In a recent blog post Roger Martin, co-author of the best-selling book Playing to Win, cautioned about Objectives and Key Results (OKRs) being used as an “implicit substitute for strategy” and that they are better seen as a “complement to strategy”. At Agile Strategies we agree. We see OKRs as the best tool for most organizations to move their strategy from idea to action. Strategy and OKRs are a powerful combination for achieving more than you thought possible. Maximizing the impact of OKRs depends on making the right connections to your strategy, so what matters in your strategy gets measured and achieved!
So how should you ensure OKRs really are powerfully connected in the right way to your strategy?
In assisting clients to optimize their OKR program, we explore their strategies from three perspectives:
- Is it robust? Is it clear about where to play, what is needed to sustain competitive advantage and what internal capabilities are necessary to drive success?
- Is it dynamic? A good strategy must change in response to events and learning.
- Is it meaningful? A powerful strategy imparts a sense of purpose, fosters understanding and helps align action across the organization.
We often use Martin’s framework to help us understand the first perspective. This is because a robust strategy points the way to the right OKRs, which then speed up implementation. Executives should connect OKRs directly to strategic goals and priorities, thereby ensuring that teams across the organization are focused where it matters.
Dynamism comes from the OKR process itself. The retrospective meetings at the end of every quarter involve asking, “Why did things go the way they did? What do we need to do differently?” These retrospectives provide valuable feedback about what is changing in the market and in the business. Strategy can then be fine-tuned accordingly.
OKRs help people find meaning in their work. The OKR process helps leaders ensure that strategy is shared and understood, and that teams and individuals know how they can contribute to success. People feel better about signing up to create outcomes that matter, rather than working on projects that don’t necessarily tie to impact. Further, by sharing OKRs, teams can better align their work.
Making the Strategy – OKR connection come alive
Here are six steps to ensure your strategy and OKRs are working together:
- Check the robustness of your strategy against Martin’s Strategy Cascade by answering these questions:
- Are you clear about your aspirations?
- In your key markets, geographies or industries, have you identified unique ways in which you deliver value better than your competitors? (Where will you play and how will you win?)
- What are your must-have capabilities that competitors would find difficult to replicate?
- What do you need from your people, systems and processes?
- Express your strategy as desired outcomes without spending a lot of time on initiatives. Describe outcomes for market success and the capabilities needed to sustain that success. Derive annual OKRs for the organization’s leadership team, checking for logical linkages to these key elements of your strategy.
You may find that the process of setting OKRs raises questions about your strategy. Are there gaps or weaknesses? Take the time to identify and answer these questions.
- Communicate to the organization the what and why of your strategy and the annual OKRs. Next, teams write their own OKRs considering the strategy and the leadership OKRs as important inputs.
- Get quickly into the OKR process, with frequent check in meetings for teams, and a focus on action and learning. Be generous with support for teams, particularly if you’re new to OKRs. Train internal OKR coaches. Make sure OKR check-ins are happening and tracking systems are updated. Support teams until they feel great about their OKR check ins. Share and discuss OKRs between teams.
- Conduct retrospective and reset meetings every quarter. Ask, “What is changing in our landscape or for our stakeholders? What opportunities do we need to seize? What OKRs best reflect our aspirations now?”
- Have regular leadership OKR forums for all teams across the organization. We all know the answer to the question How will we win? is continually shifting, so put the emphasis on learning. Leaders should use the forum to give teams a steer on their next round of quarterly OKRs.
These six steps together create a dynamic cycle in which strategy and OKRs respond with agility when faced with opportunities or challenges. Note the crucial difference with most strategy processes: Don’t tell teams what they need to do to support the strategy. Instead, ask them what they need to deliver and support them as they determine how to do it.
Whatever strategy framework you choose, OKR development doesn’t replace sound analysis and decision-making. However, expressing your strategy in OKRs gets you to implementation faster. It enables teams to connect their work to strategy and it sets you up to manage strategy dynamically, as OKRs enable a rich flow of learning.
So, check the robustness of your strategy and express it in OKRs. Take advantage of the dynamic feedback loops inherent in a well designed OKR process. You may never think of strategy in the same way again.