OKRs: Top 10 Questions by OKR Practitioners & Industry Stalwarts
How do you differentiate the new age goal setting, communicating and tracking methodology: “OKRs” from balance scorecard approach and what are the benefits/advantages of OKRs?
by Nigah Aksan – Principal Strategy Leader at Mercer, Turkey
Nikhil Maini: I have had this question come to me several times in various forums and by clients. Firstly, let’s be clear – It was never a question about The Balanced Scorecard (BSC) or OKRs? . The better question to ask is ‘How can we combine The Balanced Scorecard (BSC) with OKRs?
The Balanced Scorecard (BSC) is a strategic planning and performance management system for an organisation. Organizations use BSCs to Communicate what they are trying to accomplish. The name “balanced scorecard” comes from the idea of looking at strategic measures in addition to traditional financial measures to get a more “balanced” view of performance. A key benefit of using a disciplined framework is that it gives organizations a way to “connect the dots” between the measurements being used to track success (KPIs), the strategic objectives the organization is trying to accomplish, and the mission, vision, and strategy of the organization.
So, what’s common between the both of them?
• Both OKRs and BSC are driven by the organisations appetite and capacity to bring growth and change by using them.
• Both require a high degree of buy-in from its leadership sponsors and people using it.
• Both require and reinforce a culture of measurement and accountability.
• OKRs are similar to the BSC in that they define top strategic priorities as the starting point.
Ergo, how can they be used together, to render solid impact?
OKRs and BSC can most definitely work together; in fact they could enable each other. Each framework has its advantages and when properly integrated, they can give phenomenal results to teams and organisations. Combining a Strategy Map (a key part of the Balanced Scorecard system) with OKRs can help organizations achieve focus and agility in the shorter term quarter cycles as the Strategy of the BSC provides the longer-term roadmap.
OKRs can take from the BSC, elements of visualizing strategy which allows organisational OKRs to be linked and rooted with its overall strategy, vision, mission and purpose. This could lend clarity to OKRs. Likewise, the BSC could adopt the OKR methodology to keep agile and review progress more frequently (every quarter) in light of the changing dynamics of the marketplace. This keeps the strategy relevant and prevent organisations from a slower response to internal and external changes.
OKRs are not a replacement for strategy – they are, in fact, a conduit to achieving your strategic intent. The BSC helps focus on creating a holistic approach to strategy, OKRs ensure those strategies don’t become too macro, have more prioritized goals measured frequently, and encourage value generation by focusing on outcomes/results and not just outputs.
Many companies strive to implement Continuous Performance Management Systems. How does a company know whether OKRs are the right framework for driving transformation and success?
by Sabrina Winter – Sr. Director Regional Sales, Lufthansa Group, Singapore
Kenneth Lewis: Continuous performance management systems or any other performance management systems are used to evaluate individual performance against a set of expectations. These expectations (also called as Key Result Areas) cover everything an employee is hired to do. Regular monitoring, reviewing and feedback help these employees excel in delivering those expectations. Employees will usually set goals that are relatively comfortable to achieve.
On the other hand, OKRs are used to propel an organization’s growth while focusing on the critical few priorities. They are used as a medium to communicate what’s wildly important. Employees have a clear line of sight between their work and the organization’s success. They are more involved in the decision making of their goals, thus increasing ownership towards achieving them. You know are doing OKRs well, when you find teams being ok to fail-fast, when they start setting moon-shot goals, when they bring innovative ways to achieve these lofty goals and more importantly collaborate effectively with others in a transparent and agile manner to help achieve the organization’s goals.
How to position OKR adoption in a mid-sized Co. which is ambitious to grow, but has a very top-down mission oriented leadership led culture?
by Vivek Sharma – Head Learning & Development at Aavas Financiers, India
Nikhil Maini: There’s been a lot of iterations on what it takes to make OKRs work. One of the often-cited factors is organisational culture. So, what is it about organisational culture that makes it an OKR catalyst?
To understand this, let’s be clear about what OKRs are meant to do, in the first place.
I like to define Objectives & Key Results (OKRs) as a goal management and execution system with no more than one to five objectives and no more than one to five key results per objective. For every key result, there are initiatives drawn that are meant to be programs, projects, tasks or activities that help achieve these key results. These initiatives are almost like hypotheses or bets that you start with, believing that they will help in moving the needle of your key result. And when they don’t make a dent in your Key Result, you start looking at recalibrating your initiatives.
In the world of OKRs, initiatives are most changeable within the quarter and rightly so. They are what gives OKRs its agility. This is where true collaboration and interdependencies come alive. It’s in the discussion of these initiatives every week or fortnight that you find opportunities to be agile. All this happens in a transparent and cyclical manner, every quarter, in most cases. Every time a team meets to review how they are doing, the discussion is less about numbers and more about celebrating, learning, sharing and supporting.
With OKRs, you also have the opportunity to leverage one of the other super-powers and that is – multi-directional alignment. While members get to see the strategic direction the organisation is taking, they also have the opportunity to contribute what they believe they can – this is the bottom-up alignment that goes through its checks and balances. It brings in discretionary effort from teams when its time to execute. You also get the cross alignment between teams which gives you the much-needed collaboration during execution of goals.
In summary, OKRs are meant to…
Be transparent, so it creates trust
Convert goals into actionable priorities, so it creates focus on what matters most
Be experimentative, so it brings agility and innovation
Create outcome-focus, so it drives value creation
Provide autonomy, so it drives ownership and engagement
Now, clearly this means the teams with its members and so-called leaders must clearly find a way to leverage these super-powers. The framework does nothing by itself. Over the last 18 years, I have worked with hundreds on organisations on culture transformation in big ways and small. Here are 5 cultural norms that I strongly believe, when practiced well by leaders, will give your OKRs the much needed boost.
5 Cultural Norms That Catalyse OKRs
1. A culture of achievement orientation: this cultural norm characterizes organizations that do things well and value members who set and accomplish their own goals. Members of these organizations establish challenging and aspirational goals, develop plans to reach these goals, and pursue them with enthusiasm.
The Antithesis: The opposite of this norm is when teams and employees avoid taking initiative and going the extra mile. Discretionary effort is missing.
How to build achievement orientation?
By encouraging your teams to do the following:
· Building a level of challenge when they set goals – the goal decides the plan, not the other way round. Pursue a standard of excellence. Be a pioneer in whatever you do.
· Know your business, your products, your competitors, and your marketplace – know what’s going on around the world. Some companies are known to encourage people to run a regular PESTLE analysis as a good way to consolidate external changes.
· Break down larger goals into smaller ones and make plans to achieve them. explore alternatives, and experiment without fear.
· Celebrate often, the wins of teams and reward sharing loses openly. Teach members to focus on learning from their failures rather than pointing fingers at each other.
2. A culture of encouragement: this cultural norm characterizes organizations that are managed in a participative and people-centred way. Members are expected to be supportive, constructive, and open to influence in their dealings with one another. An Encouraging culture leads to effective organizational performance by providing for the growth and active involvement of members who, in turn, report high satisfaction with and commitment to the organization.
The Antithesis: The opposite of this cultural norm is when the organisation encourages oppositional and power-centric behaviors. Managers are supposed to know all answers and take all calls, with little delegation or empowerment for their people.
How to build a culture of encouragement?
By encouraging your teams to do the following:
· Make coaching a way of life. Coaching is a skill that does not need subject matter expertise. Managers can coach their team mates just as well as their peers. I have seen many companies where team members coach their managers as well. it works! Its powerful! It enables!
· Teach people to truly listen to each other. Listen to understand – not to respond. This is a learned skill and needs self-mastery. Organisations where leaders are truly good listeners have been known to create magic for their customers and employees alike.
· Resolve conflicts constructively and involve others in decisions that affect them.
· Show concern for the needs of others, check-in with your people on a regular basis.
· Focus on development of people within your teams. This can be done through a myriad learning experiences like mentoring, coaching, training, etc.
3. A culture of cooperation: this culture characterizes organizations that place a high priority on constructive interpersonal relationships. Members are expected to be friendly, open, and sensitive to the satisfaction of their work group. This culture can enhance organizational performance by promoting open communication, cooperation, and the effective coordination of activities. This cultural works on the premise that for the system to work optimally, the sub-systems must work sub-optimally (systemic approach).
The Antithesis: The opposite of this cultural norm is when internal competition is valued, and members are rewarded for outperforming each other with a win-lose framework. Such organisations are characterised by individual rewards rather than team rewards.
How to build a culture of co-operation?
By encouraging your teams to do the following:
· See how they contribute to the larger top-line or bottom-line of the organisation. Bring clarity to their contributions and show them the significance of what they do.
· Teach them the power of synergy. It helps in visualising how the sum of parts can be greater than the whole. It’s the very concept of MECE (mutually exclusive, collectively exhaustive) in OKRs.
· Learn how to communicate openly and honestly with each other. Authentic communication is the cornerstone skill that helps build a culture of co-operation.
· Encourage members to make decisions that are good for the team, not the individual within it.
· Encourage members to look for goals that are collective.
4. A culture of psychological safety: a culture where people do not experience interpersonal fear. This culture is characterised by lack of fear of speaking up, especially within hierarchies and a lack for fear of failure. A psychologically safe culture allows for rapid experimentation, fail-fast mindsets, and openness to experiment. Cultures that experience psychological safety are adept at aspiring for moon-shot goals and constantly challenge status quo.
The Antithesis: The opposite of this cultural norm is when there is severe micro-management as decisions are hierarchically driven rather that based on the merit of ideas. Fear of the stick compels members to avoid all mistakes, and in doing so, take a beating on innovation.
How to build a culture of psychological safety?
By encouraging your teams to do the following:
· Encouraging a mindset of being passionate about the goals and dispassionate about the initiatives. Create a learning organisation – share openly what’s not working.
· Helping people focus on true-stretch. Avoiding sandbagging wherever possible and not being afraid to dream big. Coaching comes in handy again.
· Debate the point, not the person. Helping people understand that when goals are not achieved, they are not the problem, they have a problem.
· Encourage experimentation & fail-fast modes by empowering and aligning people to the goals.
· Use regular feedforward conversations to keep the teams proactive in their experiments.
5. A culture of curiosity & creativity: this culture is characterized by organizations that value creativity, quality over quantity, and both task accomplishment and individual growth. Members of these organizations are encouraged to be scientists, not judges. Genuine curiosity in what’s happening inside and outside the organisation keeps teams relevant. Creative ideas emerge that help in experimentation and ultimately, innovation.
The Antithesis: The opposite of this cultural norm is when the culture is descriptive of organizations that are conservative, traditional, and bureaucratically controlled. Members are expected to conform, follow the rules, and make a good impression. This culture is hierarchically controlled and nonparticipative. Centralized decision making in such organizations leads members to do only what they’re told but also clear all decisions with superiors.
How to build a culture of curiosity & creativity?
By encouraging your teams to do the following:
· Teach people how to be creative in their thinking and resist conformity. It’s a learned skill.
· Emphasise quality as much as speed or quantity.
· Encourage members to treat ideas as more important than rules. Encourage people to constantly challenge status quo.
· Discourage your people from critiquing wild ideas or casting them aside, simply because they are different.
· Play the “What if” game.
The culture of any organisation is the culmination of time and practices (conscious & unconscious). Culture is everyone’s prerogative within an organisation. Each member contributes to the overall culture in one way or the other. What makes it interesting is that the very definition of constructive cultures, no matter where you go, extrapolates quite well when juxtaposed with OKRs. They feed into each other – they enable each other. Its almost like a virtuous cycle – the better your culture, the better your OKRs and the better your OKRs, the better your culture.
What is the best practice for crafting measurable, long-term (i.e. multi quarter) leading KRs whose true impact may only be felt after 3 or 4 quarters?
by Edna Ambundo, Director R&D at Colgate-Palmolive India
Kenneth Lewis: Here’s an answer to this question through some examples:
You have set upon yourself to launch an application that you expect will be a killer application. You are only at the design stage now and have decided to use a design thinking approach to reach an MVP. Thereafter you plan to have multiple soft launches till you land the killer application.
In this case, the first thing, we will do is add this KR to a long term (usually annual) OKR.
Annual O: To successfully launch killer application X
KR 1: To get 100000 active users in 90 days of launch
KR 2: To achieve a 4.5 app store rating
KR 3: To be in the top 10 in IOS and Appstore
KR 4: To get 20% upgraded to Pro version
KR 5: To have a less than 0.001% error rate.
Now we know that this application will not be ready within a quarter, or maybe even two. This is where every contributing team starts writing their OKRs for the quarter.
Product Team OKR for the 1st quarter (and progressive KRs over the following quarters)
Quarter O: To have a beta version quickly with maximum learnings (and 3 beta versions in the following quarters)
KR: First MVP to get 1000 friendly users (progresses next quarter to Appstore- invite only users)
KR: To realise 10 major changes through first version
KR: To have beta rating at 3.5 (progress to app store rating in following quarters)
Similarly, the other teams that is the Sales, Customer, Engineering, Design and other teams will have OKRs that reflect the ambition of the quarter to achieve the longer-term objective to launch the killer app. This quarter-by-quarter approach of having lead metrics allows you to then innovate and be agile enough to change direction to help meet the longer term OKR. Its critical to keep all the stakeholders involved and call out challenges as quickly as possible. You may decide to change the KR targets for the long-term OKRs since you may have found something to increase the ambition through this iterative approach.
Another example is where instead of writing new OKRs quarter over quarter you have only one OKR that you update progress quarter after quarter.
Example: You have set your sights on improving your organization’s culture. You believe that this is going to be long drawn effort, where there is no absolute finish… Culture will always be something to build!
Quarter: O: To make our organization’s culture, the most constructive one yet
KR 1: To increase the employee satisfaction from 65 to 80 (the target changes quarter after quarter)
KR 2: To be ranked in the Top 10 of Great places to work (the quarter initiative is to submit the application)
KR 4: To increase innovation index by a factor of 10 (the target changes quarter after quarter till it can be replaced by some other important metric)
In this case, some of the OKRs will roll over quarter after quarter till they cease to be a top organizational priority. Some KRs may change over these quarters and new KRs can be introduced as well. Say for example, you find out that employee’s wellbeing is taking a beating which is negatively impacting work culture. You may hence have a new KR to measure wellbeing. If you cannot measure it right away, its ok to start with an output measure or a milestone measure. e.g. Run a dipstick to understand Wellbeing of Employees. And once you have done that to replace that to a progressive measurable KR, e.g. To increase pulse wellbeing scores for 2.2 to 4.2
Hence to Edna’s question, the best practice for long-term OKR is depending on the stage of the OKR’s initiatives, the measurability of outcomes and the time taken to see impact.
What are 2 or 3 best practices to align leadership on kick starting the OKR journey & modifying their current practices of managing performance & critical organisational objectives?
by Sreedevi Shirali, Group CHRO at VKL Seasoning, India
Nikhil Maini: Traditionally, I have found leaders to struggle with execution. Creating elaborate strategies can be relatively easier (in many cases also outsourced to consulting companies). The real challenge lies in mobilizing resources (people, machinery, material, money & time) on the right bets and aligning people and inspiring them to achieve those bets or goals. Helping leaders understand how they can conquer this problem using OKRs, helps in getting instant buy-in, I reckon.
One of the practices that I have seen work is to ‘Nudge’ your way through change. OKRs is a change program and must be dealt with accordingly. It’s not a plug-n-play system that works itself into an organisation. Therefore, a great practice is to start small, get early wins and create use cases that can be replicated easily whilst scaling OKRs within your organisation.
Bring the leadership in on using OKRs and ensure buy-in of the top leadership first. Without this, there is no moving forward. Showing how the OKRs can help the business grow and therefore, how people can grow as well is a great way to start.
What I would also recommend is to not do away with your existing performance management systems. OKRs are simply meant to focus on priorities. They are not a replacement to existing performance management systems. Positioning OKRs as such would create better alignment from leaders.
Lastly, OKRs is a business exercise and must not be handed over to Human Resources to run. This not only confuses employees about the intent of the program, but also absolves key leaders from taking the onus to run and role model OKRs within their teams.
Startups are unique because they are scaling systems, rippling both inward and outward as they grow. And that means their OKR work requires not only a systems thinking lens, but an agile and spry one at that! How can OKR coaches create an effective, scalable, repeatable framework that supports high-growth startups with OKRs?
by Jackie Kerzner, Organisational Performance Strategist & Consultant, USA
Kenneth Lewis: The best way for OKR coaches to help set up a repeatable and agile framework is to understand that for fast growing companies, no plug and play model can ever work. Setting up OKRs is akin to fixing the engine of a moving car. You got to keep getting it right, without ever having to decrease the momentum. At best OKRs are an accelerant to the business. And the best way to do this, is to have a learner’s mindset while implementing it as a change management project. This means the following:
There are no rules about OKRs – being dogmatic will only get you to a point of no-return. Allow flexibility on things like how OKRs are written, how often the meetings are met, how meetings are conducted, how they are linked to performance management or not, where they are applied etc. Don’t promise only a working plan A. Tell them there is Plan B and C waiting to kick in soon.
Do not compromise on the superpowers of Focus, Transparency, Alignment, Coaching/Feedback/Acknowledgement, Collaboration and most importantly the cadence discipline.
Be Coach Like – Ask challenging questions. One way I like to prime the leaders of any organization, is “How much are you willing to fail with the OKR PROCESS to succeed with OKR GOALS?”.
Look for Champions (especially the ones that are spry and respected). Create an OKR office that helps in the strategic communication, ritual management, software discipline, scheduling, and guidance around the OKR goals.
Have a process review once a quarter: Get people to comment on the OKR process such as how goals are set, how they cascade or align, the enthusiasm, the collaboration, and the discipline. Be ready for people to complain saying that they are taking more time planning rather than executing. This is but normal for teams that don’t plan!
Enlist leadership. One of my best experiences with a CEO, is where he told everyone, “We are experimenting with OKRs and will continue to experiment. If the process doesn’t work, we will make it work! But we will never settle into a process just because it’s comfortable for us! We will create an OKR process that keeps challenging not only our goals, but the way we set and achieve them.”
What are the challenges that an organization may encounter when moving from a traditional Performance Management Practices to OKRs and how to overcome them?
by Bhaskar Bhattacharya, Talent Development Specialist at Aspiro Global, India
Nikhil Maini: My first response is that the two cannot be compared. OKRs is not a replacement of your performance management system; and; as such must not be treated as an ‘either/or’ thingy.
A typical performance management system has 4 critical phases viz. Goal Setting, Ongoing Development, Performance Review and finally Rewards (Increments, Bonuses, Promotions, Incentives, etc.). It applies to every individual within the organisation and is focused on the work an employee does through out a performance cycle (usually a annual affair).
OKRs on the other hand is a goal setting and execution framework that focuses on priorities only. It is mean to be used as a collective at organisational level, unit or team levels and/or for project teams or agile teams. The idea is to help teams focus on what matters most and put their efforts in achieve defined outcomes and results for a quarter cycle.
And that’s where the challenge lies as more and more companies are realizing that their performance management system does not work, they are looking at OKRs to solve this problem. The idea is not to replace apples with oranges. We at OKR International have implemented OKRs in a traditional organisation that’s been around for nearly 150 years with a well established performance management system. They have managed to keep them both separate and they are seeing brilliant growth due to OKRs.
What advice would you give to an organization that is attempting to reimplement OKRs after a previously failed attempt? Based on some of the most common reasons OKRs fail, what are some key points a leadership team can use to overcome objections and advocate for why reimplementing OKRs this time around, will be different and more successful than the previous implementation attempt?
by Jim Apodaca, Apodaca Consulting, USA
Kenneth Lewis: This is where I can draw a lovely table for you Jim!
When OKRs are defined and their number reduced to a reasonable level, some people feel that they “lost” and that their areas of responsibility are not important. That leads to either adding more OKRs or to disengagement of the colleagues. How to overcome this?
by Isidora Usendic Stosic, Head of Services at Zühlke Group, Serbia
Nikhil Maini: This is a great question Isidora. And we have seen instances of clients come to us asking for help here. One thing to remind people of, is that OKRs are not supposed to be all that they work on. OKRs are those 20% goals that you believe will give you 80% impact (your classic Pareto Principle) – that’s called Prioritisation. Most teams and individuals also work on Business as Usual (BAU) work that are essentially health metrics – they are hygiene factors that help maintain the engine of the business running and they must not stop.
Another associated problem is not realizing that OKRs are best served as a ‘common‘ set of goals for a ‘collective‘ set of people (either a team or a function or even the organisation). Which is why we don’t like to confuse them with performance management systems. When OKRs are set, individuals will end up working on various initiatives (tasks, activities or projects) necessary to see the needle move on the KRs, which in turn help achieve an objective.
Learning how to set powerful OKRs at the organisational level that is broad and large enough for others to contribute towards, is another factor to be considered here.
Vanity OKRs (for optics sake) may not only mislead you from the very purpose of OKRs, but also get you away from your aspirations; as teams will start spending time and resources towards ‘pseudo priorities’.
How goal setting can help someone overcome the fear of starting up a business?
by Dana Elena Musoiu, Start-up Coach at Dana Elena M, UAE
Kenneth Lewis: Goal setting helps develop certainty and conviction in a person’s mind. Which eventually becomes a self-fulfilling prophecy. People have a lot of ideas, but if you leave these ideas without a framework to articulate it then they remain as pipe dreams. I’ve met many people who regretfully tell me that they too had ideas that could help build the next Apple, Facebook or Tesla. But they didn’t get down to working with It. And the first step to move from dreams to action, is the act of writing your goals. The OKR framework encourages budding entrepreneurs to not only write goals about their next business idea, but goals about what they need to achieve it. For example, here’s an OKR set from an entrepreneur-in-the-making.
|O 1: Launch my bootstrapped online business by July
KR: Self fund my business – $100000
KR: To get an experienced co-founder with 30% equity funding
KR: To get 80 partners signed up
KR: Soft launch in March results in 500 sales
KR: To maintain a burn rate for 12 months
|O 2: Have enough to sustain me.
KR: Have $50000 as rainy-day fund
KR: To reduce personal expenses by 50%
KR: Be ready to quit my day job by September
|O 3: To be a scalable-profitable business in 1 year
KR: To achieve a 50% margin
KR: To achieve 50000 fulfilled orders
KR: To be 100% compliant business
KR: To decrease returns to less than 0.5%
KR: To grow to a team of 30
Notice that the 2nd objective is not so much about the business as much as its about creating guardrails for success.