MBOs Vs. OKRs: How do they differ?

mbo vs okr

Objective and Key Results (OKRs) and Management by Objectives (MBOs) are two of the most renowned goal-setting methodologies that are used widely for making teams perform at a superior level. They are quite identical as OKRs are known to have evolved from the MBOs. Both of these frameworks have been helping organizations in establishing strategic objectives. So, it is very significant for you to have a clear understanding of OKRs and MBOs, how they differ and the advantages they can bring to your organization. 

mbo vs okr

Both OKRs and MBOs involve writing down an internal state of outcomes that your organization wants to achieve. While the MBO goal setting is centric on the “what”, OKRs go one step ahead of MBOs as it encloses a set of benchmarks of progress. Beyond their structures, other prominent differences are the extent of autonomy, method for reviews, and how quickly and continually objectives change. Let us now take a look at both of these platforms specifically.

What is MBO?

An extremely renowned goal-establishing practice, MBO starts from the top leadership deciding and directing the objectives of the organization for the cycle. A typical MBO cycle lasts for around a year. In this framework, leaders establish the objectives for each employee working under them for the cycle. Although, the employees do have the autonomy to align tasks for accomplishing their benchmarks. Attaining the objective is expected during the MBO goal cycle and therefore, the employee’s performance evaluation, compensation, and bonuses are all tied to the success of the objective. 

The very first step of the MBO process is for individual departments to set objectives that support the objectives of the top-line organization. In the MBO process, it is the managers who decide what the employee’s individual contribution during the cycle is going to be. 

What is an OKR? 

OKR stands for Objectives and Key Results and evolved from the MBO goal-setting methodology after Andy Grove acclimated to Intel’s MBO process during the 1970s. OKRs outline the organization’s success in a more specific manner. The objectives define what is to be done and the Key Results define how the progress is to be tracked. Each of the set objectives is convoyed by 3 to 5 key results. The objectives tend to be qualitative, while the key results got to be measurable. OKRs change a few times annually, typically after each quarter. While employees and teams still hold the autonomy to decide how to accomplish the key results, everyone in the organization works toward a common set of benchmarks of success. 

What are the differences between MBO and OKR?

MBOs are known to be risk-averse, while OKRs are generally aspirational. Following are more differences between the two:

The goals under MBO are more focused on the ‘what’ aspect, while OKRs link the ‘what’, ‘how’, and the ‘why’. Unlike the OKRs, the MBO strategy states the objectives without defining the benchmark of success throughout the process. In the OKRs, a set of key results is used to achieve the set objectives. 

The goals under MBO are private while under OKRs they’re public. Under the MBO approach, the goals are more about the performance of the individual. Conversations are held between the manager and the objective’s owner which are private too. On the contrary, OKRs are visible to everyone in the organization. 

The MBO cycle is  annual while for the OKRs it is generally quarterly MBOs are reviewed perennial while most OKRs have quarterly reviews. Consequently, MBOs are not regulated as regularly as the OKRs. Changes are harder to make in the MBO goal cycle. The faster pace of quarterly reviewed OKRs provides more prospects to adapt over time. 

OKR vs. MBO: pros and cons

Pros and cons of OKR


Flexibility: OKRs are flexible and can adapt to changing circumstances, making them suitable for dynamic environments.

Focus on outcomes: Emphasizes measurable results, which can improve performance and ensure that everyone is aligned with the company’s goals.

Transparency and alignment: OKRs encourage transparency and alignment within the organization, ensuring that everyone understands how their goals contribute to the company’s objectives.

Encourages innovation: Supports ambitious and aspirational goals, fostering a culture of innovation and risk-taking.

Regular check-ins: Regular check-ins allow for continuous tracking of progress, making it easier to identify and address issues promptly.


Complexity: Setting effective OKRs can be complex and may require training and practice to implement successfully.

Potential for misalignment: Without proper understanding, OKRs can lead to misalignment and confusion within the organization.

Overemphasis on short-term goals: This may lead to a short-term focus at the expense of long-term strategies and objectives.

Time-consuming: Regular tracking and updating of OKRs can be time-consuming and may divert attention from other critical tasks.

Risk of setting unrealistic goals: Setting overly ambitious goals can demotivate employees if they constantly fail to meet them.

Pros and cons of MBO 


Clarity and focus: MBO provides clear objectives and goals, helping employees understand what is expected of them.

Employee motivation: Involving employees in the goal-setting process can increase their motivation and commitment to achieving those objectives.

Performance evaluation: Helps in evaluating employee performance objectively based on predefined criteria.

Clear communication: MBO encourages open communication between managers and employees, fostering a collaborative work environment.

Alignment with organizational goals: Ensures that individual goals are aligned with the company’s objectives.


Rigidity: MBO can be rigid and may not easily accommodate changes in the business environment.

Emphasis on short-term results: This may lead to a short-term focus, ignoring long-term strategies and objectives.

Potential for conflicts: Conflicts may arise if individual objectives conflict with the overall organizational goals.

Lack of adaptability: This may not be suitable for fast-paced or dynamic environments where goals frequently change.

Dependency on accurate measurement: Relies heavily on accurate and measurable objectives, which might not always be feasible for all roles and tasks.

OKR vs. MBO examples

1. OKR vs. MBO in marketing

Marketing OKR  example

Objective: Increase brand awareness and engagement in the target market. 

Key results:

  • Achieve a 30% increase in social media followers within six months.
  • Attain a 20% growth in website traffic from organic search within the quarter.
  • Secure 15 high-quality backlinks from reputable websites by the end of the year.

Marketing MBO example

Goal: Increase sales by 15% in the next quarter.

  • Specific sales targets are set for each marketing team member, emphasizing the quantitative increase in sales volume.

2. OKR vs. MBO in product management

Project management OKR example

Objective: Enhance product usability and customer satisfaction. 

Key results:

  • Decrease average customer support ticket resolution time by 25%.
  • Achieve a 15% increase in the product’s Net Promoter Score (NPS) within the quarter.
  • Launch two new product features addressing the most requested customer needs.

Project management MBO example

Goal: Develop and release a new product feature within three months.

  • The product team is evaluated based on the successful implementation and release of the new feature within the specified time frame.

3. OKR vs. MBO in human resources (HR)

HR OKR example

Objective: Improve employee retention and satisfaction. 

Key results:

  • Reduce voluntary employee turnover by 20% in the current year.
  • Implement two new professional development programs catering to employee career growth.
  • Conduct employee satisfaction surveys and maintain an average score of 4 out of 5.

HR MBO example

Goal: Increase employee productivity by 10%.

  • HR team members are individually responsible for implementing training programs or policies aimed at improving employee productivity.

4. OKR vs. MBO in engineering

Engineering OKR example

Objective: Enhance product scalability and performance. 

Key results:

  • Reduce product loading time by 15% across all platforms within six months.
  • Implement an automated testing process resulting in a 30% reduction in the number of bugs reported.
  • Improve system uptime to 99.99% over the course of the year.

Engineering MBO example

Goal: Develop a prototype for a new product.

  • Engineering team members are tasked with meeting specific deadlines and technical requirements to successfully build and present a prototype.

5. OKR vs. MBO in sales

Sales OKR  example

Objective: Increase market penetration and revenue growth. 

Key results:

  • Achieve a 25% increase in new client acquisitions within the quarter.
  • Attain a 15% growth in revenue from existing clients through upselling and cross-selling efforts.
  • Expand into two new geographic regions by securing partnerships with local distributors.

Sales MBO example

Goal: Exceed quarterly sales targets by 20%.

  • Each sales team member is responsible for meeting or exceeding their individual sales quotas within the designated time frame.

Why do organizations prefer OKRs to MBOs?

OKRs are known to be more effective than MBOs as:

Organizations desire to have a focus on their overall efforts. The OKR cycle initiates with the thought of choosing the most important thing for the organization in the next three months. OKRs enable the leaders to provide their team with a compass and baseline for assessment. 

Nowadays it has become extremely crucial for organizations to align their day-to-day activities to the overall vision and mission of the organization. OKRs enable organizations to break down the long-term objectives into shorter-term achievable objectives. 

Each and every leader wants to promote innovative thinking in their organization. OKRs give organizations and their employees the much-needed push to strive beyond what they thought was possible. 

Organizational success is dependent on more than one factor. By connecting the quantitative key results with the qualitative key results OKRs protect against the harm that can be caused by success at any point. 

Even though MBOs and OKRs have been highly popular throughout the years, organizations are more inclined towards the OKRs for the reasons elaborated above. Your organization too can thrive with the help of the OKR tool

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Gaurav Sabharwal


Gaurav is the CEO of JOP (Joy of Performing), an OKR and high-performance enabling platform. With almost two decades of experience in building businesses, he knows what it takes to enable high performance within a team and engage them in the business. He supports organizations globally by becoming their growth partner and helping them build high-performing teams by tackling issues like lack of focus, unclear goals, unaligned teams, lack of funding, no continuous improvement framework, etc. He is a Certified OKR Coach and loves to share helpful resources and address common organizational challenges to help drive team performance. Read More

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