Created by Drucker1, MBO is focused on setting goals and aligning indvidual units and people to those goals. Employees are involved in goal setting. Performance of a given department or division is measured quantitatively by a few metrics/objectives. Managers are encouraged to manage to a target and success and failure is determined by whether they hit that objective2. The overall theory is that by improving the key metrics, the progress and success is assured. MBO is a precursor to the OKR framework.
1. Hayes, A. Management by Objectives (MBO). https://www.investopedia.com/terms/m/management-by-objectives.asp.
2. DeMarco, T. Slack: Getting Past Burnout, Busywork, and the Myth of Total Efficiency. (Currency, New York; London, 2002).