How Can Agile & OKR Work Together
Author: Khalid Amin
Today, market forces, customer demands, economic changes, political conditions, and public health concerns make it necessary for companies to quickly adapt to change.
Those who don’t, run the risk of losing market share, revenue, and public trust. Command-and-control style leadership teams become powerless to control change across an entire organization. Agile companies, on the other hand, give teams the freedom to set goals and to decide how to reach them. Flexibility & empowerment, the cornerstones of agility, are also the founding pillars of OKRs.
What is OKR? A goal-setting framework for thinking big
Objectives and key results (OKR) help establish high-level, measurable goals for your business by establishing ambitious targets and outcomes that can be tracked over the quarter.
OKR is a goal-setting framework that helps organizations define objectives and then track outcomes in days instead of months.
OKR has been around since the 1970s, and the concept was created by Andy Grove, but popularized by John Doerr, one of the earliest investors in Google. OKR quickly became an important focus for Google, and companies such as LinkedIn, Twitter, Dropbox, Spotify, AirBnB, and Uber have since followed suit.
The goal is to set an ambitious objective, which is “what I want to accomplish,” and the key results, which enable how to get it done. Thus, with OKR, a goal isn’t just what you want to achieve; it must include a way to measure achievement. Embraced by tech companies, OKR can help businesses stay on track in a fast-paced, ever-changing industry, while still encouraging innovation.
OKRs support a goal or vision, and they should also be measurable, flexible, transparent, and aspirational. They’re also typically established by leadership and they’re never tied into compensation or performance reviews. Ultimately, OKRs help businesses set ambitious goals, and then focus on achieving outcomes over the course of a business quarter
OKRs vs. KPIs
OKRs provide guidance that promotes distributed decision making and keeps every level of the organization engaged. Objectives in OKRs should be ambitious, short, and inspiring. Unlike the goals in management by objectives (MBOs), OKRs should make you strive for peak performance. Scoring a perfect score usually means the objective wasn’t a stretch. And unlike key performance indicators (KPIs), OKRs are meant to align with a company’s vision, mission, and values.
Both address different aspects of organizational performance KPIs are focused on the performance of employees, creating goals to measure their success in their careers and within in the organization, whereas OKRs are focused on the organization, helping companies identify quarterly goals to improve business performance and grow the organization’s success.
OKRs & Agility
Agile teams’ experiment, fail, and learn as they go.
OKRs don’t punish teams for going after aggressive goals. Instead, they embrace a spirit of continuous learning and collaboration
Agile teams are empowered to make decisions.
It is understood they will make mistakes and learn from them. OKRs function in a similar way: they set a direction without mandating how the work will be done. ·
You can change throughout the year.
You may discover that the goal you set for yourself or your team is no longer relevant. Maybe market forces are now dictating a new direction. OKRs offer you the flexibility to make these changes. You can change goals that are no longer relevant. And you can modify tactics that aren’t yielding the desired results.
How to use OKRs
According to Ben Brubaker-Zehr, co-founder of strategy management software company Meddo, OKRs are generally simple and flexible, which can be good or bad depending on how they’re implemented within your organization. You want to avoid a “set it and forget it” mindset, he says. Instead, OKRs should align with business goals and enterprise initiatives, with regular check-ins to gauge progress throughout the business quarter.
- Objectives are qualitative. They should be ambitious, short, and inspiring. They should instill a sense of meaning and get you out of bed in the morning with a feeling of excitement. Ambitious objectives make teams strive for peak performance. The philosophy behind OKRs is that if your company is achieving 100% of its goals, the goals are too easy.
- EXAMPLE | O: Deliver best-in-class customer experience
- Key results are the metrics you use to track progress toward each objective. The best KRs are quantitative, possible, and measurable. You should plan for one to five key results for each objective
- EXAMPLE | KR1: Improve the net promoter score from X to Y
- EXAMPLE | KR2: Improve online engagement from B to C
Types of OKRs
- Company OKRs:
Setting OKRs forces you and your teams to prioritize goals. As a leader, you need to secure commitment from your leadership team to get going - Business Unit Leader OKRs:
Your job, once the top-level OKRs are communicated, is to define your own. We walk you through examples and offer suggestions for creating and tracking bold goals and key results. - Agile Teams OKRs:
Teams and individuals are empowered to adopt OKRs. OKRs not only push you to peak performance; they also create a track record of your achievements
If your division is responsible for international marketing, your team sets an OKR that supports increasing the number of users in Asia.
Division OKR Example:
O: Increase market share in Asia
KR1: Increase the number of users in Asia by 10%
KR2: Increase volume of product sold in Asia by 15%
For an HR Leader the OKRs may look like this:
O: We are rated as the #1 workplace
KR1: Increase employee retention rate to 92%
KR2: Improve net promoter score to 7.6
Note : the HR objective doesn’t seem to directly align to the leadership OKR above, about improving market share in Asia. And that’s OK. Not every part of the organization will seem to align exactly with the top-level objectives. Some divisions or functions still need to account for “business as usual.” This doesn’t mean they can’t set aspirational goals.
- See what setting team-level OKRs looks like using the division-level OKR set by the business unit leaders in our previous section:
COMPANY OKR EXAMPLE
O: Establish an online presence in the Asian market
KR1: Achieve a social reach of 10,000,000 online active users
KR2: Improve our share of voice by 300%
DIVISION OKR EXAMPLE
O: Create a buzz in Japan
KR1: Onboard 5 new social influencers per quarter in Japan
KR2: Double the entrances to our Japanese translated landing pages KR3: Reach 300 social shares a month in Japan
When setting OKRS, understand the dependencies across business units or functions. Who cares if you can bring a product to market faster than anyone else if your services team can’t support it?
PRO Tip
OKRs usually contain three to five high-level objectives, with another three to five key measurable results for each objective. Even at the biggest organizations, it’s never advised to have more than five OKRs at one time. For smaller teams and organizations, you’ll want to keep it to three. After establishing your objectives, you’ll track the progress of each key result individually and reference them often during the quarter.
Establishing OKRs | OKRs Governance | set once, score & pivot monthly
- The goal of using OKRs for strategic themes is to define and track their progress through concrete, specific, and measurable actions. “OKRs are frequently set, tracked, and re-evaluated – usually quarterly.
- OKRs exists to create alignment and to set the cadence for the organization. The goal is to ensure everyone is going in the same direction, with clear priorities, in a constant rhythm
- Collect actual performance data across the business unit with the help of your finance or analytics teams.
- Review the KRs with the objectives’ owners via scoring (see below figure)
- Have an honest conversation about the progress you made. What obstacles are in your way? How can you remove them? What do you need to do differently?
- Communicate with the rest of the organization and your leadership team, ask for feedback, and post the results on an intranet site or blog
Scoring 0.7 on a key result is a success. You should not feel like a failure if your team end the year without a perfect score.