The O stands for the objective to be achieved. And the KRs or key results look at specific ways to reach those objectives.
Globally, many organisations swear by the power of these OKRs (objectives and key results), which are monitored through quarterly business reviews.
For a CEO of a company today, with so much information in flux around us, do OKRs still hold sway? And what could be some considerations to keep in mind?
There are three clear benefits of OKRs in an uncertain business environment:
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Focus: What’s the key goal of the company? Is it to prioritise revenues or customer experience? Is it to drive better margins or to improve cash flow?
While a business has to juggle multiple fronts to stay competitive, with increasing uncertainty around us, choosing the right top-level OKRs can help drive more clear focus and help the organisation rally around what is really important. Not just that, it can also help remove certain objectives that may not be that critical for the business.
Collaboration: As organisations grow, rarely are goals achieved by a single person. A simple goal such as ensuring a net promoter score of X, is an exercise in multi-team collaboration.
It would need the product team to develop a really user-centric product.
It would need the customer success team to manage strong post-sales conversations/onboarding, at every step of the customer touch point with the product.
It will need the sales and marketing teams to align on the right message and not oversell or mis-sell the product.
Hence, that simple goal could result in next-goal goals across different teams. And as they deliver on individual outcomes around this goal, the visibility of the overall north star goal also drives more collaboration.
This is true for most cross-functional goals as well. The companies that incorporate OKRs the best often create transparency around the goals and have break-downs of the organisational goals across team and functional levels.
Agility: While it is important to have clarity on the long-term strategic direction of the company, it is also important to be agile. A lot of technology teams incorporate agile workflows in their work planning. How do the OKRs align?
Again, just developing the OKRs at the organisational and team level is not the endgame. OKRs have to be baked into the decision-making process. Which means periodic team discussions and reviews with a need to reflect on what has been achieved and what needs to be done differently.
Best-in-class companies, in their quarterly reviews, incorporate lessons learnt from the previous quarter and the changes needed for meeting the OKRs.
For example, despite building a strong product, a company could experience a drop in customer interest at the onboarding stage. Imagine that the customer success team finds out that the users need more hand holding at the onboarding stage. That could become an input for the training team to design self-learning videos or use cases.
By regular discussions and feedback, if NPS is a north star metric, these problems can be addressed without waiting for a year and then discovering issues during the next annual cycle.
However, for CEOs implementing OKRs for their company, another fascinating read is the Harvard Business School 2009 article, Goals Gone Wild.
The article highlights ways in goal-setting that can go wrong. Too many goals, unrealistic goals either in terms of end objective or timelines can be counterproductive.
With corporate governance being an increasingly important pillar for companies to be strong in, along with driving growth, this serves as a good sense-check to make sure that while implementing OKRs, we are not misusing goals and making our lives more difficult instead of easier.