How to Use the OKR Framework to Align Company and Team Goals

Editor's Note: Take a look at our featured best practice, OGSM (Objectives, Goals, Strategies, and Measures) (33-slide PowerPoint presentation). Organizations often face significant challenges in aligning their day-to-day operations with their long-term strategic goals. This issue of strategic misalignment is particularly detrimental to sectors like manufacturing, healthcare, and technology, where rapid decision-making and agility are [read more]

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There are a number of popular goal setting frameworks used by companies. Popular ones include Balanced Scorecard and SMART. One that is new for many but has actually been around for a long time and evolved from the MBO framework is Objectives and Key results or OKR.

The Basics of OKRs

OKRs have two elements to worry about as part of their format. An Objective and a group of Key Results that are designed to quantify the goal and measure its achievement. Here is an example of an OKR.

Growth driven through amazing CX

CSAT score increases from 72% to 80%

Retention increases from 83% to 90%

Achieve Sales Growth of 150%

With a unifying top-level OKR this team can propose aligned or cascading OKRs that would support its achievement during the upcoming quarter in same format

Common Challenges and Issues for New OKR Users

Although in principle OKRs are simple, they are designed to be both transparent and inclusive. This means that teams are perhaps not used to setting goals and even considering which measurements matter most will be asked to learn new skills.

Common OKR challenges include:

• Activities not Outcomes – OKRs are trying to describe a desirable and measurable outcome by the end of a future planning period, which for most is a quarter. It is common for teams to default to describing what they are doing instead with verbs like ‘launch’, ‘release’ and ‘create’.

• Set and Forget – Agile teams are used to discussing goals and plans at an agreed regular cadence. This for many is new and takes some getting used to. OKRs are design to be part of regular meeting agendas.

• Command and Control – OKRs are there to describe the most important goals in an organization. The goals that will create a step-change in performance. For some leadership they want to see everything that is happening in an organisation all rolled-up in toa high level percentage. This approach stops a company obtaining a laser focus on what really matters and allowing teams to work autonomously. It also does not encourage teams to be ambitious. More on ambition next.

• Ambition and Safety – Something magical happens when teams feel that it is safe to create stretch goals. Innovation, collaboration and learning all increase. OKRs through a process of grading are meant to be hard to achieve and sometimes really hard. How you treat both target setting and the final outcome achieved needs to evolve beyond the idea that 100% is the only definition of success to use OKRs really well.

Agile Frameworks and OKRs

If OKRs are an efficient way to describe a goal in a numerical way. How you approach and manage the day-to-day workload to achieve these goals also needs optimization and agile working practices like Scrum and Kanban are good ways to align your work.

Having and managing a visible backlog and deciding on what units of work should be prioritized and progress as a means of doing what matters without overloading the system is at the core of agile working.

Combine these two frameworks and you’ve got a recipe for performance improvement. With both Agile and OKRs having regular and effective conversations as a requirement, they also complement each other in how teams approach managing work.

Typical planning cadences for OKRs are annual and Quarterly, with Agile Cadences using a variety of more frequent cadences that range from the use of daily stand-ups to fortnightly Epics.

Unlock OKR Superpowers

OKRs are often described as having superpowers. Of course in reality they don’t. What they do is provide a framework for discussing the biggest challenges and opportunities companies and teams have and then getting support for the resources needed to achieve them. So if there are superpowers at work they are very basic and unique to human-kind –  the ability to talk and debate, then imagine and describe a desirable future state we can aspire to achieve. Give them a go.

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Performance Management (also known as Strategic Performance Management, Performance Measurement, Business Performance Management, Enterprise Performance Management, or Corporate Performance Management) is a strategic management approach for monitoring how a business is performing. It describes the methodologies, metrics, processes, systems, and software that are used for monitoring and managing the business performance of an organization.

As Peter Drucker famously said, "If you can't measure it, you can't improve it."

Having a structured and robust Strategic Performance Management system (e.g. the Balanced Scorecard) is critical to the sustainable success of any organization; and affects all areas of our organization.

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