Actually, what is OKR?

OKR = Agility + Anticipation + Impact.

What are OKRs?

The keys to agile strategic organization.

First things first:

OKRs mirror the strategy.

The decisions we make in setting OKRs are based on strategy: we have decided what we want and what we don’t want to achieve.

It doesn’t take much to understand OKR. A few Google searches and reading the most important books like “Measure What Matters” make us understand the theory.

The practice, and we tell you this as a team that has been implementing OKR for a decade, is something else, indeed.

Speaking of practice: We’ll highlight here some of the lessons we’ve learned over all these years:

What does OKR not mean at all?

First of all, OKR is not MBO (Management by Objectives) and does not use KPIs (Key Performance Indicators). OKR is the consistent evolution of MBO, which started at Intel more than two decades ago and which Google, as well as many of the organizations supported by ActioGlobal, have honed in recent years.

In a culture built on OKR, the reality of traditional strategic planning is changed in an evolutionary and continuous way.

5

fundamental cultural dysfunctions

Strategic priorities defined as projects

Deployment of priorities by department and functions

Definition and annual revision of priorities

Meetings focusing on reporting what cannot be changed any more

Leaders who neither inspire, guide, motivate, nor help

But what actually is OKR?

The OKR theory

Essentially, OKR is a formula for getting an organization to move synchronously towards common objectives.

This tackles one of the most common problems namely that it is an objective and not an activity or a wish list. For an objective to be an objective, it must be clear so that 1, 10, 100, 1000 or 100000 people understand it to mean the same thing, and it must be measurable.

If it is not measurable, it is not an objective, it is just a desire.

To define objectives that are not desires but real objectives, John Doerr’s formula is the simplest.

To Be/To get to [Objective].
and we will measure it with [Key Results].

This formula makes it obvious: OKR has two inseparable components.

The Objective:

It is a qualitative and memorable description of what you want to achieve. Objectives should be short, inspiring, and persuasive. Objectives should motivate and challenge the organization to achieve what has never been achieved before.

The Key Results:

These are a set of metrics that indicate the progress we need to make towards reaching the objective. They should determine where to leverage our efforts in order to achieve the desired objective. It is recommended that no more than 3 key results be used per objective. The key results should cover what is most important to meet the objective.

OKR - 5 key elements
The theory of their definition, so that they are clear and measurable, is complemented by some characteristics that OKRs must have to make the necessary impact on the organization.
1.

Agile Objectives

OKR transforms traditional annual planning into adaptive planning with shorter time cycles, allowing companies to define stops for reflecting on lessons learned and make the necessary adjustments to actually meet their objectives at the end of the year.

2.

Simplicity

OKR removes all the bureaucratic obstacles associated with the traditional deployment of objectives by grade. With OKR, there are only two grades of objectives: Companies and Teams.

3.

Transparency

The main purpose of OKR is to synchronize the talent that delivers value to an organization. To achieve this, transparency is not only necessary, it is indispensable. OKRs must be public at all levels of the company and everyone must have access to them.

4.

Rhythm

With OKR, governance is established to synchronize strategic, tactical, and operational decision making. To this end, the following three main rhythms are usually established:

  • Strategic, in which the OKRs emanating from strategic decisions are anchored. 
  • Tactical, in which company and team OKRs are synchronized on a quarterly basis.
  • Operational, in which the level of confidence and the achievement of objectives are reviewed on a weekly basis.
5.

Ambition

The philosophy behind OKR is that if the company always reaches 100% of them, the objectives areway too easy.

OKR is based on the principle of focus, speed, and impact. OKR should help the organization rethink its ways of working to achieve what has not been achieved before.

If your OKRs allow you to maintain the status quo, they are no OKRs.

The impact of OKR on practice

Since we’re tired of theories that you can all read about in books, we’ll let one of the people we’ve collaborated with over the years explain how he experienced it all:

João Eça
General Manager coches.net & motos.net Adevinta

One of the cornerstones of the change in the way we work has been the change from thinking in terms of outputs to thinking in terms of outcomes.

It may seem like a simple nuance, but the difference is fundamental and paradigmatic! The delivery of features or actions is no longer the most important issue, but rather the value delivered by those features or actions.

With this change we have been able to empower the teams to be in close user and customer proximity, to seek and find solutions to identified problems versus dictating to them what to do in their daily routine.

Therefore, the OKR methodology has been a major step in shifting the mindset to outcomes!

The Objectives and KRs are aligned with the strategy and the priorities are transparent to the entire organization on a daily basis.

Adevinta and ActioGlobal have been working together since 2018 to transform the culture of their digital marketplaces worldwide with OKR as the backbone of that transformation.

OKR Methodology:
Operating System and Keys

The OKR theory does not work unless it is supported by an operating system that changes the culture. That operating system must radically change those aspects that sustain traditional planning and command-and-control management. Over all these years we have been refining its implementation in organizations around the world. It is from this practice that we have derived 10 key aspects essential to be transformed, no exception:

Traditional planning

OKR

Activity

Impact

Organigrams

Organism

Hierarchy

Talent

Deployment

Synchronization

Control

Self-organization

Reporting

Focus

PowerPoint

Data

Power

Service

Bureaucracy

Transparency

Patronizing

Radical Candor

It is very important to understand that a theory will not change anything. But the culture certainly will.

OKR can become a traditional management tool without an operating system that transforms the culture and a high commitment to the values of the Agile Manifesto. However, coupled with routines and the necessary change, OKR turns into an organizational accelerator, as Juan Elias, CEO of Yapo, explains.

Juan Elias
Director General Yapo

A year ago we began working with ActioGlobal on the great challenge of changing the way we work. Today, after several months of intense work, 

I am very proud to see how this new cultural system has managed to bring together and give a logical shape to all the initiatives we were carrying out to gradually change our mindset from outputs to outcomes, using OKR, and other Agile methodologies within the ActioGlobal PEAK framework.

Yapo is a digital marketplace that partnered with ActioGlobal to transform its culture using OKR as a model for empowerment and evolution of an agile organization based on self-organizing teams.

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

New business challenges, unprecedented business perspectives.

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