Over the past twenty years the corporate world has seen significant change influenced by digital technology which has revolutionised the way that companies operate. Globalisation has led to increased complexity navigating different markets, each with their own regulatory environments and cultural values, and the pace of external, societal change has led to challenges predicting future trends.
Companies have access to more data than ever before, but whilst access has increased, discerning actionable insights from this vast quantity of information has caused traditional leadership problems. Where previously, autocratic, task-focused management was the norm - now good leadership requires a more collaborative, decentralised approach to decision making.
The most successful organisations are embracing softer leadership styles that shift away from being task-oriented, to a more people-oriented approach - empowering those closest to the work to make data-led decisions on the what and how, without centralised directives from senior management.
A McKinsey Global Institute report found that organizations that embraced data-driven decision-making were 23 times more likely to acquire customers, 6 times more likely to retain customers, and 19 times more likely to be profitable, and research published by Harvard Business Review indicated that companies with decentralized decision-making structures were more agile and able to respond to market changes more effectively, leading to improved performance.
Against this backdrop, successful companies are utilising a variety of tools and frameworks to align their strategy with their work. Rather than dictating exact scope, leadership provide strategic direction in the form of objectives and empower people and teams to define what needs to be done to realise them.
OKRs (Objectives and Key Results) is one such framework. Popularised by the likes of Google and Intel. OKRs help organisations set clear goals and measurable outcomes. The OKR framework promotes alignment across teams and ensures everyone is working towards common goals, promoting transparency and clarity.
OKRs are typically written with an objective at the top and 3-5 supporting Key Results below it. The Objective is what needs to be accomplished - it’s concrete, action-oriented and (ideally) inspirational. The Key Results are how the objective will be accomplished - they provide a benchmark, help monitor progress, and need to be measurable and verifiable.
OKRs are usually set quarterly but sometimes objectives are long lived, and key results evolve as progress is made. The quarterly cadence allows organisations to adapt to changing circumstances and re-evaluate priorities on a regular basis.
OKR Implementation Tips for Leadership
Set a Few, Clear Objectives: Define a small number (1-3) of ambitious yet achievable objectives that align with the organisation's overall vision. With less objectives comes more focus - yes, I know you want to take over the world and do everything, but step-back and decide what is truly important right now. Remember, the quarterly cadence - you can always pivot direction later.
Regular Check-Ins: Schedule regular reviews (at least monthly) to discuss progress, challenges, and adjustments. This keeps momentum and accountability high.
Involve Teams: Engage employees in the OKR process to foster collaboration, buy-in and ownership. Team members often have unique insights into their work and the challenges they face - they can help identify what really matters and help set better OKRs.
Avoid BAU: OKRs are meant for change - not maintaining the status quo - you don’t need to set OKRs for Business as Usual.
OKRs not KPIs: KPIs (Key Performance Indicators) are measures of an organisation’s health; it’s performance and operational efficiency. OKRs are measures for change, they are a focus on what needs to be achieved. Both are important, but they are not the same - be careful mixing them.
When KPIs and OKRs are integrated there are often an overwhelming number of metrics being tracked which causes confusion and dilutes focus. The continuous nature of KPIs versus the quarterly OKR timeframes can create misalignment in assessing progress and success, and an over-emphasis on KPIs can foster a culture of micromanagement and fear of failure, discouraging experimentation and learning. OKRs should promote a growth mindset, encouraging teams to stretch their capabilities.
Agilicist work with leadership across industry to help them create strategic alignment throughout their organisations by using the OKR framework - contact us to have a chat about how we can help you become more aligned, more focused, and higher performing.
