Making OKRs Useful

OKRs – the latest wave of enthusiasm within the Agile transformational world. This idea was born out of big tech companies and through some decent results and a wave of marketing, has now become the de-facto standard for defining an organisation’s direction with a view to getting people aligned in what they do.

The premise is simple, the concept laudable and the logic sound. However, the benefits are too often stymied when the implementation remains an academic exercise and underlying organisational patterns and behaviours do not change.

?Firstly, a super brief explanation of what OKRs are (and aren’t).?

?OKR stands for Objective and Key Results.

?The Objective is a goal, something meaningful and ambitious. Critically this is to be an OUTCOME, something that is the consequence of your actions – not the action itself. Pushing eight products to market isn’t an outcome. Having people say "yours is the best product", or your product being the market leader, or increasing customer conversion, are outcomes. Those are things you want to happen and can influence, but you can’t force to occur.

Then there are the Key results, these are like milestones on your journey there, things you think should be occurring to inform you that you are making headway into the objective.?If market leadership was the objective, then being accepted to speak at four conferences, hiring two hundred new staff and taking a key client from a competitor could be Key Results. OKRs last for months not years and you should have just a few.

?The organisation defines a handful of OKRs at the exec level to align purpose and hence priorities through the company with the intention of finishing more, starting less and generating maximum value for the available effort.

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OKRs are not KPIs. KPIs are the measures of things that are important, typically always important, whereas an OKR is transitory, it is what is most important right now. The KPIs usually measure output and day to day operations. Maintaining them forms part of the delivery culture, the Definition of Done and as such can be wrapped up inside performance management. They often will have an acceptable threshold, performance is at “X”, capacity is at “Y”, sales conversion is at “Z” etc. Now should one of those KPIs drop below the threshold, then it might be a future Objective to invest to address the issue.

?Once the Exec has their OKRs it is common to cascade these down through the organisation. Each team looks at the OKR from the level above and asks – “if that is what is desired, then given our capabilities and sphere of influence, what should we aim to achieve that would help that?” this should also be expressed as an OKR; again with outcomes rather than outputs.

?Now within the company we all have OKRs, we all know what needs to happen and everyone prioritises their deliverables accordingly and everything is awesome. Right? Well not always, and it comes down to two big issues.

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DATA

?We are now in the world of data with focused efforts on its exploitation, and for good reason. We have better capabilities now than ever before to hold, manipulate and intelligently process information for our gain. This is all super exciting and there is now a whole industry to support descriptive, predictive and prescriptive analytics that just wasn’t there ten years ago. However, there is one part of the data lifecycle that is often overlooked and underfunded – that is the capture of the right data in the first place. There is so much data available from our delivery management systems, our logistics systems and our sales systems that we often fail to ask, “Is this the right data?”

?What we measure matters, because all too often, we don't measure what matters.

Now we go back to the OKR, what truly is the measure of success of the outcome you are trying to achieve? Customer satisfaction? Employee Morale, Application Usability? These are common, typically hard to measure and consequently often not measured. Information comes at a cost; you have to invest to get it. The biggest failing I have seen of OKRs is that the information needed to judge success is not being monitored and as a result they are meaningless. Without measuring what actually matters, people fall back on what is measured, which as a consequence starts to matter. So what data do we have? What are we measuring? We are back to outputs.?Features delivered, tests run, system performance, generally planned activities done. We have slipped from measuring the problem to measuring the solutions – whilst remaining in the dark as to whether the solutions are the right ones.

OKRs should not be put in place without conscious efforts to capture the data required to measure success. This is often means setting up surveys, regular polling of a pool of known users and external market research.

INCENTIVES

The exec board are probably highly connected to their objectives, those should relate to company performance on which they are judged. The incentive issue arises in the cascading of the OKRs to levels below them who are less clearly tied to the top line objectives.

What often occurs is that each level of the organisation redefines purpose in their unscrutinised OKRs to be the things that they are already doing – and doing because that is how they are measured / gain their bonus. The result is a veneer. An academic exercise to create an impressive sounding soundbite that has no consequence and is soon forgotten. ?

The OKRs at one level should be approved of and monitored by the level above who meet regularly to assess the outcome metrics of the teams beneath them. This will ensure that systemic focus remains supportive of the top line objective. If it is possible for a team to just adopt the higher level OKR as it stands, then they should do so, this will result in the strongest alignment between team delivery and organisational purpose.?When a Key result is achieved then there needs to be significant celebration of success – in a manner that puts the delivery of the output that achieved it in the shade. Celebrate what you achieve over what you do.

If you want OKRs to actually change the way your business works then creating them at the top line is not sufficient, the following additional steps will need to take place, and these require effort.

?1.?????Measure the problem not the solution. Ensure that you have active meaningful metrics on the outcomes you are trying to achieve – often these will not be able to be extracted from SAP or Jira and you'll have to invest in some customer surveying.

2.?????Ensure that the cascading OKRs are agreed down the company and regularly assessed to ensure that progress is being made against purpose.

3.?????Celebrate outcome achievement more than output delivery?