Hot off the press: "The State of OKRs - Global Enterprise Report"

The Business Executive’s OKR Cheat Sheet

Objectives and Key Results are a journey that you will not get 100% right the first time. Most of the OKRs value comes through achieving them, and not setting them. Communication with the organization is essential to drive OKR success.

Here’s a quick refresher on what OKRs actually are:

Objectives are qualitative (no numbers) and aspirational single sentence statements (can say it in one breath), which describe your medium-term success for each of your strategic alignment themes.

  • It is better to imagine you are sailing around the world on a boat, and the horizon point can be a describing point for each objective for a strategic alignment theme.

  • If you set the objective too close, then it is not aspirational enough, and if it is too far away, it is beyond the horizon and difficult to visualize.

  • Struggling to identify your theme for digital strategy? – acknowledge what is important for growing the business externally, optimizing the internal processes, and building and/or maintaining the culture

  • The intent of 90% of the objectives remain the same from one quarter to the next, with slight changes

  • We recommend around three objectives for the ELT (Executive Leadership Team). If you have more than five, consider whether you are truly focusing on what matters

  • The first objective is the hardest. Done right, it typically takes an ELT 2 hours to set their first objective. If you have it in five minutes, you haven’t spent the time aligning

Key Results are a set of targets for metrics (smart goals) that objectively track your progress towards achieving your objectives.

  • Always lock down the objective before setting the Key Results. You must figure out what mountain you are trying to climb before climbing it

  • You should target three key results per objective. If you have more than six key results for an objective, consider if you measure what matters. Often thinking about the top 3 things that you want to measure can help

  • Key Results describe an end state in 90 days, not the process. These must always have numbers and should be measurable without bias.

Now that we know what OKRs are, what are the success drivers that are important to keep in mind for driving results with OKRs?

KPIs complement OKRs: Key Performance Indicators (KPIs) track the performance of Business as Usual (BAU) activities for accountability. In contrast, OKRs dramatically improve the performance of the business. Examples include Google OKRs, IBM OKRs, Enterprise OKRs, and others.  KPIs are often not useful to create KRs as they promote stability rather than change. So, they are not helpful in inspiring teams to take ownership of business improvement. It becomes a hurdle to align the poorly performing team. Use KPIs to track the business and KRs to focus on improvement and high output management.

Outcome over output: There is often a need to do a lot of work to achieve a Key Result. This work is not an integral part of the OKR itself. So, you need to use your standard workflow tools for managing this work. Objectives capture the vision, while Key Results capture goals. Decide only these in your session and do not try to solve for achieving the Key Results in the session.

Communication is key: Once your Objectives and Key Results are acceptable, communicate the ELT OKRs to the organization. Also, acknowledge their importance, and the procedure, and the timeline for the first OKR cycle.

Implementing OKRs is a project: Create a Steering Team that meets monthly to discuss OKR rollout success. It should consist of the CEO, the business sponsor, and a representative from each business cluster and the CHRO or equivalent. Establish a Project Management Team in charge of defining all the teams for OKR sessions, the scheduling, and communications plan.

Use OKRs to unify teams: OKRs unify teams and are the real value driver for improving an organization. We do not recommend setting individual OKRs except for documenting and tracking professional development goals. OKRs are not for calculating an individual’s bonus as this encourages sandbagging.

Teams must own their OKRs: Make sure each team has a set of OKRs. The teams below the ELT team should take the OKRs from the team above them and their team’s big rocks. It identifies how to make the Objectives and Key Results relevant to their team. The KRs for the team should form via copying or adapting some KRs from the level above and adding some team-specific KRs. Align the objectives first before aligning the KRs.

Align OKRs horizontally and vertically: A team leader should have a 1 on 1 conversation with the leader of the team above them. It ensures that they cover the OKRs from the level above in a vertical alignment, and so ensure accountability. For horizontal alignment, the team leader should talk with other team leaders where KRs have dependencies on another team for delivering results.

Review the ELT OKRs every week: Team must stay up to date, and you should ensure you communicate this expectation. Have 1 on 1 conversation with all your directs on a biweekly basis for 30mins for improving organizational performance. Discuss their contribution to the KRs and review the OKRs at every level to grow your business and drive results with OKRs

Red is a good thing: It identifies problems that need urgent attention. For KRs that turn red, evaluate if: i) They are right KR for what the business wants to achieve for growth– is it still a radical focus ii) The way of measuring the KR is correct. iii) Is the KR too ambitious? iv) If there are enough resources to support the KR or if dependencies are blocking the KR. If the first three items are correct, adjust the KR or remove it. If the final one is true, remove the road-blocks.

Keep the OKRs stable: Try to do it for the 90 days as you review and reset at the end of the 90 days. However, do change the OKRs if there is a significant external event that requires an organizational response.

OKRs are a tool to grow your business and drive alignment for digital strategy. Enjoy the journey.

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