Objectives and constraints

Two leading thinkers of management in the twentieth century were Peter Drucker and W. Edwards Deming. Drucker developed the idea of management by objective that would eventually evolve into OKRs. In this approach, effective managers identify operational goals that can be operationalized (that’s the objective), identify metrics to measure to determine if progress is being made towards the goals (those are the key results), and then set targets for the metrics.

Deming was vehemently opposed to management by objective. Rather, he saw an organization as a system. If you wanted to improve the output of a system, you had to study it to figure out what the limiting factor was. Only once you understood the constraints that limited your system, could you address them by changing the system.

In the tech world, Drucker has clearly won out. His legacy can be seen in the adoption of OKRs by many tech companies (most famously, Intel and Google).

I’m in Deming’s camp, but I can understand why Drucker won. Drucker’s approach is much easier to put into practice than Deming’s. Specifically, Drucker gave managers an explicit process they could follow. On the other hand, Deming…, well, here’s a quote from Deming’s book Out of the Crisis:

Eliminate management by objective. Eliminate management by numbers, numerical goals. Substitute leadership.

I can see why a manager reading this might be frustrated with his exhortation to replace a specific process with “leadership”. But understanding a complex system is hard work, and there’s no process that can substitute for that. If you don’t understand the constraints that limit your system, how will you ever address them?

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