A client recently asked me for a list of “what could go wrong” as his company begins OKR implementation. Here’s what I shared with him:
Confusing Outputs with Outcomes
This is the #1 toughest lesson to learn, and easier said than done. An “output” is the completion of a defined piece of work, finishing a task or achieving a milestone. That is not a Key Result. Key Results are not a task list, they are business outcomes. Something is only an outcome if it produces value for somebody. That somebody can be a customer, a shareholder, or internal customers like employees. Some examples of outcomes include:
- A financial result like more revenue or reduced cost
- Value for a customer based on useful features at a good price
- Improvements in time or quality for a critical business process
- Enhanced employee skills
Healthy OKR cultures feature high levels of transparency, collaboration and psychological safety. OKRs originated in Silicon Valley, a place of intense speed and competition that values teamwork and creativity. High level strategy is set at the top but every team is invited to say how they will contribute. In an overly hierarchical organization, though, employees expect to be told what to do, and will tend to set very safe goals that they know management will approve of. Creativity goes out the window. If you have a hierarchical culture, you will likely be disappointed with OKRs if you don’t address the cultural and leadership issues at the same time.
Using OKRs for Compensation Decisions
In successful, agile OKR organizations, achievement of OKRs is only loosely coupled to decisions about raises or bonuses. If you tie individual OKRs to money, people will set very safe targets, rather than to stretch, innovate and learn. Also, performance is a team sport, not an individual achievement. Many organizations, including parts of Google, rely solely on team goals. Replace annual performance appraisals with quarterly coaching sessions designed to help the individual set goals and achieve them.
Set It and Forget It
Once set, translate OKRs into a shorter-term cycle of action commitments, typically weekly or bi-weekly. In successful OKR organizations, employees have a high capacity for making and managing these commitments. And this has to be part of the regular management cycle of the business — OKRs can’t be the subject of yet-another-meeting. Don’t wait till the end of the quarter to see if the OKR was successful — conduct a thorough mid-quarter review, examining progress on Key Results as well as the process you’re using to get there.
We live in a culture of over-commitment. It’s all too common for any shiny new set of strategic goals to be engulfed by emerging problems and opportunities. We recommend the Zen approach: Start Less and Finish More. Don’t over-commit! Minimize the number of objectives and tasks you take on at once, get them done, and then pick the next most valuable job to do.