Why does OKR or MBO Work Less Well in a Research Environment?

Posted by Robert Norton on

MBO and OKR is a proven way for companies to improve performance dramatically. But it is not a panacea either. It is just a structure and cadence for good management to insure great communications and cooperation between people and areas of the business. And one very good manager should use - no exceptions. 

To be fair OKR is just a repackaged (plagiarized) version of Management By Objective (MBO) created by The Father of Management (Science) Peter Drucker in the 1960s. All his books are timeless, and I highly recommend any serious manager read them all over time. Start with The Daily Drucker.

That said in research (and development), which I did full-time for 8 years in my earlier career, there are more unknowns, and it is harder to set clear timelines for things, mainly because the next steps depend on the result of earlier steps and also iteration.  However, you can still have release dates and other things agreed to -- you just may not have exact expectations on what a deliverable might contain.  If breakthroughs are required, you need patience. Time. And money. That is just the nature of the beast. If it were easy, others would have probably done it long ago. 

Innovation is not an exact science and requires time, creativity and money. The more you are pushing the bounds of the unknown, the less predictable the results and a timeline, but also usually the more valuable the discoveries and results if successful.  Risk and reward almost always go hand in hand.  That is why innovation can be incremental or disruptive. We teach the difference in The CEO Boot Camp and how to design business models that leverage both. As they are very different approaches to a business and market. 

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MBO has been shown by decades of research to increase value creation in companies by about 56%!

This is HUGE! It is basically the difference between the market leaders and the also-ran, copycat companies in the marketplace. So doing it is not a question. All companies should have a MBO or OKR process - NO EXCEPTIONS!

If it is a little less effective in R & D so be it, but it is still effective to focus, communicate, program people’s subconscious (look up the Reticular Activating System) and provides many other benefits. So do not doubt for a moment if you should do it.

You can see my video on MBO here. This and using dashboards and Key Performance Indicators (KPIs = numbers and trends) are the biggest bang for the buck for most companies to implement easily and quick to generate a big impact on their company and culture.

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Bob Norton is a long-time Serial Entrepreneur and CEO with four exits that returned over $1 billion to investors. He has trained, coached and advised over 1,000 CEOs since 2002. And is Founder of The CEO Boot Camp™ and Entrepreneurship University™. Mr. Norton works with companies to triple their chances of success in launching new companies and products. And helps established companies scale faster using the six AirTight Management™ systems. And helps companies successfully raise capital.

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