my thoughts on one of the most difficult trends in the software engineering space today: Offshoring work to low cost countries like India.

My view on this topic has always been kind of wary, until I recently decided to apply one advice I’m constantly giving to other people to my own thinking: Accept the current reality, understand the reasons, change your attitude and deal with it right away. So this post is basically a recommendation to accept the current situation despite all the negative feelings that might be attached to such a change and to adapt strategy and operations accordingly.

Living in one of the richest countries of the world has a lot of benefits – no doubt. The “drawbacks” of this can mainly be attributed to the fact that the price of work is to high for those results that can be produced somewhere else on the world for less money. Of course, this is especially true for the IT industry, as the costs for transporting the results of this work (software and services) over the internet are very, very low.

When I ran the software engineering business unit at my former company, we made a first attempt to get in touch with offshoring as a concept in 2007, but decided to back away from that strategy. In retrospect, that may have been for the wrong reasons and I think, I approached it with the wrong mindset.

The truth is, offshoring is not very different from other trends in the IT industry. For years we have seen new layers of abstraction in the form of new programming languages (Assembler, C, C++, C#), runtime platforms (Mainframe, Unix, Windows, COM, .NET), and frameworks (JSP, Struts, ASP.NET WebForms, Modern MVC Frameworks) that incorporated the learnings of its predecessors and added an additional layer of indirection to safe time and money.

Offshoring is basically the same, although it is applied in a different area, namely organizational structure, processes, people, and skills. The fact is, there are certain types of work you can outsource (and thereby offshore) pretty good, if you can clarify the outcome to a degree that is sufficient to let someone else carry out the work. This, of course, raises the bar for consultants and local software developers significantly. It is no longer enough to be able to complete relatively simple tasks like HTML development very quickly, you now have to explain someone what result you want and give him all the information available to fulfill your expectations. This calls for management and people skills, and it demands good judgment in terms of business value and strategic thinking.

In addition to that, there are types of work you will never be able to “offshore” somewhere else. This starts especially with a good relationship to your customers, partners and suppliers, continues with strategic consulting, business analysis, requirements engineering, software architecture, project management, and ends with certain types of development, testing and deployment. Having said that, there are of course a lot of tasks that can and should be put into action by an inexpensive work force if the outcome meets the demands in terms of quality and delivery performance.

Therefore, one of the biggest challenges for successful organizations in this decade will be to a) find the right kind of work that can be delegated to offshore resources, b) hire the right people in a low cost country and integrate them as part of a global team, c) create a culture of trust and performance among your distributed work force, d) help your local people to define the outcome they need in a way that guarantees good results and e) educate your staff to delegate and manage their remote counterparts effectively and efficiently.

Of course, this will especially be difficult for smaller organizations that currently rely on a local work force and lack the right connections to important peers in India or on the Philippines. But it is nevertheless a problem they will have to address with the right mindset as soon as possible.