Strategy knowledge with Christian Underwood
Objectives & Key Results help bridge the gap from strategy development, to implementation, to goal achievement. Read now!
In the new "Hope is not a Strategy" episode, Christian Underwood explains how to use OKRs (Objectives & Key Results) in the strategy process to bridge the gap from strategy development to implementation, thereby achieving set goals in no time.
OKRs are not a new concept. Nevertheless, many people do not understand what exactly is meant by the management tool of the three magic letters and what power Objectives & Key Results can also unleash in their own company: Employees understand how their daily work contributes to the company's goals and what value they personally bring to the table. Transparency in implementation, the right meeting routine, consistent progress tracking and regular review of OKRs are real success drivers and promote self-determined work.
Find out exactly what the magic of the OKR methodology is, how best to incorporate OKRs into management and the strategy process, and why strategy combined with OKRs are the "perfect match" in episode #16 "OKRs Put Strategy-PS on the Implementation Road."
Detailed episode description:
OKR is not a new concept. Many have heard about it, but cannot imagine anything concrete about it or do not know what goals can be achieved thanks to OKRs.
OKR means Objectives and Key Results - so it's about goals and key results to achieve those goals. John Doerr took OKRs from IBM and introduced it there with the founders of Google. Here, the system was established and then taken into the wider world as a vision. The concept is not only suitable for start-ups, but also for large, complex organizations, as it promotes transparency and thus supports teams and employees in achieving their goals. It is important to look at how OKRs can add absolute value to the business.
Focus: How to use OKRs in the strategy process
OKRs are a strategic management tool that can be used to manage a company, teams or oneself in a better and more goal-oriented way.
O stands for Objectives, i.e. qualitative goals, and KR for Key Results, i.e. quantifiable, measurable key results. This definition does not sound revolutionary at first. The magic comes in the consistent implementation in three-month cycles of the OKR sets, as well as a meeting routine adapted to the goal setting and goal tracking, which is then accompanied by weekly tracking of progress. Tracking is often done in Excel or in appropriate digital tools, as this is a simple way to check the results of the work. There is a wide range of tools available, which Christian has packed into the show notes for you to read.
Proper tracking is incredibly important so that there is transparency within the team about where each goal stands, what everyone's goals are, as well as the company's goals, and what everyone wants to work together to achieve.
What benefit OKRs bring
It is nice when each individual sees how they can make a very concrete contribution to a common, larger goal in the company. On the one hand, this helps to create a sense of purpose (e.g., among the managers, teams or employees involved), and on the other hand, it also makes for a very consistent pursuit of goals. In reality, this is harder than it sounds. You can define the most beautiful strategies, what you don't want to do in the future, but when it comes to sticking to it in the end and following up on it consistently, that's when the high art begins. So the introduction of the vision is the easy part, but in the implementation of this strategy lies, as always, the difficulty.
OKRs in the strategy process
Christian already uses the OKRs in the development of the strategy. These are already anchored as fixed objectives in the first strategy workshop, in the target image of the StrategyFrames.
Of course, you don't start the process directly with OKRs. First, you look at the situation analysis and then formulate an impact and value proposition (sustainable value proposition and the customer value proposition). These are two very essential elements of the strategy that define the framework. Once a clear competitive focus - i.e. market, customer segment and portfolio - has been defined, the next step is concrete implementation. This means which defined goals one wants to achieve and which goals should be pursued in order to turn the value and impact proposition and also the competitive focus into reality. And this is where OKRs come into play. They can be understood as the priorities that really make a decisive difference for the company in achieving the new strategy, or implementing it. In doing so, one should never lose sight of the company's own vision.
Implementation of the strategy: How to proceed concretely
Integrated into the first major strategy workshop, the first OKR sets are developed for the company or for the scope that the strategy should have. This could be a country, a region or a business unit, for example. It is important to communicate the methodology and the basic system behind OKR to everyone. So far, so good. However, experience has shown that when these three letters appear, they tend to create confusion at first. Christian therefore recommends not to do a two-day OKR seminar in the strategy process, as this does not really lead to a better formulation of OKR sets. People are fundamentally designed to set goals and to want to achieve them. In the corporate as well as in the private environment, we have merely often unlearned it.
There is so much that is always done anyway and this is usually not questioned very much. OKRs are a very good way to leave out unimportant things in the future and to see where one can use one's own resources for the most important objectives in order to transform the vision into clear results.
Validity of OKRs in the strategy process
In the strategy context, the OKRs set should not be purely three-month OKRs, as is the case by definition in the normal OKR cycle. This is because the objectives and key results are looked at again and again and questions are asked about how far the objectives have been achieved. It can make sense for the strategy process to select a larger range. These are called Stretch Goals, which can be implemented over 2-3 years (like the validity of the strategy). In addition, there are so-called Moals (Mid-term-goals), which then run with a validity of one year. If only 3-month goals are anchored in the main strategy of the company, then it can become relatively difficult to achieve set goals. It would then be more decisive to translate the Moals or Stretch Goals into ambitious 3-month OKR sets in the next step. These can then be helpful in sorting the measures to be developed into the fields of action and placing them on a 3-month track. Such an implementation usually turns out to be more profitable. If all this is taken into account, the OKRs can be used to build a bridge that leads from the target picture to the fields of action. This results in concrete and targeted measures that can be planned with adequate resources.
Cascading of the OKRs
The success of the strategy is often buried where it is a question of introducing cascading from the corporate level to business areas. Depending on the size and complexity of a company, this is a very difficult undertaking, which today can often only be implemented with software support. In terms of content management, however, it can work via OKRs. Particular attention is paid here to transparency: not only do you look at which measures are implemented in which time horizon, but also what contribution you want to make, what effect is to be generated, and what goals are being pursued.
Agile strategy process through OKRs
It is often described that more agility is needed in the strategy process. This is where the greatest benefit of the OKRs lies, in addition to the sense-making and consistent follow-up. On the one hand, they create transparency and commitment; on the other hand, it is an advantage to have a certain flexibility. You have another steering authority here and the possibility to adjust and change things without having to change the whole strategy. It's important to review the strategy every three months and see: How far have we come in achieving our goals? Are the goals still the right ones or do they need to be adjusted? This consistent, institutionalized adjustment and review of the OKRs through the meeting routines creates a nice strength in the goal tracking and the implementation of the strategy. This is how you get the strategy horsepower on the implementation road.
OKRs also give space to the stakeholders. In the target spaces, which are developed top-down 60% and 40% buttom-up and agreed jointly in the team and at individual level, you create a very binding common system. It is therefore important that this target system also creates transparency for everyone. That means: You know the goals of your colleagues, which at the same time contribute to the achievement of a common team goal. If everyone only pursues individual goals that are not related to each other, then you have to ask yourself whether this is the right implementation and can bring the company forward. Strength lies in the team. For example, you need resources from the IT team to drive digitization forward. You can do as much as you want in your own department if the objectives do not include support for one business area. Problems then arise in the allocation of resources. OKRs also help with the use of resources, because you no longer get lost in the "nitty-gritty" of the measures, but instead record the value contribution of the individual measures and check whether they make sense and contribute to the strategy.
Feel free to send us your specific questions about OKRs
It is not necessary to have a strategy process in order to lead in a goal-oriented manner and to work together on OKRs. Of course, you can also establish OKRs separately from the strategy process. It is only important that a mission statement, vision or strategy is still there so that your team can better implement the follow-up of this given objective or expectation from your higher management authority.
We are happy to support you and help in the OKR language jungle to adapt the concept for you in a way that you can best create with your team with a vision for concrete goal implementation.
Contact:
Christian Underwood
Managing Partner
Email: christian@strategy-frame.com