The difference is critical to your company’s success.
For years, companies used to make annual plans to drive more Enterprise Agility. Now they make quarterly forecasts for the same purpose. New tactic, same game. But what if that Enterprise Agility is defined by activity level rather than concrete outcomes achieved that build towards real Enterprise Agility? If annual or quarterly success is measured by activity only, does that actually make a company “successful”? Let’s say the employees were really busy and their “activity level” was high; in fact, they were so busy that they did not have time for the things that really have the potential to move the needle for their company and customers. This is because the broad focus on “activity” for the sake of activity deprived them of the conscious narrow focus on only activity for the sake of achieving certain outcomes. In other words, their “activity” included even the activity that has zero influence on achieving the outcomes you want… So why the heck are we measuring success by activity?
This happens often because the company, business unit, or team is missing critical thinking frameworks, which – if implemented correctly – can demolish silos, cultivate connections across different reporting structures, and enable that frontline autonomy that drives new solutions to business problems because people are measured by driving business outcomes vs. activity level. The whole company will rally around the things that matter most to the overall business, aligned in mission and purpose instead of disconnected by silos and turf wars. It keeps members continuously stretching, and you will dramatically increase Enterprise Agility if you implement these critical thinking frameworks quarterly. Enough mystery. These frameworks are known as OKRs.
What are OKRs?
Increase sales, margins, and employee engagement, and get more time by doing less wasteful work with O bjectives and K ey R esults. The system of Objectives and Key Results is a critical thinking framework and ongoing discipline that seeks to ensure employees work together. It allows companies and team members to FOCUS ON WHAT’S IMPORTANT. When implemented correctly, it also means making sure the most important things get done first, or they won’t get done at all.
Do any successful companies use OKRs?
Yep. Ever heard of a little company called Google ? Google has been using OKRs almost since its inception . The Objectives and Key Results framework has been around since the 1970s. The concept was created by Andy Grove , known as the father of management science, but popularized by John Doerr in his book Measure What Matters. John Doerr also happened to be one of the earliest investors in… you guessed it: Google. OKRs quickly became an important part of management of Google’s culture and way of working.
Unsurprisingly, other large tech companies soon adopted the management framework. Famous names such as LinkedIn, Twitter, Dropbox, Spotify, Airbnb and Uber are just a few of the companies that now use Objectives and Key Results (OKRs).
Do I need OKRs?
Use this checklist to find out. Do any of these sound like your workplace?
- Teams not aligned; they operate in silos.
- Low or inconsistent employee engagement.
- Inconsistent or incorrect tactics to unclear outcomes.
- Everyone’s busy, but if you asked them what was accomplished that moved the company forward last quarter, they’re at a loss of how to respond.
If any of those bullet points rang true, continue reading…
OKRs are the nervous system of a well-run company. OKRs allow you to Align on Objectives instead of being divided by tactics.
Every business is a digital business or a wannabe digital business
That means you have to transform all three of the following areas to be successful. If you are a digital business, you have to act like a digital business. Implementing OKRs is a great step in that direction.
In this article I will discuss how you can quickly implement OKRs successfully in your organization. You can watch my video below, download the presentation, and even contribute your own great examples of good and bad OKRs to it. You can download the current list here or email email@example.com with your best or worst examples (but please remove any proprietary data or company name).
Where do I start?
We start where we always start: with the 3Rs. For a lasting transformation, you must follow the 3Rs. OKRs are no exception to the rule; we have to apply the 3Rs even to them!
- Right Formula
- Right Tactics
- Repeatable Action
I’ve made these helpful charts so you can compare the Right Formula directly to the Wrong Formula you’ve likely been using.
The Right Formula – Key Takeaways
- Objectives indicate WHAT will be achieved, no more and no less.
- Key Results benchmark and monitor HOW we get to the objective.
- When properly designed and deployed, they’re a vaccine against fuzzy thinking and fuzzy execution.
- Key Results are measurable and verifiable. It’s not a Key Result if it’s not a number.
- Most importantly, a Key Result expands our limits.
Remember to tell your teams that this will be iterative.Goal setting isn’t bulletproof. When people have conflicting priorities, unclear/meaningless/arbitrarily shifting goals, they become frustrated, cynical, and unmotivated. How do we avoid this? By linking goals to certain team members or the company’s broader mission.
What’s the difference between Committed OKRs and Aspirational OKRs?
Committed OKRs don’t change. They’re the goals that will be delivered no matter what, period. Aspirational OKRs are the moonshots you can aim for, but don’t necessarily need to deliver. Some companies have them, others don’t – it’s up to you. The benefit of having Aspirational OKRs is that often when we have goals this ambitious, even if we miss them, we often end up reaping some benefit. This can inject surprise opportunities on a company’s path.
One last thing about our Right Formula for OKRs here. This one is very important! Always have the group that created the OKR be accountable for the key result.
For example, let’s say the business unit has an OKR that is dependent on Group B within this business unit. If Group A has it as an OKR, they are accountable whether Group B delivers or not. This is forcing a function for collaboration/alignment or for Group A to self-serve.
This is the #1 mistake in OKR roll-outs. Otherwise teams will have OKRs, forget to get alignment on dependencies, and then state they missed their goal because of another team. It turns into one big blame game. Ideally, have the Key Result be in both teams. Feel free to email me at firstname.lastname@example.org if I can help you on your roll out.
Second, the Right Tactic for OKRs
The first step is to pick an Objective. As discussed, Objectives indicate WHAT will be achieved, no more and no less. By definition, Objectives are significant, concrete, action-oriented, and (ideally) inspirational… unless they’re Aspirational.
Then identify the Key Results for that Objective. Key Results benchmark and monitor HOW we get to the Objective effectively. KRs are specific and time-bound, aggressive, yet realistic. That’s your tactic, plain and simple. Here are some examples.
Lastly, the Right Formula and Right Tactics mean nothing without Repeatable Action. Once you get the hang of identifying Objectives and Key Results, writing and sharing those Objectives and Key Results, it’s your job to make this process a habit.
OKRs are one of my personal favorites because they really help your team understand what matters, what doesn’t, what are obstacles, and how to measure whether or not they’re actually moving towards solving those obstacles. Plus, it gives them the flexibility and autonomy on the tactics to get there versus handing that down specific tactics.