Benefits from successfully implementing an OKR framework
Introduction
Charles Darwin in his theory of evolution, suggests natural selection occurs when species change over time, by developing traits that favour survival, to become more adaptable and increase their ability to remain well-suited for their environment.
In a world where resources are limited, Darwin’s evolutionary theory can be used to draw a comparison into the business segment and illustrate how organisations that thrive in uncertain conditions, are the ones that learn to best adapt to changing environments.
As we head into 2024, organisations continue to feel the pressure of navigating the current environment of uncertain economic and geopolitical conditions. Among all the instability, one thing is certain: change. Change is always constant. And navigating the unprecedented rate of change we are experiencing today, whether you are an individual or a large corporation, is not an easy thing to do.
In one of our previous articles, we described how Objectives and Key Results (OKRs) provide a powerful framework to drive organisational change. OKRs help ensure broad alignment, which is key to an organisations’ ability to navigate, respond and adjust to the complexities of the current global landscape.
In this article, we’ll discuss the benefits of using OKRs to provide organisations with a tool to concentrate efforts on their most important goals, and to adjust plans as priorities change over time. We’ll shed some insights from the lessons we’ve learned when implementing OKRs across three different industries, and how these organisations ultimately improved performance in achieving desired outcomes.
Benefits of using OKRs
Organisations can greatly benefit from implementing an OKR framework to pursue their strategy. Some of the most common benefits we have seen, include:
Improved performance. OKRs promote increased transparency. By setting clear measurements towards progress and increasing visibility of performance, an organisation can improve how they prioritise the work, allowing for faster decision-making and more efficient allocation of resources for the initiatives that have the greatest impact. This also creates a heightened sense of responsibility among employees, improving accountability and supporting a shift in company culture from task-oriented, to outcome-focused, sustaining people’s motivation to achieve tangible business results.
Increased adaptability. OKRs help build resilience to seize new opportunities and maintain a competitive edge. By enabling teams to continuously assess and adjust priorities based on frequent evaluations, organisations can quickly respond and adapt to changing circumstances, so they can realign objectives to stay relevant and competitive to market changes. OKRs also provide clarity and direction for teams as to where the focus should be, but are dynamic in nature, enabling flexibility by allowing teams to apply learnings from feedback cycles, to make the necessary adjustments as needed.
High alignment. OKRs create a sense of unity and shared purpose among individuals, so teams can apply intentional effort towards a common outcome. When the workforce understands the overall vision, mission, and strategy, they can see how their contribution supports the bigger picture. This improves collaboration and synergy across stakeholders and promotes a sense of belonging.
Lessons learned applying OKRs across Retail, Financial Services and Energy industries
ADAPTOVATE has helped organisations implement an OKR framework across many sectors. Below, we have captured the learnings with clients from three specific industries:
Retail
Context
One of Australia’s largest retailers, with a team of over 200,000 members, needed to break down siloed work and improve the value delivered for customers in a rapidly changing business environment.
Learnings
This organisation adopted company-wide OKRs to align their strategy to execution. During implementation, these are some of the things they did well:
They started small.
The company began their journey by drafting OKRs for a small number of teams first, to be used as a pilot. They aimed for 3-5 objectives with 4-6 key results each, keeping in mind that focus was ‘key’. Then, they started sharing these prioritised objectives on a quarterly basis throughout the business unit, which created a shared sense of purpose and direction for execution. They started with less to deliver more.
They knew what to do, but also what to STOP doing.
By creating visibility of OKRs, the organisation provided leadership with an opportunity to discuss and react to ongoing changes in the market and to challenge their own assumptions. Over subsequent feedback cycles, the leadership team agreed to deprioritise some Key Results to respond to changing market conditions. This enabled the team to free up capacity and refocus it on work with a higher priority.
They took time to make it simple.
OKRs became more effective once they were structured to be simple to understand, share and deliver. Writing effective OKRs took a few iterations to get right, but once matured, they provided a much stronger platform for socialising the important things they wanted to deliver.
Outcomes
This organisation was able to maintain momentum of execution by improving visibility of critical initiatives, aligning leadership and 36 business teams on measures of progress against objectives. They also achieved 70% of quarterly CAPEX linked to strategic priorities, and as a result, were able to identify $100m of allocated capital that hadn’t been spent.
Financial Services
Context
A major financial institution wanted to align their strategy to results, by enabling teams to better prioritise, increasing transparency of execution, and developing a more iterative approach to planning and delivery.
Learnings
This financial institution adopted OKRs to improve coordination across the organisation. During implementation, these are some of the key learnings:
They used OKRs to address strategic initiatives and regulatory compliance.
Running the operations of a financial institution is always the top priority and where most to resources are allocated. However, managing new and developing risks such as cybersecurity threats, whilst ensuring regulatory compliance, was also critical for this organisation to maintain a competitive advantage. OKRs helped prioritise critical regulatory initiatives by building alignment across all levels, from leadership down to operational teams, so that effort was focussed on the highest value work for the organisation.
Their OKRs were more easily adopted with strong support from leadership.
The leadership team made a deliberate effort to lead by example on what they expected employees to follow. Leaders helped build a shared understanding of the journey for change, and to articulate the narrative as to why the OKRs they agreed to prioritise, were the most important. Leaders also promoted better collaboration by framing goals based on outcomes (e.g. provide the best user experience across our digital products) instead of outputs (e.g. build wire frame to show app home screen). This was especially important as OKRs required multiple parts of the organisation to work cross-functionally to deliver on those outcomes.
They supported OKRs with funding.
The organisation ensured resources were directly supporting priorities by aligning budgets to OKRs. This way, the company supported consistency in execution to their strategy, in delivering the highest value to the organisation, and their customers. This also helped reduce the ‘use it or lose it’ mindset that prevailed at the time, and discouraged spending on initiatives that were not important.
Outcomes
Using OKRs, this financial institution was able to coordinate the work of +3000 people across various business units and increase the sales for one of their products by 33% over 3 quarters.
Much more than just a buzzword, Agile is a way of thinking and working that has been proven to be successful in many different industries.
Agile is a practical approach to project planning based upon a concrete definition.
Energy
Context
A large multinational oil and gas conglomerate, wanted to deliver high-value projects at a much faster pace, by improving their ability to deploy resources quickly and efficiently.
Learnings
This conglomerate adopted OKRs to improve alignment around strategic initiatives, and across four organisations with different work cultures. During implementation, these are some of the key learnings:
They used OKRs to generate impact.
This conglomerate was committed to building momentum from the beginning. They started by writing OKRs for their capital-intensive side of the business, which was the area that could benefit the most from delivering on high value outcomes in a faster way. OKRs brought clarity across teams, showcasing that with limited resources, there is only so much that can be done in each period. They used OKRs to help shift the focus on what was important for that cycle and addressed longer-term initiatives by breaking these down into smaller components, and actioning these over several cycles.
With momentum built, they ensured lasting change.
This organisation took a disciplined approach to evaluate progress, and celebrated success for the results achieved. They also understood that sustaining change would take concerted time, resources and effort. After several cycles of evaluating and applying learnings with each iteration, the organisation was able to build a culture of continuous improvement and a robust framework for planning executing long-term projects.
They used OKRs to promote cultural fit.
This conglomerate was formed by four different companies, with different ways of conducting business. They used OKRs to drive consistency for change communications, by developing a shared understanding of the pathway moving forward, and to cascade accountability down to teams doing the work. This way, leaders were aligned on priorities, capacity was more accurately estimated, and the limited resources were allocated towards the highest value initiatives.
Outcomes
This conglomerate was able to create and prioritise eight clear objectives linked with their corresponding backlogs, and as a result, improve the allocation of capital by generating savings of USD $5.4M due to a 39% reduction on scope changes. They also reduced almost by 50% the cycle time for execution of capital projects.
How to get started with OKRs
ADAPTOVATE can help your organisation better adapt to change by implementing OKRs. In this article, we have shared insights from some of our previous engagements where clients have realised tangible benefits of using OKRs to drive meaningful change and be able to adapt quickly to a changing business environment. Our consultants are highly skilled at coaching and training executives and teams, and in guiding them through the implementation principles.
Contact us today if you are looking to make a difference at your organisation in the Australia New Zealand region.
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