THREE PIECES OF ADVICE TO EMBEDDING OKRS INTO YOUR ORGANIZATION

Making OKRs Work

“Focus on the right things to be doing, not the constant battles over who is getting more resources. The real unlock is making the conversation. ”  – Paul McNamara, Partner and Managing director of ADAPTOVATE 

OKRs are a goal-setting framework that helps organizations translate strategy into measurable and actionable goals for each level and function in the organization. Objectives (O) are qualitative goals organizations want to accomplish; Key Results (KR) are quantitative measures that show progress towards these objectives. OKRs create a common vision, prioritize outcomes, and focus on better collaboration to achieve goals. They help organizations achieve more by clearly setting out their purpose and goals, and empowering teams to work out how to deliver.

Organizations choose OKRs because they allow them to quickly respond to customer needs or market shifts, spot new opportunities, and optimise their resources and costs. However, implementing them comes with challenges.

Common issues in implementing OKRs

Writing OKRs is easy – the hard part is fostering meaningful conversations around them. To successfully implement OKRs, the entire organization must deeply understand the strategy and strategic objectives, and how OKRs help to translate these down to the work done in teams. We’ve observed three common issues that arise at our clients when introducing OKRs:

Lack of awareness of strategy

One common hurdle is the lack of awareness regarding organizational strategy. According to a 2014 survey conducted by Inc. magazine, a mere 14% of employees surveyed could identify their company’s top three priorities. An MIT Sloan analysis of 124 organizations revealed that barely 28% of executives and middle managers tasked with executing strategy could articulate three of their company’s strategic priorities. This stark reality highlights the critical need for a change in a way that strategy is communicated, to a dialogue that engages the entire organization. This ensures that strategic priorities are not just written but deeply understood.

Reluctance to add more perceived process

Another roadblock in fostering effective conversations around OKRs is the reluctance to add process. Teams may be hesitant to engage in what seems like extra meetings or admin. What’s more, they may see OKRs as just another fancy tool which is not significantly better than the current ways of working. The challenge is not merely about introducing a new process but demonstrating the value it can bring to the overall organizational performance.

Resistance to mindset shifts

Traditionally, strategic goals were set top-down and communicated through annual planning processes. With OKRs, the process is an ongoing multi-directional dialogue – between leaders and teams, and horizontally between teams as well. To achieve this, leaders and teams need a mindset shift to more collaboration. For example, one team may have one high-priority item throughout a quarter, but this item has a critical dependency in another team, which is a low-priority. Leaders would need to understand the impact and work out a common ground or readjust priorities for both teams. These conversations encourage participation from all levels over time and build confidence in the process and the strategy.

How do you best prepare for a meaningful conversation and kick-off a successful implementation of OKRs? Here are three drivers of success.

Leaders must be clear on the strategic narrative

Leaders play a critical role in the successful implementation of Objectives and Key Results (OKRs). They must articulate the OKRs clearly in an inspirational way and explain the “why” – how these objectives contribute to a larger vision. The ability to create and engage in meaningful conversations surrounding OKRs is paramount, serving as the catalyst for a shared understanding and commitment to a common ambition, and setting the foundation for organizational alignment and collective commitment.

Initiated by the CEO and leadership group, these conversations dive into each objective and key result, culminating in a concise memo. For practicality the memo should focus on quality over quantity, detailing a small number of critical OKRs and ensuring strategic focus on the highest priority objectives.

Once the OKRs are agreed at the top level, leaders must actively work with each other to align delivery teams across their different work priorities and interdependencies among teams. A well-designed memo is invaluable in these alignment discussions, providing a shared understanding of the bigger picture, and leading teams to work out collaborative solutions which align with shared goals. Those conversations further ensure each team member understands the “why” behind their objectives, fostering a sense of purpose and alignment with the organization’s broader ambitions.

For a financial services client who needed to implement critical regulatory initiatives, leaders invested in building a shared understanding of the change journey and articulating the narrative behind the changes. Empowerment was promoted by granting delivery teams the autonomy to determine how to achieve the goals collectively. Furthermore, leaders aligned work priorities and dependencies between delivery teams in the work planning session. During the journey, leaders also provided guidance and support to remove obstacles, so that delivery teams could adapt to a collaborative way of working. As a result, the client coordinated the work of over 3,000 people across various business units, leading to a 33% increase in sales for one of their products over three quarters.

In essence, leaders must master the art of meaningful conversations around OKRs, from the very top, recognising their role as strategists and storytellers who weave a narrative that resonates throughout the organization. The conversation should be treated as a powerful vehicle that drives the organization toward a shared vision, one OKR at a time.

Keep the conversation going

For a successful OKR implementation, ongoing conversation are crucial during and after each cycle beyond the initial rollout. Using a formal strategy and delivery cycle with interaction rhythms embedded will ensure leaders stay engaged with the process. These interactions cover different topics, including aligning work plans and delivery dependencies, providing actionable feedback to incremental deliveries, as well as removing obstacles. Collectively, those interaction rhythms create a supporting environment for the entire organization to achieve shared goals with focus and adaptability.

The frequency for each type of interaction may adjust according to business needs, the nature of the industry, and the level of leadership alignment. At a retail industry client, the leadership team was a new group consisting of leaders from two different companies that went through a merger. To hasten collaboration, they started delivering and engaging on a two-week cycle. Three months later, with a base comfort level of working together, the cadence was adjusted to a monthly cycle. As the leadership team’s alignment and level of collaboration matured, the leadership team officially modified their cadence to one of quarterly business performance reviews, coupled with monthly check-ins, which then persisted for more than twelve months.

The ongoing conversation enables adaptability over time as conditions change. Most strategic objectives should be kept for a year, but key results might change by quarter depending on market situation and seasonality. A retail client, responding to market changes, deprioritized some key results as part of preparing for a new cycle, freeing up the capacity of 36 business teams, ensuring that most of their quarterly CAPEX was linked to strategic priorities and freeing up $100 million of allocated funding that could be redirected.

Using delivery cycles or interaction rhythms breaks down the complexity of the business operating model into manageable segments, providing organizations with flexibility and adaptability and promoting test-and-learn at scale.

Start focused and scale over time

Mastering OKRs is like any skill—it takes practice, for leaders and the organization. Leaders need learning cycles to nail down the “why” and “what” of the strategy in a clear and concise manner. The act of preparing the memo, communicating it and cascading OKRs through the organization can be refined over time by starting focused at the top, then scaling across teams.

A retail client has been using OKRs for three years, with their latest strategic cycle covering six business units consisting of more than 200,000 employees. Initially, a small number of leaders from key business units and the strategy team were involved in writing the memo. The process later expanded to include over 100 people providing responses and comments from across various businesses.

“The Memos are our single source of truth so that we really nail it for our team and customers.”

– Managing Director, Australia, Retail client

Another client, a conglomerate energy company, decided to adopt OKRs by the end of 2021. Initially, they focused on four high value projects. With positive feedback from delivery teams and more confidence in OKRs, they gradually expanded to over 30 projects. After three cycles the teams had achieved greater flexibility in planning and execution, enabled more focus on high-value projects and improved visibility of their deliverables.

The time to see benefits in adopting OKRs and QDC may span 2 – 6 cycles or 6 –18 months, contingent on the mindset and commitment of senior leadership. For instance, a retail client took about a year (four cycles) to fully appreciate the benefits, while a capital investment client recognized them after six months. The difference came from the level of commitment by the senior leadership within the respective groups.

Overall, when it comes to discussions, leaders should be open to different opinions and even welcome moderate conflicts. Each conversation, whether one-on-one or a group discussion, is a chance to tweak and clarify OKRs and boost the overall strength of the organization. Think of every learning cycle as a step towards building a robust and adaptable team, making the journey of mastering OKRs a continuous path of improvement and collective growth.

Conclusion

In conclusion, OKRs are a powerful tool to enable businesses to express their strategy and translate it down to work done in teams. However, implementing them requires strong leadership, strategic clarity, ongoing and structured focus, and patience in building over time.

It can be hard for organizations to do this without external help. Having a strategic partner capable of assisting in every stage, from initially working with leadership to define the strategy, document it in the memo, and communicate it clearly with their teams, through to helping the teams break down the work and deliver, has proved valuable for our clients.

Unlock the full potential of your business with ADAPTOVATE’s support. With a track record of success across diverse industries and client types globally, we offer services and valuable insights to elevate your performance. Contact us for tailored solutions that will drive excellence in your organization.