MBO (Management by Objectives) is a goal-setting approach introduced by Peter Drucker in 1954, in which managers and employees jointly define objectives, agree how they will be measured, and review progress against them. It put shared, explicit objectives at the center of management and is the direct ancestor of OKRs.
Drucker's insight was that people perform better against goals they helped set and understand than against tasks handed down without context. MBO formalized the annual loop of agreeing objectives, working toward them, and appraising the result, a rhythm most modern frameworks still inherit.
The classic critique, sharpened by W. Edwards Deming, is that MBO can reward hitting a number over improving the system, and that yearly cycles are too slow for fast-moving work. OKRs and EOS are in large part responses to those gaps.
Under MBO, a regional manager and their rep agree on an annual objective of growing the territory to EUR 3M, then meet through the year to review progress and adjust.
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