How to formulate your company OKRs

This blog post is about how?to formulate your corporate OKRs. Besides the definition and relevance of the OKR method, we want to show you how you can plan and structure your corporate OKRs.

In addition to that we provide you with an example of a template for the structure of the company OKRs based on the five dimensions “Business”, “Customer”, “Product”, “Processes” and “Employees”.

Introduction

In recent years, OKR is on its way to becoming a standard management method. However, the current OKR 1.0 approach has significant shortcomings and lacks a suitable set of tools for effective OKR management. To ensure lasting success of OKR management, these problems must be addressed.

In particular, the separation and high level of reconciliation between controlling and OKR is a constant challenge for many CFOs. Often, the numbers in the OKR system do not match the numbers (actual, target) in management reporting and thus do not accurately reflect the implementation status of an organization. ValueWorks has systematically developed the OKR methodology.

See the table here:

In the following, we present key recommendations for OKR consulting firms or OKR coaches based on our experience with OKR implementation and that of our OKR consulting partners:

1. Planning of OKRs

1.1 Stepwise introduction

The leadership team needs to make a strong case for the method and lead by example. As an OKR coach or consulting firm, you should act as a sparring partner here from the beginning to define the right guardrails. Start from the top down with one or more management workshops to define the company's OKRs (perspective 1 year).

OKR management should be stepwise introduced in the organization after a learning quarter with the management team; each manager should then be able to act as an "evangelist" for OKR and carry forward the methodology and elaborate OKR guardrails in his or her own area, ultimately to each individual employee.

Experience has shown that the leadership team tends to be overly ambitious in setting OKRs at the beginning, given the limited resources available. Encourage the leadership team to take time to learn what can and cannot be achieved.

While the process should initially be driven top-down, teams & employees should take on an increasingly important role over time and become involved in the OKR planning process.

Encourage your customers to become agile - After an initial but deep pilot implementation, continuously improve the process and content with management and staff and reflect together on what is or is not working.

Stop starting, start finishing - Focus OKR planning and resources on achieving results in key areas rather than trying to achieve as many goals as possible at the same time!

Typical misconceptions or stumbling blocks your customers may have regarded OKR are:

• OKR is not an employee evaluation method, but a framework for strategy implementation.
• Therefore, a direct link to a bonus system does not make sense.
• Missed targets are not sanctioned but used as a basis for future target setting. It is important that the reasons for non-achievement are thoroughly analyzed and remedied.
• The OKR process cannot be delegated to an OKR coach. Management should lead by example from the beginning.
• "Less is more": Too many goals overwhelm any organization.

The recommended scope of consulting in the context of an OKR introduction is shown in the figure below. The two management workshops, in which the initial OKRs are defined at company level and at divisional level, are essential.

1.2 Recommendations for the structuring of corporate OKRs

In the example below, the structure of the company wide OKRs is based on the five dimensions "Business", "Customer", "Product", "Change" and "Employees". Below these are the respective "Key Results", i.e., measures of success. Each key result is a quantitative measure with a defined start and target value.

As can be seen above, the majority of "key results" are key figures from controlling that can be calculated automatically from operational systems. These include growth of a business unit, EBIT, recurring revenue, NPS, brand index, number of new customers, etc.

A challenge sometimes arises when the OKR is successfully completed at the divisional level, but still fails to meet the business objectives. To prevent this, one should define one "Objective" at the divisional level for each "Key Result" at the corporate level. In general, the "Key Results" of the upper level should become the "Objectives" of the following level. In this way, the OKRs flow "top-down" from the company level via the area or team level to the individual employees. In this way, area managers can create proposals for their own area or can delegate these to team leaders or individual employees. In this case, the lower level then determines how it can best achieve its "objectives".

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