Introducing OKRs: An agile leadership, goal management, strategy execution, and performance management framework for the future fit organizations!

As an OKRs strategist and consultant, helping businesses to improve their business performance, I sometimes being asked to introduce what is OKRs all about?

Trying to share with you more about OKRs in an enjoyable way, and as I consultant not biased to specific "tool" or "software application" that is used to execute an OKRs system, yet, I found it useful to share with you many schools of thoughts that explains it in an easy and enjoyable way while giving the credits to those who did.

Today, I share with you more about the OKRs in the European context as explained by work path:

What is OKR: OKR is an agile leadership and goal management framework. It is a strategy execution tool to guide result-focused work, create alignment and engagement around measurable goals. OKRs consist of one Objective and several Key Results.

Objectives Are desirable, ambitious goals, qualitatively describing an aspired outcome. It sets a clear direction for everyone and is supposed to motivate you to work towards it. The Objective basically tells you where you want to go.

?Key Results: Describe the metrics you will use to check if you are on the right track to achieve your Objective. They are measurable results indicating your progress towards achieving an objective and will tell you if you have achieved it. Key Results usually have a starting and a target value to measure how you progress towards your Objective. Through this, you always know how close you are to your final destination and if you will have to change something to get there.

You can also define OKRs as a holistic method for the management of goals and performance on every level of an enterprise.

Leading organizations use them to manage fast growth, optimize alignment and collaboration processes, and enable employee engagement and transparency in a more agile work context. OKRs connect strategies with operations and results while intentionally promoting the autonomy and self-organization of teams.

Moreover, OKRs support a more data-driven goal-setting process and help to allocate resources efficiently by focusing on the right metrics. Establishing an OKR goal-setting system, which is new and different for most employees, requires management buy-in, persistence, and time. However, for more and more organizations it is an important step to position their company as an innovative workplace and an attractive employer. A structured OKR process usually is great support for the implementation and establishment of the OKR method.

The benefits of OKRs

Focus and Discipline: A limited set of important goals are documented, being precisely and clearly communicated to everyone. Actionable metrics that allow quantifying progress lead to discipline and a more efficient allocation of work.

Coordination and Alignment: Aligning all teams and individuals from the beginning of a quarter increases the overall efficiency and helps reduce conflicts.

Motivation among employees: Every team member understands how goals can be achieved collectively and what is expected from them. You can engage individuals in the goal-setting process, which increases motivation and commitment alike.

Transparency: OKRs make accomplishments visible and hence promote acknowledgment and recognition. Moreover, it becomes easier to learn from past performance and to iterate and optimize over time.

Why are OKRs so popular at the moment?

The majority of established enterprises encounter difficulties operating in an increasingly complex market environment while keeping employees engaged. Accordingly, recent studies show that more than 70% of employees are not fully committed at work. At the same time, only 6% of organizations say they are fully prepared for a new working world.

Simultaneously enterprises, which use state-of-the-art goal management, show that they are 3x more likely among the most successful companies of their industry.

The digital transformation increases the pressure on most enterprises. Digitally born companies such as Tesla might be still far from challenging established competitors. However, they understand employees and intelligent performance management systems as their most valuable resources and the last true competitive advantage of tomorrow’s markets. The organizational context to develop, learn, and innovate increasingly becomes a key driver of success. And one of the few aspects management can actually influence. Established enterprises are still mostly stuck in hierarchic processes and a Taylorism logic where managers control and delegate work centrally. In order to keep up with today’s competitive landscape, more and more enterprises use OKRs as a key instrument to enable a successful digital transformation of their organization.

Successful OKR organizations follow these best practices

We work with leading experts and organizations who build their success on OKRs. Thereby, we collected the following success drivers.

1. Determine internal OKR masters who moderate, support, and take long-term responsibility for the process.
2. Plan with enough time and allow employees to get used to the process. Particularly the definition of good Key Results needs practice. The dedicated time for planning will pay off multiple times during the following cycles.
3. Demand prioritization. A limit of 3–5 OKRs per organizational level and 2–4 Key Results per Objective is non-negotiable.
4. Objectives should give directions and be ambitious and time-bound. Pay special attention to the alignment between different Objectives.
5. Every Key Result needs to be clearly quantifiable, measurable and assigned to one or several people.
6. Key Results are neither tasks nor KPIs: they can target certain KPIs as a result but should not be considered a traditional performance indicator that only indicates success with a certain time lag and without being actionable. Tasks and initiatives have to be derived from Key Results. But your OKR system should not become a project management tool.
7. Key Results should correspond with the criteria of S.M.A.R.T. goals and be definite and meaningful.
8. OKRs should be an integral part of your weekly routine. You should ideally update progress on a weekly basis and OKRs should be part of the agenda in weekly meetings and one-on-one conversations.
9. The buy-in and the support of the executive team are indispensable for a successful introduction and implementation of goal management with OKRs. This also means that you should publicly promote communicating and working with OKRs.
10. On top of, refer your regular feedback for employees (ideally several times per month) to OKRs. Quarterly meetings for performance assessments and feedback are usually disentangled from the actual work of an employee, neglect goals, and prohibit a steady development of individuals.
11. OKRs should be transparent and tied to other goals, in particular on the team and organization levels. As it turned out, goals are more likely to be attained if there are responsibilities and links across team borders.
12. Keep the system flexible for changing contexts. Sometimes it can make sense to adapt or even drop a goal during a quarter.
13. Discuss and reflect OKRs retrospectively. Learn from your performance but do not make bonuses or other incentives directly dependent on the attainment of OKRs. A more detailed explanation will follow in the next paragraph.

OKRs in Europe — what are the differences?

The original OKR approach was clearly born in the context of Anglo-American management culture. Therefore, many European companies partially adapt OKRs to their cultural context and local data security or employee protection policies.

In order to enable self-organization and to identify synergies, enterprises should foster transparency about the goals and priorities everyone is working on. However, the current progress of an individual on their goals might not necessarily have to be publicly available for everyone. It is important (and possible) to find a working system of rules and guidelines that respects employee privacy and gets the approval of work counsels. Without weakening the impact of OKRs!

A further aspect many organizations adapt to their company culture is the use of stretch goals. Stretch goals are set so ambitious that it is almost impossible to achieve completion of more than 70%. Particularly in the German-speaking region, these kinds of goals can lead to insecurity and demotivation among employees. This is because the local mentality of coping with ambition and failure is usually very different from the USA and other countries. Hence, it might make sense to avoid stretch goals and aim for 100% completion, particularly when starting with OKRs.

Conclusion

In an increasingly complex and digitized economy, agile goal and performance management systems are indispensable. An ever-increasing pressure to innovate and more flexible working models require new standards that help enterprises organize work and foster focus, engagement, accountability, and alignment.

* As we independently provide OKRs consulting and coaching, and we are affiliated with any "tool" or "software" provides as they are many, this article is largely adopted from Workpath for the mere reason it's an easy way of presentation and being in the European context. We are not affiliated with workpath or any other software provider.