Making the case for OKRs
OKR International Founder & Managing Director Nikhil Maini explores the key factors for organization success and how OKRs enable each of them.
In the wake of October 2015, Jeff Immelt (CEO of GE), in his interview with McKinsey Publishing said, “In the digital age, sitting down once a year to do anything is weird, is just bizarre.”
Let us examine what organizations need today, quite desperately in fact, to sustain themselves and grow. In my conversation with forty-five CEOs and CXO leaders, entrepreneurs of start-ups and scale-up organizations, the following factors have emerged as key mandates for organizational success. We will assess how OKRs enable each of them in detail.
Converting strategy to execution, quickly
Planning is good but plans are useless. Unless organizations develop a robust mechanism to align their resources in creating execution excellence, failure is certain. Traditional goal setting and execution systems have relied heavily on mechanistic and outdated systems that are not only defunct but also no longer yield results. The sad part is most business leaders remain unaware of alternatives. In a landscape where businesses are experiencing change at an exponential rate, their responses to these changes remain sluggish.
OKRs on the other hand allow teams and individuals to assess changes in the marketplace, pivot in time and more importantly learn how to ‘fail fast’. OKRs are the creamy layer that help companies mobilize their resources using a framework of regular measurement and progress reviews to enable implementation of various strategic and tactical agendas quite rapidly. Refining the archaic annual cycles to more frequent quarterly cycles allows organizations to pivot well in time and respond to changing consumer and competitor activities.
More focus on priority
With a growing number of companies trying to compete in the marketplace, everything seems to be a priority at work. What the business chooses not to do, is as important – if not more, than otherwise. This is hugely connected to the purpose, vision, mission, and values of an organization. These allow leaders to make decisions during a dilemma. Prioritization provides a certain clarity that is necessary before you can move forward, and by focusing in on what really matters, it provides you with a sense of direction.
Well, what do you do once you have clarity? Clarity allows you to invest your finite resources by putting your money where your mouth is. I am constantly reminded of the Pareto Principles a.k.a, the 80-20 rule . Leaders need to drive their businesses by focusing on those 20% goals that give them 80% results. The creamy layer, which we like to call OKRs.
Greater alignment of goals and efforts
You cannot build a vehicle by assembling it using the best engine from one company, the best transmission from another, the best computer chip from yet another vehicle manufacturer and so on. If the parts are unable to speak with each other, they are useless. If you do try assembling a vehicle like that, it will not even start, leave alone move an inch. For the system to work optimally, the sub-systems must work optimally. Systemic thinking is built on this premise. However, there is one more condition that needs to be satisfied here. The sub-systems also need to be correlated with each other in a way that creates interdependencies between them – quite like how gears in a machine fit into each other.
OKRs and its very framework enhances systemic thinking. It encourages leaders to convert their strategy in annual goals and then further break those goals into quarterly ones. In doing so, it becomes critical for teams and sub-teams to align themselves to the overall goals and purpose of the organization. One also gets to see true alignment when there is a healthy amalgamation of top-down, bottom-up and cross alignment between teams or members. All working towards the same goals. The result? A well-oiled engine generating great value for the organization.
Need for Value Creation
Employees all over the world are seeking more autonomy and empowerment in getting work done. Autonomy is the freedom to act independently while empowerment is the granting of decision-making powers to someone. That being said, autonomy and empowerment are means to an end – the end being achievement of goals. These goals are dictated (ideally should be) by the vision, mission, values, purpose, and the strategy of the organization. So how is all this connected to ‘value creation’ and OKRs?
OKRs, especially the Key Results, get defined in ways that help create more autonomy and empowerment. Well-crafted Key Results are outcome (value) based and not effort (activity) based. The right Key Results (outcome based) support the achievement of an Objective, thereby empowering employees, and teams to work out how best they should be achieving them.
More interdependencies and alignment
An organization is an ecosystem of interdependent parts. These parts are required to work in ways so as to enable the system to work seamlessly to fulfil the goals of the organization. When sub-systems work in opaque silos, it disables employees from contributing to the goals of the company in meaningful ways.
Rapid changes in the marketplace and consumer demands coupled with increased use of technology has made organizational operations complex. The need to have a system where changes in one faction of the organization (and its impact) can been seen instantaneously in other related factions is becoming a critical success factor for being agile. Since OKRs encourage transparency and alignment along with unison in goal setting and implementation effort, such a framework becomes a mandate. Within its framework, OKRs require top-down, bottom-up and cross team alignment before implementation begins.
Apple, Alphabet (Google), Amazon, Microsoft, and Samsung, in the order of appearance, have been ranked the top 5 most innovative companies in 2020 by Boston Consulting Group . What do they have in common? It’s their ability to generate value through constant disruption (read as innovation).
OKRs thus become the ‘go-to’ framework that ignites a truly agile system whilst acting as the conduit for cultural transformation within any team or organization. Rapid experimentation of initiatives within the realm of OKRs, a ‘fail-fast’ mindset, psychological safety to take calculated risks, collaboration, learning and continual sprints in the product, services and operational segments all add up to creating an environment where innovation thrives.
Employee engagement and ownership
Disengaged employees are a growing concern for companies across the world. So, let’s assess what causes employees at work to be disengaged. The list is quite long. Poor leadership, lack of autonomy and empowerment, little or no professional growth, lack of personal development, et al.
By sheer virtue of its inherent design, OKRs are meant to create a culture of top-down and bottom-up communication. While the top-down design enables the strategic and tactical intent, the bottom-up approach brings grounded experience, executional intelligence, and clear contribution from people in teams. Through transparent alignment and involvement of employees across the board, higher levels of engagement and ownership is created.
Thrive and grow
By now you may have noticed how these elements not only work as causal factors for organizations to perish, but also change levers in making them thrive and grow. You will also notice that these factors are all interrelated to each other. OKRs are also, therefore, the automatic fit for businesses that want to gear up to create a P urposeful Organization, A gile Leadership, C ulture, E mpathy and D igitisation-led companies.
About Nikhil Maini and OKR International
Nikhil Maini is the founder and Managing Director of OKR International– a leading OKR services company across South Asia, South East Asia and the Middle East. Nikhil has consulted more than 400 organizations globally in areas of strategy planning & execution, culture transformation, agile leadership and organization development. He brings nearly 25 years of experience across 20+ industry sectors and is a behaviorist and coach by profession.