I’m taking a shot, without even knowing you, and I’m going to guess that you’re doing OKRs wrong. If you aren’t using them at all, and you have no idea what they are, read on, I’ve got you covered.
What are OKRS?
The Mechanics:
OKR stands for “Objectives and Key Results”. But I really wish it stood for “OUTCOMES and Key Results” because that’s what it is. We’ll get to that in a moment.
OKRs should be developed strategically at the top of the organization, and then more specific OKRs are developed collaboratively at every level below (don’t say cascaded!). There are also OKRs at long-term and short-term time horizons, with the day-to-day view typically being quarterly.
Key Results are written to be “outcome-focused” not deliverable-based, and measured in a way that is progressive, rather than Y/N. We’ll get to why this is, hang in there.
The Secret Sauce:
At first glance, OKRs may seem like every other goal-setting framework you’ve used, but you’re missing the point if you use it that way. Yes, OKRs can help your teams get aligned, and drive focus and all that wonderful stuff that goal-setting frameworks all claim. But there are two things other frameworks cannot claim.
The first secret sauce is that OKRs are a structure to spark and support an adaptive organization. By using your OKRs to design and seek ways to “Experiment and Learn”, you build in adaptivity.
The second secret sauce is that OKRs will lead you to the holy grail of connecting strategy and execution. Yes, I just promised you the holy grail! OKRs can serve as a bridge between strategy and execution, with continuous feedback loops between the two.
Let’s take a look at how to reap the benefits of OKR secret sauce, and then we’ll also look at where they go horribly wrong.
Using OKRs to Build an Adaptive Organization. In our VUCA (Volatile, Uncertain, Complex, Ambiguous) world, “Adaptive Organizations” are all the rage. A lot of it is just talk because there is a lack of known structures to support adaptability. OKRs are a simple structure that you can start doing today, that will set your organization on a path towards adaptability.
Here are some ways to make this promise a reality:
Write Objectives in Hypothesis Format: When you write Outcomes in hypothesis format, it allows room for them to be wrong, or improved upon. Try this template: “We believe [this strategy] will result in [this outcome]
Ex. We believe that by targeting Gen Z consumers, we will grow sales and lower the cost of customer acquisition.
Versus the traditional goal-setting language: “Target Gen Z consumers.”
This subtle difference in language opens up the organization to a broader spectrum of thinking and innovation. Everyone is now invited to prove, disprove or improve the strategy.
Write Key Results to Prove Yourself Wrong. This step is the big kahuna. For years, we’ve designed metrics to show that we’re doing a good job and track progress. At best, they sparked leaders to add resources, but they never sparked a pivot in strategy. I prompt clients to design metrics by asking “how will you know if you’re wrong?” And second, “how can I know quickly?” You want to be able to pivot as quickly as possible. A metric that says “rollout complete” is too late and not progressive. Try something like “sales increase by 5%” where you can see it increasing .05% monthly. Or, narrow it down while you hone your sales process: “50% of people we sell to, make a purchase”.
Design Experiments: Now that your Outcomes are in Hypothesis format, you can proceed to design experiments to test your hypothesis. This is something that gets lost when we create objectives assuming we know all the answers. This is where strategy and execution connect.
Use OKRs to Connect Strategy and Execution. Every organization I encounter says that its strategy gets lost somewhere in execution. OKRs can help connect the two. Here’s how:
Add specificity and clarity to strategy. When you put your strategy into OKR format, with a hypothesis, it forces the organization to get really clear on the strategy. There is a difference between “aspirational” and “unclear”. A strategy can still be aspirational and abstract, but it does need to be clear what’s in and what’s out. I’ve worked with organizations whose strategy was “customer-focused, cost-efficient, and grow revenue.” That’s pretty much everything every organization does. Not a single person changed a single thing they were doing when this strategy was announced. When you write Key Results and ask “how will we know if we’re customer-focused?” and “how will we know if we’re not?” you’ll get a lot more clarity on strategy.
When a client specified that “We believe that by being more customer-focused we will reduce our customer acquisition cost” well now we were getting somewhere! Now, when people had to weigh a cost-saving activity against a customer-focus activity, they knew which to prioritize.
Ideate and Map Activities to OKRs. Now that you know what outcomes you want, go brainstorm on what work might help get you there. You might pull from work already in progress, and you might also ideate new work. What you don’t want to do is retrofit everything you’re doing anyway into the new OKRs. Note: You may end up stopping a lot of what you’re doing! This might cause some upheaval!
Design Forums to Assess Learning. A key step is in creating space to collectively make sense of the results. Don’t leave it to chance, or force an ad-hoc meeting, get something on the calendar. The team will have to look at the results, and determine when to take action. Often this forum is re-purposed from what was formerly a status meeting.
I find these 5 prompt questions help in forums like this:
Have we learned anything that might prompt a pivot in strategy?
Did we learn something that prompted us to do another experiment?
If we’re not seeing results: Is our strategy wrong or are we failing to execute?
If we are seeing results: Do we want to double down on this?
Are we doing the absolute best activities to reach our outcome?
I want to highlight #3. If you are not getting the Key Results you thought, it’s only one of two things:
Your strategy was bunk
OR
You failed to execute
If you designed your experiment right you are testing strategy and execution separately. If it’s not clear which is the culprit, now is the time to find out. There’s nothing worse than perfect execution of a bad strategy.
How OKRs Go Horribly Wrong. OKRs seem to go wrong pretty often. Mostly because we try to fit them into the ways we’ve always done goals. Here are a few pitfalls to watch for.
Over focus on filling in the OKR template. When OKRs become a mechanical, administrative task, you’ve lost the value. It’s not about the numbers, it’s about the design and direction.
Emphasis on meeting the quantitative results. It’s very common to replace performance metrics with OKRs, and measure everyone on meeting their key results. It becomes just another carrot-and-stick instead of a high-performance enabler.
OKRs become “promises never to be broken.” When OKRs become cast in stone, not flexible or intended to pivot, they lose their ability to drive adaptability.
OKRs as deliverables. Instead of “outcomes” OKRs are worded as deliverables. I.e. “Build a website”. When OKRs are deliverables, it means you’ve already assumed the solution and you’re not tracking it to an outcome. You’ve confused output with outcome. The website goes up, but sales numbers don’t move, everyone claims victory. Then the company files for bankruptcy and no one understands why.
Stick the OKRs in a drawer and forget them until next quarter. If you’re not using the OKRs in every meeting, (or many meetings), then you’re squandering a huge opportunity. The activity of creating them is valuable, but using them to constantly course-correct is the real magic. If you don’t have them open, together, as a team, at least weekly, you’ve wasted them.
Leave with this...
“A hammer cannot build you a house”.
OKRs are a super-awesome tool, but they are just a tool. You need to coax the magic out of them by using them to support adaptability and connect strategy to the work. Now that you’ve read this article, you can’t un-know it. You are now uniquely positioned to go out there, using diplomacy and tact, and help your organization reap the benefits of OKRs.