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Performance Management

The OKR framework: How to implement it & mistakes to avoid

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OKR is a popular framework that few organizations manage to make it work for them.

Many businesses treat their OKRs as the solution to all of their strategic and focusing problems. Naturally, they end up disappointed. Like any framework, it can certainly provide a lot of valuable answers, but its implementation takes time and practice to offer a satisfying ROI.

In this guide, we’ll reveal the ways of the OKR framework, the secrets that make it a successful framework and help you implement it effectively. Here’s what you’ll find:

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What is OKR? A distinctive definition

OKR stands for “Objectives and Key Results” and is a strategic framework, not just a goal-setting or leadership tool. This simple misconception is responsible for most failed attempts to implement it.

The primary purpose of OKRs is to align the company’s vision with every single employee’s daily work in a simple and flexible way while fostering innovative thinking. The framework requires a fundamentally iterative approach to be effective, which includes two parts. Setting up OKRs across the organization and adopting a regular reviewing process. 

OKRs are composed of three elements: objectives, key results, and initiatives.

Common mistakes when applying the OKR framework

Countless companies have tried and failed to implement the OKR framework in an effective and productive way.

Actually, most attempts are so crudely executed that they’ve left scores of knowledge workers despising the framework. Be it leadership’s inexperience or unrealistic expectations, rarely do organizations enjoy all the benefits that this model has to offer.

Although it’s a simple framework, it’s notoriously hard to implement.

Here are the most common mistakes people make when trying to implement the OKR framework:

  • Mistaking it for just a goal-setting framework
  • Poor implementation due to inexperience or incomplete understanding
  • Inflexibility in implementation

Mistaking it for just a goal-setting framework

OKR is not just a goal-setting framework.

Nor just a management tool.

It’s much more than that. It’s a powerful strategy model. That means it has structural and governance elements. People who focus only on the structural elements (the “O”s, the “KR”s and the initiatives) mistake OKR for a goal-setting framework. They forget the governance elements that are crucial to the model’s success and put disproportionate effort into setting up OKRs that look “cascaded,” approved from the top and “make sense” for each department, team or individual.

And they end up with a set of irrelevant and utterly useless commitments.

Company-wide goal-setting without proper strategic context is a waste of everybody’s time.

Expecting people to fill out their OKRs without any additional context or visibility in the business’s strategy does more harm than good. It’s a doomed attempt to solve the alignment problem, and it adds noise to people’s daily work.

OKR implementation goes hand in hand with sharing strategic context.

Poor implementation due to inexperience or incomplete understanding

In the unusual scenario that the organization’s leadership recognizes the crucial role of strategic context in setting up OKRs, successful implementation of the model is far from a given.

In every aspect of life, when theory meets practise, theory breaks.

Strategy is no different. When your organization moves from preparation to the development of its OKRs, look out for these two mistakes:

1. Leadership fails to provide strategic context

Knowing that strategic context is essential and actually providing it to your people is easier said than done. That’s because most leaders ignore the most important law of strategy communication.

The #1 law of strategy communication:

The further you move from the top, the fewer people know about the strategy.

It’s hard to fight against something you ignore. But even when you know your enemy, you must apply the right tactics to defeat him. The traditional way leaders prepare for the fight is with fancy slides and comprehensive spreadsheets to present during the “Strategy Launch 2022” event. The sad truth is that presenting your strategy doesn’t work, no matter how many organizations try it. People forget the plan and never execute it.

You might tempt yourself to believe that you’ll do it better. Well, we know of a strategist who decided to distribute the strategy with personalized videos to every single employee. He sent close to 100 videos, but when he asked what the strategy was, nobody knew. Talk about a personalized approach.

Is this because people don’t care about their company’s strategy? No. Is this because people are too dumb or uneducated to understand it? Nonsense. Are there people who only want to collect their paycheck and head home? Absolutely, but the vast majority of employees crave access to their company’s strategy and want to understand how they contribute to the business’s growth.

So, is there a better way to communicate your strategy?

Yes. You need to expose your strategy to your people and make it available on-demand. Strategy exposure is more of a mindset than a set of actions. Once you realize what people want, you can find several ways to share your plan, include your people in various degrees and help them have the context to make informed decisions. From reviewing meetings to software solutions.

Remember, there isn’t such a thing as overcommunication in strategy. And when people are asked to align their daily work with the company’s strategic priorities - i.e. fill their OKRs- they need context.

2. OKRs are distributed top-down

Cascading OKRs assumes that they have a strictly hierarchical nature. They don’t. 

That mistake leads to a blunder that robs the framework of one of its most valuable benefits. Their delegated development. Each team requires top-down approval of their OKRs, which often translates to teams inheriting KRs and using them as Os (which is a bad idea, as we’ll see later).

Stop viewing and treating this framework as a goal-setting tool.

There are no siloed OKRs, but they’re also not linked linearly. OKRs are networks.

Inflexibility in implementation

Inflexibility takes many forms.

First of all, it’s important to recognize that it takes time for your organization to make it right. It's a learning process that includes mistakes and poor results. Businesses with no previous experience with OKRs won’t have it right by the first or even second year of implementation. Thus, it’s not a good idea to rely solely on OKRs for alignment and focus. Pay attention to strategic progress and OKRs’ operational value, and your understanding (and earned benefits) will evolve over time.

Second, it’s also important to realize that not all frameworks fit every organization. Many businesses have tested and rejected strategic frameworks, like the popular Balanced Scorecard, because they don’t provide enough value to them. The same goes for OKRs. If, for example, your organization moves quickly and the iteration process of OKR is lagging, then it doesn’t really make sense to implement this model, does it? Shift to something more flexible.

Third, not everything will fit into the framework. Some initiatives or projects are going to be necessary but impossible to fit into a certain department’s or team’s OKR set. That’s OK. As long as you’re certain of their importance, include them in your plan as separate entities.

How to approach OKRs to be successful?

When you attempt to implement the OKR framework in your organization, keep in mind three things:

1. OKRs integrate

They don’t cascade. OKRs are comprised of three parts: objectives, key results and initiatives.

What makes OKRs so hard to cascade is that they relate to each other in more than one way. For example, marketing and sales might share key results while product and sales share objectives. How can you link OKRs from top to bottom in a linear way? You can’t.

OKR examples

Marketing OKR example:

Objective: Reach more of our Ideal Customers and help them recognize us as the best solution to their problems.

Key result: Increase qualified pipeline by 30%

Initiative: Increase the conversion rate to core pages

Sales OKR example:

Objective: Get our prospects excited about our product and eager to use it

Key result: Increase qualified pipeline by 30%

Initiative: Determine who has the authority to make the purchasing decision before hopping into a call

Product OKR example:

Objective: Get our prospects excited about our product and eager to use it

Key result: Decrease time to value by 50% 

Initiative: Help the user input crucial information in less than three clicks

OKRs link to each other and create a network.

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How to write useful OKRs?

Don’t underestimate the effort and care that goes into writing useful OKRs.

One of the reasons that so many organizations fail to implement OKRs is people’s inexperience in writing relevant and inspiring OKRs. Counter the lack of experience with extra care and thought during the development and review of OKRs.

Let’s see some tips on how to write useful OKRs.

How to write OKRs: writing inspirational objectives

Nailing the Objectives in your OKRs increases your chances of success to over 80%.

Master objective-setters make sure their objectives have two important traits:

  1. They’re inspirational
  2. They’re benefit-based

Sounds pretty straightforward, and it should be. But it’s not. In their attempt to cascade OKRs, most organizations end up making blunders on that front.

To make an objective benefit-based, teams and individuals need to discover and determine their objectives on their own. Most organizations and leaders avoid empowering their employees that way. So, one way or another, they dictate the objectives because they believe that their people lack the proper strategic context to make informed and well-aligned decisions.

(And they’re absolutely right, which takes us back to “exposing your strategy.”)

The problem with that approach, though, is that leaders lack the operational context that the team inherently possesses and focus too much on the “how” or the business metrics. However, it’s not the leader’s responsibility to decide how their team is going to achieve the goal or hit the target. It’s the team’s responsibility to determine the best way to get to the destination. If the team is successful, business metrics will take care of themselves.

So how do you guide your team to write great objectives?

Describe the benefit your customer enjoys thanks to your team’s work. Rolling out a new feature is not a good objective because having a hammer is not a benefit. Nor is hammering a nail. But putting up a family picture thanks to the hammer is clearly a benefit.

For example, in a cascading attempt, the objective “Increase revenue by 40%” could translate to the marketing objective “Increase qualified pipeline by 40%.” But this isn’t an inspiring or benefit-focused objective. Here’s what you can choose instead:

Marketing OKR example:

Objective: Reach more of our Ideal Customers and help them recognize us as the best solution to their problems.

Key result: Increase qualified pipeline by 40%

And the initial objective becomes a great lagging KR. Remember, you want benefit-based objectives. And once you set those up, you need to know whether you’re getting closer to making them happen.

In other words, you need to learn…

How to write OKRs: writing comprehensive key results

Ideally, key results are leading measures that tell you whether the team is moving in the right direction.

This is not the same as the team being productive. The team might be working like a machine, having high levels of output, but moving in the wrong direction. That’s why output goals are not good key results.

Great key results are indicative of progress and have these traits:

  1. They’re comprehensive
  2. They’re outcome-focused

This is where numbers come in. But not just that. KRs are effective indicators of progress when they offer a good look at the whole picture.

So, determine a set of KRs. That set must include leading, lagging and counter KRs.

Leading KRs are action-like, process-focused metrics that you can directly influence (hence the action-like trait) and can predict the feature, meaning that their progress tells you how close to your output goals you’ll get.

Lagging KRs are business metrics and reveal past performance. They’re essential to track but have no effect on the future.

Counter KRs help you mitigate the effects of over-focus or overachieving your goals. You don’t want to focus too much on making a powerful hammer that nobody can lift.

Following our example:

Marketing OKR example:

Objective: Reach more of our Ideal Customers and help them recognize us as the best solution to their problems.

Lagging KR: Increase qualified pipeline by 40%
Lagging KR: Increase traffic to demo page by 60%
Leading KR: Number of experiments per week/month to decrease customer acquisition cost
Counter KR: % of deals closed

Now, you have an inspiring destination and a way to measure the distance you walk. All you need now is to determine the step along the way.

How to write OKRs: writing actionable initiatives

This is the most volatile part of OKRs.

And the least important. That’s because the initiatives refer to the actions of the team or individual that will take to make progress. If the Os and the KRs match each other well, then this part of the framework will take care of itself.

Dictating initiatives enters the field of micromanaging and takes away the innovative spark of your team. Besides, including this element in your implementation of the framework is optional. Most companies don’t really include it.

Marketing OKR example:

Objective: Reach more of our Ideal Customers and help them recognize us as the best solution to their problems.

Lagging KR: Increase qualified pipeline by 40%
Lagging KR: Increase traffic to demo page by 60%
Leading KR: Number of experiments per week/month to decrease customer acquisition cost
Counter KR: % of deals closed

Initiative: Increase our content generation
Initiative: Declutter our home page
Initiative: Run free seminars

OKRs used to measure HR effectiveness

Let’s see another OKR example for the HR department

Objective: Create an inclusive and very supportive workspace

Lagging KR: Employee retention rate
Lagging KR: Number of complaints per month
Leading KR: Number of applications for support services the company provides
Leading KR: % of new hires from minority groups
Counter KR: Cost of support services provided to long term performance and absenteeism

Initiative: Send Monday emails detailing 1-2 services provided + any work event or training session for the week
Initiative: Run anonymous surveys from the teams asking for feedback on leadership
Initiative: Detailing training and upskilling programs for every department

Besides, the reviewing process addresses whether current actions bring the desired progress and helps to determine the next ones.

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OKRs vs KPIs: what’s the difference between them?

OKRs and KPIs have a lot of differences.

In short, OKRs take a more holistic approach to performance than KPIs. KPIs measure progress. OKRs define goals, inspire innovative thinking and measure progress.

To understand how they relate, KPIs can be excellent KRs and vice versa. The usual approach to KPIs is business metrics that are lagging. Useful to understand past performance but doesn’t spark innovative ideas for the future. Certain KPIs are essential to track but might not fit into any team’s or department’s OKR set due to the objectives you’ve determined. Keep tracking them.

KPIs and OKRs aren’t mutually exclusive.

They complement each other.

How to review OKRs: the K.I.D.S. rule

Keep It Dead Simple

Elaborate processes won’t do you any good. What you need are structure and good old honest conversations. It’s hard to do OKRs correctly, so you need practice and reflection. Establish regular review meetings throughout all levels of the organization.

That’s obvious, but what’s not is how you run those meetings.

Meetings without agendas are harmful time suckers. Experiment with their structure to make them fit your culture, but include the following:

  • Discussions about the metrics AND the judgment calls that preceded the meeting.
  • A “next steps” section, usually placed near the end.

Depending on the size of your business and the scale at which you’ve implemented OKRs, you’ll need to automate reporting or, at the very least, adopt a templated approach. Consider using OKR software to help you automate.

During this process, look for three things:

Applying the K.I.D.S. rule

If you overcomplicate things, you’ll be frustrated and probably miss an insight or two. Start with something as simple as a yes-or-no format or a green-yellow-red system to evaluate progress. Then, dig deeper, one step at a time.

Progress towards the objectives

If you aren’t making progress towards the big Os, evaluate the KRs, the initiatives and the current effort. Sometimes, these three don’t fit all together, and you need to redefine them. That’s OK. Practice makes better, or something like that.

Relevance of Os and KRs

If your people, teams, departments and the world fail to meet their objectives, but you still achieve growth or progress, then challenge the relevance of the OKRs. You might need further practice.

Amount of value you enjoy

If the amount of effort and time that goes into iterating and evolving your OKRs doesn’t produce a satisfying ROI, consider whether the framework is a good fit for your business culture and needs. A business with Increased adaptability needs that require heavy empowerment of teams might not benefit from a slower iterative framework.

How to choose an OKR software

With all the choices in the market, it’s hard to know beforehand which OKR software fits best with your needs and culture. So, we’ve listed a few key traits that you should be looking for when assessing an OKR framework.

1. It’s accessible to many people

Keeping track of your OKRs shouldn’t be the job of a select few. Because they become bottlenecks of information, and the process defeats the purpose of delegating their development.

You want to have a single source of truth for your OKRs and strategy that everyone can access.

2. Supports a large-scale adoption

If your business is inexperienced with OKRs, it’s best to start small and expand once you’ve demonstrated success. Getting familiar with a platform that works well for smaller teams but can take care just as easily of a much bigger number of people is essential for a smoother transition to large-scale adoption.

3. It’s customizable

When you’re being flexible in your implementation of the OKR framework, you need software that adds to your approach, not software whose limitations make your approach more rigid. That applies to everything strategy-related, from automating reporting to customizable strategic planning.

4. It facilitates reviewing

If you need to use more than a couple of tools to report on your progress, then you’re adding friction to a process that needs to flow like a skater in a frozen lake. The software you choose should be at the center of your reviewing meetings to help the discussion be focused and your decisions informed.

If you’d like to find out more about how Cascade can help you to implement the OKR framework, start a free trial or jump on a demo with our team and we’ll walk you through everything you need to know.

Download the strategic planning template.  This excel template is 100% free allowing you to build your strategic plan  with an auto-generated final plan output! Download Now

Topics:Performance Management

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