Objectives and Key Results provide a critical strategic bridging function, and create alignment within the business. Let’s break these down beginning with alignment.
OKRs Create Alignment
If you check out my article series on KPIs, you’ll see that KPIs roll-up. Beginning from Teams and Departments, KPIs roll up to a central view for management to have a centralized command view of critical data about the organization.
It’s easiest to view OKRs as having the opposite structure of beginning with central management and fanning out and down to departments, teams, and individuals. And indeed, there is a lot of truth in that. OKRs work best when they’re organized from a central vision that guides a picture of what is important.
It’s a mistake, though, to think there is no latitude for creativity, innovation, and expression as OKRs “fan out.” A department can and will have its own Objectives for its own critical issues.
In other words, there is no “rule” that every single Objective at any given level must be derived from a higher level. There is no rule that the higher levels “dictate” the Objectives of lower levels. What are true are three things:
- The majority of OKRs usually arise from higher levels.
That is, most but not all of the Objectives a team creates are inspired by the Objectives of their Department. Similarly, most but not all of the Objectives of a Department are inspired by central management Objectives. There’s no rule that they must. It’s just how things work out.
- OKRs should Align.
We’ve just learned that it’s okay for a Department, for example, to have its own Objectives that aren’t directly derived from higher-level OKRs. The important bit, though, is they still ought to be aligned with those OKRs. Put another way, any OKR a lower-level team sets should never contradict, work against, or counter-act a higher-level OKR. That’s really common sense and should go without saying, right? But I’ve seen it happen so it’s worth a mention. Usually, this is accidental rather than intentional. The moral of the story: review your OKRs across your business.
- The OKR process should be bi-directional.
This is a truism about planning generally and strategic planning specifically. This is not advice unique to OKR planning. Even in a small business by the time you hit 15 employees, it almost never works to do planning in a top-down fashion. The leadership has blind spots that can only be informed by involving the line-level folks. For this reason, it’s important that the OKR process – and all planning, really – be bi-directional.
Let’s look at how this alignment is useful to strategy.
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OKRs Fill the Need for Tangible Strategy
OKRs build the bridge of strategy between a) the vision you have for your business, and b) daily execution. Let’s unpack that.
With a little work, it’s doable to have a relatively clear vision for your business. I find most business owners have some sort of vision for the changes they want to make and where they want to go. They might just need a little assistance making that picture clear.
And most folks are solid executors. They get things done. Put 30 tasks in front of them, they’ll knock them out. They’re good at getting things done and that’s why they’re in business for themselves.
The key challenge is bridging the gap between that vision for where we want to go and the changes we want to make and translating that into daily execution. Making that leap is surprisingly challenging. This is in no small part because:
- “Vision,” even when clear, can be squishy and body-less. It just doesn’t have tangible action tied to it.
- We’re just so busy executing on a day-in, day-out basis that it’s easy not to prioritize the changes we want to make. Especially when those changes are squishy.
That’s where OKRs come in to fill that strategy gap.
Just to review: “Strategy” is determining the direction of the business as well as the methods we want to use to get there.
So OKRs are perfect for that.
Objectives are the statement of direction and goal. Key Results, in stating the work that must be accomplished in order to accomplish the Objective, clarify the methods we’re going to use to reach the Objective. So OKRs slide perfectly into that gap between vision and execution and fill in the necessary information.
If it’s not immediately obvious how valuable that is, let’s peel the onion one layer deeper. Once you’ve got OKRs standing in as your statement of strategy, you’ve got tangible work identified that will move your business closer to your ultimate vision. That work is not your every day normal execution work. That work is the work of transformative change to your business – making your business better. That work is what is captured in the Key Results. But by making that work tangible, it becomes much, much easier to bring that work into your regular schedule. That means instead of “we’ll get to implementing our vision someday,” today is the day you make your business better. Literally, implement OKRs, and today is the day.
How cool is that?