OKR: The Formula for Agile Organizations

Without clear objectives Agile is good for nothing.
Until we implemented Agile to transform organizations around the world, experience had taught us that traditional project and objective management methodologies did not deliver the expected outcomes.

In repeated diagnostics conducted in leading organizations over the last decade, we found that

More than

60%

of the projects have not delivered the expected outcomes.

Nor do they solve the problems that they were meant to solve when created.

These poor data are a logical consequence of our approach to projects and objectives with a causal focus. Traditional management methods make us think that tasks lead to results and, consequently, we believe that if only the tasks are performed with diligence, the set objectives will automatically be achieved.

Reality, however, shows that this approach is erroneous. In fact, this approach generates the project factories that organizations have become today.
The pandemic of companies is known as"Projects". Projects for which no one can tell you in less than 30 seconds the quantifiable and measurable result they are trying to achieve.
In today’s dynamic and exponentially changing environment, doing for the sake of doing is resulting in a culture of mediocrity. The culture where everyone “falls in love” with the projects and protects them must give way to an Agile culture, where teams do not aspire to complete tasks and projects, but to achieve their objectives. All this in an environment where everything nicely planned can be changed overnight.

For this reason, one of the first aspects to change, and to adopt the Agile culture to, is the system for defining, aligning and achieving objectives, the OKR.

Target deployment is history.

Most organizations with traditional objective systems found the engagement of the people in their teams on the “deployment of objectives”. As if it were a factory or assembly line, the hierarchical layers communicate from one level to another “objectives” that in their translation end up becoming wish lists, tasks, activities or priority projects for the function, department or business unit.

But what about the customer?

The well-known Italian expression “traduttore, traditore” (“translator,traitor”) acquires great meaning throughout this deployment process.

In Agile organizations, the objectives necessary to satisfy customers are not deployed. They are put at the center, with OKR.

OKR, a formula as simple as it is revolutionary.

The #OKR system was created by Andy Grove during his tenure with Intel since he was surprised to have so many people working hard but achieving so little. This is why he created the OKR system: To achieve results.

John Doerr, who at the time of Grove was with Intel, too, brought it to Google in 1999. Since then, OKR has guided Google’s exponential growth, as founder Larry Page acknowledges:

OKRs have helped lead us to 10x growth, many times over. They’ve helped make our crazily bold mission of 'organizing the world’s information' perhaps even achievable. They've kept me and the rest of the company on time and on track when it mattered the most.

Following Google, many technology organizations such as Linkedin, Twitter, Uber or Microsoft, among others, have reaped the benefits of OKR. So have ActioGlobal’s clients in different sectors and on four continents. They include:

Digital:

Consumer Goods

Pharma

Services

Industry

The proper implementation of OKR, when developed through a holistic system, accelerates the development of Agile organizations, disrupting any and all of the dysfunctions of the target systems that have taken center stage over the past two decades.
OKR build a culture based on these 8 supporting pillars:
1.

The focus is on impact and not on activity. Prioritization is done according to the results to be achieved, focusing on what really matters.

2.

Activities or projects are means to achieve the result, the impact on customers, not the result as an end. If the impact is not achieved, the project or activity must be adapted.

3.

End-to-end synchronization and collaboration between the different teams right from the definition of OKRs to their delivery.

4.

Effective adaptation as a way to deliver results. Change is not an unpredictable event, but a generator of learning to deliver results.

5.

Early and Small Releases practice that seeks to deliver value to customers in small steps to learn and receive fast feedback.

6.

Self-organized teams, with a clear purpose and comprising the necessary roles to deliver results and have an impact on customers. People from Product, Sales, Design, Marketing, Development and Finance work together with high autonomy and self-responsibility.

7.

Sustainable and shared rhythm throughout the organization that enables everyone to deliver results while maintaining balance and well-being.

8.

Transparency of knowledge, progress, data, and information so that all teams can self-organize and collaborate in a synchronized way to achieve OKRs as effectively and efficiently as possible.

But, what does OKR mean?

OKR are a system for achieving objectives. They help the organization translate its purpose into results. They help the organization to adapt its projects and initiatives in an agile way, keeping the objectives as the unchanging destination.

In short, OKR are a system that drives people to become passionate about the outcomes that will impact customers rather than the projects in their silos.

The first step in the OKR implementation process is to define the organization’s objectives. That is, the purpose to be achieved in a given period. These objectives have a motivating and guiding function, namely to convey a clear message regarding the direction and destination to be pursued.
OKR should always place us in a learning zone, where everyone feels mentally safe to experiment and try new ways of doing things, but at the same time where everyone has a strong sense of responsibility for achieving them.

This graphic helps us understand it clearly:
There are two types of objectives to be distinguished:

Roofshots

They are the objectives clearly aimed at inspiring the team and helping them disrupt the established paradigms. With their message, they express the commitment to reach an extremely ambitious, seemingly almost impossible target. They point in a very high and perfectly determined direction. The team must interpret and feel them as a challenge and, in this case, reaching 70% of the objective can already be considered a success.

Moonshots

They are the objectives clearly aimed at inspiring the team and helping them disrupt the established paradigms. With their message, they express the commitment to reach an extremely ambitious, seemingly almost impossible target. They point in a very high and perfectly determined direction. The team must interpret and feel them as a challenge and, in this case, reaching 70% of the objective can already be considered a success.
According to Walt Disney´s

"If you can dream it, you can do it."

This is a perfectly good philosophy for OKRs, especially for moonshots.

OKR: Objectives and Key Results.

OKR have two inseparable components. Take this example
Objectives:
Example:
The qualitative, motivational part, which translates strategy into purpose.
To be #1 in providing data for decision making to companies all over the world.
Key Results:
The quantitative, measurable part, which translates the objectives into transparent and unambiguous metrics.
  • Increase the number of companies using [Product] each day from X to Y.
  • Increase the number of data that companies process each week with [Product] from X to Y.
  • Increase the NPS of [Product] from X to Y.
Unlike objectives, in the case of key results the indicator selected must unequivocally express progress. As we have seen in the example, in order to achieve this numerical concreteness, key results are usually expressed as the passage from an initial “X” value to a “Y” value to be achieved in the future for each of the factors.

Needless to say, these indicators neither measure the number of tasks performed nor the functionalities. They are not a list of tasks to be performed. They are global metrics that define success in the objective and that focus on what really matters to the customer or end user.

OKR: Empowerment without silos and hierarchies

Once defined, the OKR are the equivalent of the North Star that points north for navigators. A reference point whose presence is maintained throughout the time cycle determined for each organization.

Continuing with this analogy, unlike traditional management models, OKR are not deployed by levels or hierarchies.

With OKR organizations evolve to form an organism of self-organizing teams
that operate like startups within an ecosystem of startups that share a common purpose.

In this organism, it is the teams who make the decision on how to impact the OKR, taking their own responsibility and autonomy. To do this together with ActioGlobal, teams use the Gemba Wall® tool that allows them to translate objectives into agile and adaptive weekly execution.

OKR: Rhythm, Transparency, Accountability, and Achievement.

One of the many differentiating elements of OKR is follow-up. With OKR, objectives do not linger on a PowerPoint sheet or in a beautiful digital tool, but become the guide for execution each week.

Gianpaolo Santorola, one of the leaders we worked with to transform Adevinta, the world’s largest digital classifieds company, puts it in a nutshell:
We execute our strategy every day, and check if we are gonna deliver it every week.

GIANPAOLO SANTORSOLA
Ejecutive Vicepresident Adevinta

With such a mindset, it is possible to establish a culture clearly oriented to the achievement of the final results – regardless of the tasks to be performed, which must be validated or invalidated every week through hypotheses and continuous experiments.

When OKRs are implemented holistically and not just as a textbook theory, this practice becomes a real accelerator of Agility and High Performance, and above all of a culture based on a fundamental principle:

MORE IMPACT. LESS ACTIVITY.

Learn more about some of the companies that have transformed their cultures by developing a holistic operating system with OKR:

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