6 Features of Effective OKRs
Adopting OKR (Objectives & Key Results) is a journey, not an event. As in any cultural transformation, change doesn’t happen overnight but it is possible to modify the company’s dynamics over time. This methodology was created by Andy Grove at Intel and taught to John Doerr. Since its success at Intel it has been adopted by many companies such as Google, Walmart, Dun and Bradstreet and ING Bank.
The methodology consist of:
- Setting Objectives (goals and intents); and
- Setting Key Results (time-bound and measurable milestones that attribute to these goals and intents).
They are proven to be a key driver to the success of some of the world’s most accomplished organisations. Below are some of the key features of effective OKRs and how OKR software supports them being achieved.
1. Developed using a Structured Planning & Execution Process
Most OKRs are almost impossible to achieve with 100% success. At times their achievement is perceived on the same level as a space mission. As daunting as it may seem, effective adoption of implementation comes down to a few key recursive steps:
- First of all, set Objectives & Key Results
Setting high quality Objectives and Key Results should focus on key changes or impacts that we wish to make over a specific period.
Time should be spent brainstorming ideas which should then be distilled into a set of 3 to 5 ambitious objectives (e.g. Deliver a world class CRM solution).
Each ambitious objective is then broken down into a set of Key Results which are used to measure success. (e.g. Deliver feature X by 30 June to increase user satisfaction by 10%).
These should be both engaging and actionable, inspiring staff to achieve and providing metrics on how key results can be improved.
- Next, conduct a pre execution Review:
Before kicking your plan into gear review each of OKR and ask the question, “are they ambitious enough?”. If you feel confident that a key result can be met it may be time to increase your target.
- Align your organisation:
OKRs should be transparent to allow sharing, co-ownership, linking and ultimate alignment of strategic planning across the organisation.
OKRs (as opposed to a Cascading strategy model) provides a more dynamic, connected, and pragmatic approach to strategic planning and execution.
Either before, during or after drafting OKRs each team should map dependencies, link, share and assign ownership. This ensures both vertical and horizontal (cross-functional) alignment. This involves collaboration and is likely to drive a review and change of your as new ideas come to light.
OKRs for many organisations are akin to a well thought out drill left on the training track. Organisations tend to place significant effort defining their OKRs however often fail to execute. Successful organisations however integrate their OKRs into their business activities and processes making their delivery a day to day task.
- Finally, Review Objectives & Key Results:
A Check-in typically consists of a weekly meeting for measuring and adjusting initiatives. Adopting the Check-in is crucial to success. The goal is not to add more meetings, but to make them more productive and focused on value instead of tasks.
2. Combine Strategic & Tactical OKRs for Bi directional Alignment
Strategic and tactical Objectives and Key Results are likely to have a different magnitude and velocity. Their cycles can be suited to your organisational rhythm and broad approach to strategic planning. It is a common misconception that OKR only works with quarterly cycles, which was the model Google used until 2011. After retaking the CEO role at Google, Larry Page decided to adopt both annual and quarterly OKRs.
Strategic OKRs generally follow an annual cycle, set the direction and are updated less regularly. On the other hand tactical OKRs tend to fall into a quarterly cycle. Results and initiatives are tracked more regularly with rapid adjustments enabling better adaptation to change and increasing innovation.
Companies using OKRs have created more efficient strategic planning and performance processes investing more time and resource on achieving goals. Their simplicity makes goal setting a faster and easier process and drastically reduces time and resources spent on goal setting.
As Laszlo Bock, Google’s former VP of People Operations wrote in his book Work Rules! “Having goals improves performance. Spending hours cascading goals up and down the company, however, does not. It takes way too much time and it’s too hard to make sure all the goals lineup.”
An effective implementation of OKRs generally combines a bottom-up and top-down approach. Strategic OKRs set organisational direction with each team then defining a set of tactical OKRs that contribute to the strategic ones. This approach provides direction whilst maintaining flexibility for teams to define how to achieve their objectives and key results. Ultimately increasing engagement and buy-in!
3. Get everyone on the same page
Seeking staff input into the development of strategic OKRs creates increased alignment of organisational strategy and its operations.
Organisational performance is directly dependant on staff performance and their ability and skills to formulate and execute their plans. In his article titled “Should You Build Strategy Like You Build Software?”, Keith R. McFarland describes a model to create a more refined and execution ready strategy:
People at many levels of an organisation make daily tradeoffs that impact the company’s strategic success. The process should be designed to tap into ideas from all corners of the organisation and not just from top executives.
Creating alignment across the organisation is the primary benefit of OKRs. It ensures a consistent organisational rhythm through the convergence of strategic and tactical OKRs. The methodology allows us to maintain direction whilst not stifling creativity and innovation. For this to occur:
- Firstly, transparency must be at the centre of all activity, fostering a culture of sharing and collaboration. Opportunities to synchronise should be used to create alignment.
Therefore it is important to ensure that reviews performed across different plans are scheduled on the same cycle. Isolation is the enemy of an OKR. When developed without consultation will lack buy-in and not be a priority for the organisation.
- Secondly, sharing of responsibility must be evident. OKRs should be shared across multiple teams who come together to provides updates on progress.
- Finally, a 360-degree alignment process should be established where OKRs link in a vertical (i.e. top-down and bottom-up) and horizontal (i.e. sideways) fashion.
4. Maintain a Value-based (as opposed to Task-based) Orientation
There are two type of Key Results that we typcally reference:
- Value-based Key Results are used to define tangible output and what we expect to realise. For example, an increase in sales by 30 percent.
- Task-based Key Results are used to define success of delivery. For example, a project delivered on time and on budget.
OKRs used effectively provide a true picture of performance however in order to be effective must maintain a value-based orientation.
As such it is important that our strategic planning clearly delineates between Objectives, Key Results and Initiatives. There is no doubting the importance of tracking initiatives required to achieve our OKRs. However these simply represent a point in time and should be changed if our results are not improving. An initiative is simply a way to achieve the positive outcomes defined as Value-based Key Results.
5. Continuous Review using OKR Software
An OKR without a review process, is like a basketball match without quarter time breaks or timeouts!
At each review internally it is important to critically analyse performance by assessing whether our objectives were ambitious enough? Whether our results were measurable? Are tactical and stratregic OKRs aligned? What have we learnt from this period and how we can improve moving forward?
A review should be a short and sharp meeting where updates are provided on the progress of achieving a Key Result. The purpose of a review is to provide an opportunity to identify initiatives and strategies and improve Key Results. Reviews should not focus on excuses as to why it has or has not been achieved.
The frequency and time allocated to a review is generally determined by the level of an OKR. It should take no longer than 1 hour where the OKR is strategic and 15 minutes where tactical. A review should surface recent results and focus on issues, risks and initiatives that improve our Key Results.
6. Blending OKRs with KPIs for True Performance
You might wonder how OKRs and KPIs, which represent a different approach to performance, could actually compliment each other. Whether a benefit exists in combining OKRs with KPIs comes down to understanding the exact purpose of a KPI and OKR.
Put simply a KPIs purpose is to measure trends by providing insights when our performance is on or off track. On the other hand an OKRs purpose is to achieve a positive shift in performance.
Regardless of whether you choose to blend OKRs and KPIs, remember to keep the word “Key” in mind. Priority should be given to KPIs and OKRs that will help you set clear priorities and achieve great results.
skefto OKR software allows organisations to achieve their OKRs through a simple, integrated, actionable and measurable planning and execution process. skefto combines strategic and tactical OKR planning with KPI data to create organisational alignment and provide a true picture of performance. skefto focusses organisational outcomes and provides a basis for continuous review and improvement.
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