#16 OKRs put horsepower on the road to execution

Strategy insights with Christian Underwood

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 strategy development and implementation, and to reach your goals in no time.

OKRs are not a new concept. Still, many people are unclear about what exactly this leadership instrument with the three magic letters means, and what power Objectives & Key Results can unleash in their own company: employees understand how their daily work contributes to the company's goals and what value they personally add. Transparency in execution, the right meeting routine, consistent progress tracking and regular review of the OKRs are real drivers of success and encourage self-directed work.

What exactly makes the OKR method so powerful, how best to embed OKRs in management and in the strategy process, and why strategy combined with OKRs is the perfect match: find out in episode #16, “OKRs put strategy horsepower on the road to execution.”

Detailed episode description:

OKR is not a new concept. Many people have heard of it but can't picture anything concrete, or don't know what goals OKRs can help them achieve.

OKR stands for Objectives and Key Results, so it's about goals and the key results needed to reach them. John Doerr brought OKRs with him from IBM and introduced them at Google together with the founders. That's where the system was established and then carried out into the wider world as a vision. The concept works not only for startups but also for large, complex organizations, because it creates transparency and thereby supports teams and employees in reaching their goals. The important thing is to look at how OKRs can deliver real value for the business.

Focus: how to use OKRs in the strategy process

OKRs are a strategic leadership instrument that lets you steer a company, teams or yourself in a better, more goal-oriented way.

O stands for Objectives, meaning qualitative goals, and KR for Key Results, meaning quantifiable, measurable outcomes. At first glance, this definition doesn't sound revolutionary. The magic comes from consistently working through OKR sets in three-month cycles, plus a meeting routine geared to setting and tracking goals, combined with weekly progress tracking. Tracking often happens in Excel or in suitable digital tools, since that makes it easy to check the results of your work. There's a wide selection of tools, and Christian has put them in the show notes for you to look up.

Proper tracking is enormously important so the team has transparency about where each goal stands, what everyone's goals are, what the company's goals are, and what everyone wants to contribute to together.

The benefits of OKRs

It's great when every individual sees how they can make a concrete contribution to a shared, larger goal in the company. On one hand, this creates meaning (for the leaders, teams or employees involved), on the other hand it drives very consistent goal pursuit. In reality, that's harder than it sounds. You can define the most beautiful strategies about what you no longer want to do, but when it comes down to sticking to them and tracking them consistently, that's where the real art begins. Introducing the vision is the easy part; as always, the difficulty lies in executing the strategy.

OKRs in the strategy process

Christian uses OKRs as early as the strategy development phase. They are already anchored as fixed objectives in the first strategy workshop, in the target picture of the StrategyFrame®.

Of course, you don't start the process with OKRs right away. First you look at the situation analysis and then formulate an impact and value proposition (the sustainable benefit promise and the customer value promise). These are two essential elements of the strategy, and they define the frame. Once a clear competitive focus has been defined, meaning market, customer segment and portfolio, it's about concrete execution. In other words: which defined goals you want to reach, and which goals should be pursued to turn the value and impact proposition, as well as the competitive focus, into reality. And this is exactly where OKRs come in. They can be understood as the priorities that really make a decisive difference for the company in achieving, or rather executing, the new strategy. And you should never lose sight of your company's own vision along the way.

Executing the strategy: how to go about it

The first OKR sets for the company, or for whatever scope the strategy is meant to cover, are developed as part of the first big strategy workshop. That scope could be a country, a region or a business unit, for example. It's important to convey the method and the basic logic behind OKR to everyone. So far, so good. Experience has shown, though, that when those three letters come up, they tend to create confusion at first. That's why Christian advises against running a two-day OKR seminar inside the strategy process, because it doesn't actually lead to better OKR sets. People are fundamentally wired to set goals and want to achieve them. In corporate and private life, we've simply often unlearned it. There's so much we do anyway, and it rarely gets questioned. OKRs are a great way to drop the less important things going forward and to see where you can direct your own resources at the truly essential objectives, turning the vision into clear results.

How long OKRs stay valid in the strategy process

In a strategy context, the OKRs you set shouldn't be pure three-month OKRs, as the standard OKR cycle defines them. In that cycle, you keep reviewing the objectives and key results and ask how far you've come toward achieving them. For the strategy process, it can absolutely make sense to choose a longer horizon. These are called stretch goals, and they can be pursued over two to three years, matching the lifespan of the strategy. Then there are so-called moals (mid-term goals), which run with a one-year horizon. If only three-month goals are anchored in the company's core strategy, reaching those goals can become relatively difficult. What matters more is translating the moals or stretch goals into ambitious three-month OKR sets in the next step. Those can then help sort the measures you develop into fields of action and put them on a three-month track. This kind of execution usually pays off more. If you keep all of this in mind, OKRs let you build a bridge from the target picture to the fields of action. That produces concrete, targeted measures that can be planned with the right amount of resources.

Cascading OKRs

The success of a strategy is often buried at the point where it has to be cascaded from the corporate level down into the business units. Depending on the size and complexity of a company, this is a tricky undertaking, and today it often only works with software support. In terms of content-level steering, though, it can work through OKRs. The key here is a high degree of transparency: you look not only at which measures you're implementing in which time frame, but at what contribution you want to make, what impact you want to create and which goals you're pursuing.

An agile strategy process through OKRs

It's often said that the strategy process needs more agility. That's where OKRs deliver their greatest value, along with creating meaning and ensuring consistent follow-through. On one hand, they create transparency and accountability; on the other, they give you a certain flexibility. You have a different steering mechanism and the option to adjust and change things without having to rework the entire strategy. It's important to review the strategy every three months and ask: How far have we come toward our goals? Are the goals we set still the right ones, or do they need adjusting? This consistent, institutionalized adjustment and review of OKRs through fixed meeting routines builds real strength in pursuing goals and implementing the strategy. That's how you get your strategy's horsepower onto the road to execution.

OKRs also give everyone involved room to move. Within goal areas that are developed 60% top-down and 40% bottom-up and then agreed on together as a team and at the individual level, you create a highly binding shared system. That's why this goal system has to create transparency for everyone. In other words: you know your colleagues' goals, and those goals contribute to reaching a shared team goal. If everyone only pursues isolated goals that have nothing to do with each other, you have to ask whether that's the right approach and whether it will actually move the company forward. The strength lies in the team. For example, you need resources from the IT team to push digitalization forward. You can do as much as you want in your own department, but if the goal setting doesn't account for supporting that one business area, you run into problems with resource allocation. OKRs help here too, because you no longer get lost in the weeds of individual initiatives. Instead, you capture the value each initiative contributes and check whether it makes sense and supports the strategy.

Send us your specific questions about OKRs

You don't need a strategy process to lead with clear goals and work on OKRs together. You can absolutely establish OKRs separately from the strategy process. The only thing that matters is that there is still a mission, a vision or a strategy in place, so your team can better follow through on the goals or expectations set by the leadership above them.

We're happy to support you and help you cut through the OKR jargon, adapting the concept so you and your team can move from a vision to concrete results in the best possible way.

Contact:

Christian UnderwoodManaging Partner Email: christian@strategy-frame.com