Having been popularized by Google, OKRs (Objectives and Key Results) have become an accepted management instrument in many organisations. Supporting several projects, we are seeing some critical success factors:
OKRS Require Strategic Direction
OKRs are a great means to align an organisation towards a set of ambitious common objectives. Having every unit or department set their own OKRs independently without a common set of longer term goals will shortchange this potential. To fully leverage the power of OKRs, a company’s leadership needs to set a direction for the organisation as a whole, typically in the form of strategic goals (codified as strategic OKRs) and/or an inspiring mission. As Christina Wodtke put it: “Using OKRs without a mission is like using jet fuel without a jet. It’s messy, undirected and potentially destructive.”
OKRs Need to be Bidirectional
However OKRs are not meant to be simply cascaded top down. Leadership needs to provide direction in the form of strategic objectives to inspire teams to work out their own ways of contributing, based on their individual contexts. Management needs to discuss, potentially adjust, and agree the resulting team OKRs. To fully leverage an empowered agile team’s subject matter expertise it is however essential to have them define the majority of their OKRs themselves.
OKRs Require Defined Cadences
Setting OKRs and not reviewing them on a regular basis defeats their purpose. To successfully drive behaviour towards achieving aligned outcomes, organisations need to actively work with OKRs in three time horizons. Long term, in most companies yearly, for the setting of strategic objectives. A more tactical level with typically a quarterly horizon to revisit outcomes, gage tactical OKR impact on strategic goals and potentially adjust or re-define them. Most importantly, a weekly operational cadence ensures ongoing focus by discussing progress against Key Results on a team level.
Key Results Must not be Binary
OKRs have two components. Audacious “Moonshot” objectives and key results. Key results need to be measurable and therefore must include some type of number that they can be tracked against. As former Googler Marissa Mayer put it: “If it does not have a number, it is not a Key Result.” Key Results require more than a binary differentiation to be able to evaluate improvements regularly. “Increase NPS from 5 to 7” is a helpful key result against which progress can be tracked on a weekly basis. “Sign one new key account per quarter” is a great outcome, but not a good Key Result.
Outcomes Need a Feedback Loop
OKRs are a means to help organisations make progress against common strategic goals. If the impact of tactical Key Results on these strategic objectives is not measured and publicly discussed on a regular basis (i.e. at least quarterly), individual teams – and as a result the organisation as a whole – risk losing focus with obvious consequences for the organisation’s shared strategic objectives.