How Top CMOs Leverage MBOs to Drive Accountability and Performance
Kevin Joyce — January 3, 2019 — January 3, 2019
Management by objectives (MBO) is a management theory introduced by Peter Drucker in his 1954 book, “The Practice of Management.” MBOs improve organizational performance by defining objectives agreed to by both management and employees. According to its time-tested principles, having a say in goal setting and action plans encourage participation and commitment among employees and aligns objectives across the organization.
Do the quarterly MBOs given to individuals on your marketing team look like this?
- Creative designer: Get certified in a new application, design and publish 20 new assets
- Event planner: Successfully execute two named events
- Campaign manager: Launch two new programs with greater than 10% open rates
These MBOs are NOT connected to the marketing objectives, and that is the root cause for many accountability issues in marketing. Management By Objective (MBO) as a process for defining objectives at both the organizational and the employee level was popularized by Peter Drucker in his book “The Practice of Management.” The objectives at all levels of the organization are intended to be measurable and directly tied to the organization’s goals. But in many cases today, and especially in marketing, managers default to defining MBOs for their team members that are not connected to the organizational goals and objectives. The breakdown tends to happen at the department goal level. If we are to hold ourselves and our teams accountable for marketing outcomes, then the MBOs for every individual have to make sense in the context of the organizational goals.
For example, if your quarterly marketing goals include something like this:
- Grow revenue from current customers by 10%
- Source 500 new customer accounts
- Expand sales into two new geographies and exceed sales goals there
- Create a marketing sourced pipeline of $ 50m
What should the department goals look like?
Choice A:
- Creative group: Design and publish 20 new assets, make the website more mobile friendly, drive for 10,000+ downloads this quarter
- Demand generation group: Drive 1,000 new SQLs, acquire 500 new leads.
- Marketing Ops: Clean up the database, increase technology adoption by 10%
- Event planning: Get 10,000+ leads from events
Choice B:
- Creative group: Increase engagement with our content quarter over quarter by 10%, grow customer revenues by 10%, increase new traffic to website by 10%, drive 500 new leads from website, increase traffic from two new geographies by 25%
- Demand generation group: Source and engage with leads from 1,000 new accounts, of which 33% are in two new geographical regions. Drive content engagement from our installed base up by 25%, create a $ 10m pipeline from current customers, create 1,000 new SQLs with $ 10M in opportunity value attached
- Marketing Ops: expand databases to include 100K records for two new geographies (geos), achieve installed based revenue growth of 10%+ and new account acquisition of 150%
- Event planning: Get 10,000+ new leads from events, 50% of this from two new geos, engage with 10% of our current customers at events
Choice A is more about tasks and less about outcomes. Choice B is more tightly aligned to the marketing organization goals. With department level goals written like Choice B, we can now write individual team member MBOs like this:
- Creative designer: Increase buyer engagement with our content by 10% over last quarter and grow existing customer revenues by 10% as a result, create 20 pieces of new content to support expansion into two new geos.
- Event planner: Drive 250 new SQLs from events, resulting in $ 20m in pipeline, half of which is in two new geos
- Campaign manager: Acquire and develop leads in 25 new accounts, generate 15 SQLs, and create $ 5m in pipeline
As CMOs if we ensure that the departments in marketing have goals and objectives tightly tied to the top line marketing objectives, it becomes much easier for the department heads to divide up those numbers for the individuals on their team. If the department goals are nebulous or activity related, instead of outcomes, all bets are off.
The result is that we assign out the big marketing goals, in slices, in exactly the same way the VP of Sales divides up his revenue target to each rep. So if marketing has a goal of 1,000 SQLs, and $ 50m in pipeline created, then perhaps 10 individuals each get 100 SQLs and $ 5m of pipeline.
An obvious objection might be that one cannot assign a goal to an individual that requires many team members to contribute to be successful. How can we give a goal of 100 SQLs from the website to the Search Engine Marketing (SEM) person when they don’t own the content used for attracting and capturing new leads?
The answer is that the marketing goals and the associated numbers have to be driven down to each individual, otherwise nobody owns them. Giving a net new lead goal to the SEM person will force them to make demands on the creative group and on marketing operations to get this job done. Giving the interactive designer a goal for pipeline in new geographies will force them to serve the sales and marketing teams developing content that makes this happen.
Peter Drucker imagined the MBO as a way to get every individual aligned with the goals of the entire function. Don’t fall into the trap of giving people tasks or developmental goals for MBOs. Don’t think it has to be constrained to what the individual can do individually. Simply make him/her an owner of part of a number related to the marketing number and watch your team’s performance accelerate.
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