Numerous impactful tech companies' success leans heavily on a concept almost half a century old. OKRs – objectives and key results – have enabled large organizations to focus their teams and stay ahead of competition and expectations.
OKRs are still a bit under the radar – a survey of 1,500 Americans found that only 29 percent of adults in the workforce were familiar with OKRs – but for those using them, they’ve been transformative. The real magic of OKRs is how they help improve efficiencies and awareness by creating a playbook for achieving primary company goals.
But OKRs are a major driver of growth only when they’re properly attuned to your priorities. A playbook is no good if it’s unclear or sets everyone running in the wrong direction. Several common OKR pitfalls are easy to avoid with the right planning.
How OKRs can go wrong
OKRs are more aggressive and ambitious than their more famous cousin metric, KPIs, which explains why they’re less popular. Unlike KPIs, the goal for OKRs is not 100 percent achievement – a high success rate would indicate the OKRs are not ambitious enough.
[ Also read Digital transformation: 8 guiding principles. ]
Instead, they set a lofty goal and define the milestones of success. They ensure each individual is contributing to company-wide progress, which makes OKRs a crucial piece of the SAFe Agile framework and helps inform and ground a good portion of KPIs in reality.
According to that same survey of 1,500 American adults, 95 percent of those familiar with OKRs believe they understand how their work relates to overall business goals. This statistic demonstrates the true power of the OKR framework when properly constructed.
However, OKR development is involved and requires discipline to maintain proper attention to detail over the entire course of the process; otherwise, organizations run the risk of:
- Too many OKRs without prioritization
- OKRs created in silos by management without the involvement of the relevant team
- Misalignment with the organization or unit OKRs
- Hollow vanity metrics
- Not focusing on customers
- Stale OKRs that need updating
3 strategies for successful OKR planning
Organizations can dodge these pitfalls by focusing on properly defining OKRs, aligning them with execution, and making them visible for all.
1. Understand and define
OKRs should give clear directions, which means they should be solution-agnostic and easily understood by all stakeholders. Teams should then decide on their own how to achieve objectives.
The next step is to explore options and create a plan of action to address the key factors that could impact each OKR. These factors include risks, assumptions, issues, and dependencies, or RAID, which are an integral part of achieving OKRs.
2. Align strategy to execution
Keeping OKRs organized at each level of the organization is critical for staying on track. OKRs must be aligned with long-term vision and strategy at the highest level. Below vision and strategy are the portfolio, program, and team levels.
Guidance for OKRs at each level should be taken from the level above to ensure goal-setting is rooted in the overall strategy. Key results should then be measured, and learnings are then fed back to the level above. In most cases, a formal quarterly review and feedback are appropriate.
3. Build effective visibility
Transparency helps create ownership, which is why it is important to make OKRs visible to stakeholders at all levels.
OKRs can be easily represented and tracked in roadmap format. Sometimes organizations create roadmaps with too many details that are difficult to decipher and track. The key is to keep the OKR roadmap simple by depicting key milestones along with OKR timelines. Quarterly review and update of the OKRs roadmap are necessary to ensure that all stakeholders are aligned, and the roadmap stays true to the emerging realities.
You’ll know you’re avoiding pitfalls if you hit 60-70 percent of your OKRs. But if you’re hitting or missing most of them, that’s a sign that your OKRs need to be adjusted. Doing this sooner rather than later can ensure customers don’t leave for a better solution, organizational progress is maintained, and a cycle of innovation is established.
[ Learn how CIOs are speeding toward goals while preventing employee burnout in this report from Harvard Business Review Analytic Services: Maintaining Momentum on Digital Transformation. ]
