Ask CEOs, team leaders, and employees what they think about OKRs and you will get a variety of answers.
Some completely hate them, saying OKRs are a disaster of a performance system. They believe OKRs create a terrible employee experience and harm business performance.
Yet, some leaders and consulting firms worship OKRs as the best goal-setting framework that can work for everyone. They might even say OKRs are essential to squeeze more productivity out of their employees by setting (too) ambitious goals.
None of these resonate, and that’s because we don’t think there’s a common understanding of the role of OKRs within an organization.
OKRs should drive sharp focus and strategy execution
Forget what you think you know about OKRs. They should NOT be endless to-do lists that crumble your strategy hopes into a box-ticking competition. They should NOT be set on the executive level and then dictated down to teams who will have to execute them. They should NOT be a control mechanism that demotivates your best talent and pushes them toward the exit door.
These OKRs are NOT strategic. This approach drives companies farther away from what OKRs promise to solve.
Strategic OKRs should help leaders to bring their vision down to reality into something that can be attained through rigorous strategy, ruthless execution, and perseverance.
Strategic OKRs should help companies to close the gap between strategy and execution.
They should help teams collaborate on shared goals, help them focus on strategic priorities, and drive business growth.
So, where’s the catch? Why are OKRs getting a bad rap despite their popularity?
By simply looking at OKRs’ devout fans, though, it’s easy to see a pattern emerge:
All of them are tech companies that attribute their tremendous success to OKRs.
Sadly, the success of tech giants in the past leads many organizations straight into the OKR trap – relying on a belief that OKRs work in the same way for everyone, completely ignoring the context and organization’s readiness for OKRs.
No surprise that 70% of companies fail with their OKR implementation. In a spicy tweet, even Google's CEO said:
Why OKRs create terrible experiences and slow business growth
OKRs are simple to learn but not easy to implement. If your organization is weighing whether it is ready for OKRs or not, you should be aware of some inherent, systemic drawbacks to OKRs that affect how they perform in real-world:
The company lacks strategic alignment (hello, chaos)
OKRs fail in siloed organizations. Silos are a death sentence for your objectives at every level. Instead of focusing on cross-functional collaboration to hit company OKRs, teams compete for resources to achieve their own individual team OKRs.
The problem is that many team goals will have dependencies on other teams, whether they realize it or not. If teams don’t communicate or consider how other teams need resources and time, everyone will suffer. This lack of transparency will create toxic culture, waste your money and slow down strategy execution across all levels of the organization.
Recommended reading: Strategic alignment: Why it matters and how you do it
The strategy lacks direction (so everyone gets lost)
Teams or individuals cannot set the right OKRs if they have no idea where the business is heading. Without clear priorities and a roadmap, teams will struggle to deliver the outcomes leaders envision.
Nacho Bassino is the Director of Product at XING. He explains, “direction will help teams understand what problems they should focus on, generating less friction between top-down and bottom-up alternatives.”
If leaders don’t ensure their strategic planning offers clarity of direction, teams will waste time on fruitless activities, instead of focusing on the right problems.
Recommended reading: The Ultimate Strategic Planning Guide
Focusing on individual OKRs
According to HBR, OKRs encourage employees to create binary goals that are easy to measure but don’t help determine whether they positively or negatively impact business performance.
Here’s an example of what this might look like in practice:
Objective: Improve my coding skills and achieve a mid-level software developer rating by the end of Q2 2021.
Key Result: Take three courses on the latest programming languages.
Key Result: Read 10 books on becoming a great software engineer.
Key Result: Achieve my certification as a DevOps professional.
Can you measure how this individual's efforts affect business performance? Hell no.
If you treat OKRs as an HR tool, they become more tedious and stop being of use to anyone apart from the employee—this affects the team direction and becomes the starting point of slow strategic deviation.
“The wrong approach to OKRs can totally kill productivity and effectiveness, and create cynicism among teams related to a new process or system implementation. Most importantly, it can result in a ton of time and energy wasted only to yield bad organizational results.” - Brandon Bett, Director of GTM Enablement at Cascade
At some point, most companies realize that individual OKRs are hurting overall productivity and are forced to rethink their performance strategy.
Take a look at Spotify. They chose to stop using employee OKRs because they slowed them down. When their OKRs changed on the corporate level, it took too much time and energy to adapt OKRs across all levels of the organization.
This is a no-no if you need to move at speed to outperform your rivals.
While OKRs work on a broader level, they become more of a disadvantage on a granular level.
Recommended reading: Strategic Drift: How to avoid losing competitive advantage
Leaders think OKRs work in the same way for everyone (spoiler: they don’t)
Just because Google made them famous, it doesn’t mean OKRs will work in the same way for you. You have to consider the industry in which your company operates.
Let’s imagine you own a food processing company that plans expansion in a new region. You require capital investment in real estate, machines, materials, manufacturing, sales, and distribution.
Strategic planning in this situation requires a long-term approach. As the traditional OKR framework focuses on quarterly goals, your business may fail to achieve its objectives with this approach.
“Organizations and leaders do not realize that OKRs framework was originally designed for short intervals (rhythm), usually quarterly, strategy execution approach. Most leaders usually develop three to five-year strategic plans and expect the OKR framework to work the same way.” - Emad Ghattas, Regional Director at ProServ and Balanced Scorecard Professional
The way you want to use OKRs depends on the maturity of your organization. OKRs should work for you, not against you. Even Google is not using OKRs as it used to in its early days.
In 2019, CEO Sundar Pichai eliminated quarterly OKRs and chose to “focus solely on annual OKRs with quarterly progress reports.” This pivot suited the now-stable enterprise, allowing Google to spend less time planning, and more focus on long-term initiatives. As the company matured, leaders recognized the need for a different approach.
It goes to show that we shouldn’t be bound by the framework. It’s flexible and should be adapted—not only to changes in the external environment but also to where your organization is today.
How To Create Strategic OKRs That Drive Business Growth
OKRs can help you to get business results faster. But only if understood and used strategically.
We’ve explained why OKRs usually flop. Here’s how to avoid it:
#1: Train your teams so they can understand the power of strategic OKRs
If you want your OKRs to work, you need everyone to understand their DOs and DON’Ts. Companies run a one-time internal workshop and think they’re ready to launch OKRs.
Unfortunately, that’s not how it works.
The lack of ongoing coaching on how to write focused and strategic OKRs means many companies get complacent. Teams end up translating the work they’re already doing into very operations-focused, tedious OKRs that don’t have much weight to them.
Instead of constantly iterating and helping people grow and succeed, teams end up bogged down with huge to-do lists. - Brandon Bett, Director of GTM Enablement at Cascade
If you want OKRs to work, you need to invest in continuous education. You must educate your people on OKRs, so they know how to get the most value from the system.
Here’s what you can do:
- Provide access to online courses and educational resources, so everyone understands the purpose of OKRs, how to write them, track them, and align them with strategy.
- Create internal OKR champions by enlisting support from key stakeholders who will promote company-wide buy-in and coach employees on how to use OKRs effectively.
- Use the right OKR tools or OKR software that will help you link OKRs with strategy and ease the transition to Strategic OKRs.
Recommended reading: 16 OKR Examples, Good vs. Bad (With Tips and Best Practices)
#2: Give clarity on where the organization is going
Paul Barker of the OKR Group explains what will happen if your strategy lacks direction: “There’s no clarity on what it means, what will be achieved, what success looks like, and the impact. It’s impossible to hold anyone accountable with this sort of ambiguity.”
Indeed, Barker sums it up nicely by saying, “Clarity is accountability’s older brother.” You must plot a clear strategic plan to achieve your goals and vision, or teams are bound to get thrown off course.
Gartner also states, “The better managers are at providing context, the better their employees perform.”
Train your team leaders and managers to regularly communicate strategic clarity on the company’s overall strategy and context on how teams can play a part. In this way, team OKRs be quickly adjusted in alignment with the company’s agenda.
#3: Run a pilot project before going all in
OKR implementation is a mammoth project, but you don't have to leap into the deep end—you can test the waters with a small pilot project first.
Each quarter, the IT group at Intuit tackles about 2,500 active objectives. But for a pilot project, “a few hundred users may suffice for an OKR laboratory, to iron out any kinks before deployment at scale.”
Also, this will help you to determine whether your organization is even ready for OKRs and on what scale.
Here’s how you can approach a pilot project in your organization:
- Test the OKR framework with a small team—for example, your finance or marketing departments for a couple of quarters.
- Gather feedback from everyone involved about the positives and negatives, bottlenecks, and possible improvements.
- Assess the results and learn from your mistakes to plan a better approach before scaling the framework to the entire organization.
#4: Run two-way feedback and prioritize collaboration
“The main reason for any unproductive or failed performance management is because there isn’t a regular feedback-gathering culture.” - Brandon Bett, Director of GTM Enablement at Cascade
For OKRs to work, teams can not be isolated from strategy. Forget the top-down approach where the leadership team sets OKRs and trickles them down to smaller and more individual OKRs. In this kind of one-dimensional framework, there’s no room for bottom-up feedback or even a horizontal flow of communication between teams whose goals overlap or are interdependent.
OKRs should be co-created with those closest to execution. If the team participates in the process of determining the OKRs, you’ll get buy-in to the goals. These co-created goals will provide purpose to the team and add focus to its delivery efforts. A combination of top-down and bottom-up approach will help your company to keep OKRs agile, drive innovation and achieve breakthrough results.
“By including a larger group in the strategizing process, you essentially create a microcosm and get a holistic view of the various departments in the organization. It is this culture that will ensure that the organization can easily adapt to any scenario with the best possible outcome.” - Ankur Gupta, Principal of Strategic Planning Office at FedEx
Recommended reading: The right way to set team goals
#5: Apply the 3M rule
If you want to make sure OKRs are moving your organization and teams in the right direction, you need to:
- Make adjustments
There is no such thing as "set it and forget it" when it comes to OKRs. They can’t be static. There is too much disruption and innovation in the world to rely on fixed metrics. You need to review OKRs regularly. And you need data to make wise and fast decisions.
To do that, you should assess OKR success beyond OKR scores. OKR scoring works on a scale from 0 (No Progress) to 1 (Fully Delivered). In its essence, it tells you whether OKRs were accomplished or not.
But does that really tell you anything about the company’s performance? Not really.
You need to link OKRs with KPIs or you won’t be able to evaluate if you are actually delivering the value promised by OKRs.
For example, using a strategy execution platform, your teams can create OKRs and track KPIs in one place. You are able to connect all business data in one place and have full visibility into the company’s performance as a whole.
You don't need to switch between multiple spreadsheets and tools to determine if you're still on track to hit business goals. It can (and should) be that simple.
Recommended reading: How to track OKRs
OKRs + strategy = the perfect couple 💜
OKRs are a powerful strategy execution tool, but they’re not going to fix your business on their own. They are not a remedy for a lack of a company’s strategy and they won’t magically create strategic alignment out of nothing.
Yes, they can improve performance management but do them wrong and you will have to deal with grumpy employees, failed strategy execution, and underperforming business.
Strategic OKRs require training, and you must live and breathe the culture of collaboration, transparency, and accountability.
They require regular reviews but help you build agility and faster innovation.
They require strategic direction but give employees focus and help you hit business goals faster.
The good news is that you don’t have to do it alone and this is where we come in.
Leveraging a strategy execution platform that gets results allows your teams to set, monitor, and adjust OKRs while staying aligned with the company’s strategy.
Sign up for Cascade and take it for a spin for free. No credit card required and no sales talk until you are ready to hit your goals faster.
(For more information on how to build adaptive teams and drive strategy execution across the organization, make sure to check out our Strategy Report 2022).
Brandon Bett is a director of GTM Enablement at Cascade. With 5+ years of experience, he’s focused on helping organizations make their strategies actually happen through an emphasis on better strategy execution.
Emad Ghattas is a Regional Director at ProServ, a leading provider of strategy implementation services in the MENA region. He has more than 20 years of experience in sales, strategy execution, balanced scorecard, and business transformation.