Schriftmarke der Nerd Reoublic. Die Beratung für New Work und Agilität.

Brave New OKR World

In this blog post, we will explore how OKRs support goal achievement and how they can be implemented in an agile environment. We will also address the challenges that companies may face when they apply OKRs incorrectly. Finally, we will share some helpful tips to ensure the successful use of OKRs.

Definition OKR: What is OKR? 

Objectives and Key Results (OKR) are a method for focus and goal-setting. They are an essential component of the management approach known as “Management by Objectives,” a proven and effective method for leading a company.

The idea behind the Objectives is quite simple: you set qualitative goals (in terms of desired outcomes) for teams, departments, and the overall organization that can be achieved independently within three months.

Key Results are quantifiable metrics that serve as success drivers for the Objectives. Typically, 2 to 4 Key Results are defined for each Objective to increase the likelihood of achieving that Objective. Throughout each quarter, regular checks are conducted to assess the progress each team is making toward achieving the Key Results and to identify where corrective actions may be necessary.

The beauty of OKRs is that they essentially “force” companies to decide between what will be done and, importantly, what will not be done. The notion that “everything is equally important and urgent” simply doesn’t apply here anymore. This helps teams concentrate on their commitments and pursue them with full dedication.

What Are the Dangers of Applying OKR wrong?

At first glance, the OKR method appears very simple. However, the framework is often misapplied, leading to a number of problems:

Resource Overload: The OKRs should reflect the goals of the entire company, including day-to-day operations. Only in this way can an overview be obtained of where financial and personnel resources are being allocated. If only a small part of the organization works within the OKR framework, teams can quickly find themselves overwhelmed. In addition to achieving their own OKRs, team members often have to deal with “side issues” from other teams that do not work with OKRs.

Incentivizing the Wrong Mindset: OKRs involve navigating uncertainty, meaning that you are essentially making bets whose outcomes are never guaranteed. Therefore, the measurement should focus on how sensible these bets were and how quickly mistakes and changes were addressed. Often, individual bonus systems are tied to the achievement of Objectives, which can lead to problems. This approach does not incentivize learning and improvement; rather, it encourages employees to formulate easily achievable Objectives to secure their bonuses. No company looking to drive innovation through calculated risks can benefit from this.

Lack of Change Management: The OKR framework relies on re-evaluating and planning anew every three months. This is based on the understanding that the environment can only be considered relatively stable for short periods. If goals are already defined through backward planning for the next 6, 12, 24, and 36 months, there is little to gain from implementing OKRs. Instead, companies lose opportunities to quickly adapt to changing circumstances.

Tips for Successful Implementation of OKRs

Objectives and Key Results can be a great tool for success, but only when used correctly. The best way to avoid the dangers mentioned above is to ensure that OKRs are applied properly from the start.

Here are some tips:

  1. Clarify the “Direction”: Where are we heading for success? Only when every employee understands the company’s vision and strategy can they formulate Objectives that align with it.
  2. Better to Aim for Fewer: …than to leave half behind. Experience shows that teams and departments often take on too much and end up overwhelmed. It’s better to achieve 5 Objectives and add 1 or 2 more in the last month than to set 10 Objectives that are only 50% accomplished.
  3. Regularly Review Progress: With Key Results, we place bets that we believe are relevant to achieving the Objectives. Only by regularly reviewing can we adjust course mid-quarter if one of these bets isn’t paying off.
  4. Continuously Learn: Each quarter, we learn what works well and what doesn’t. These learnings should be thoroughly discussed in reviews and retrospectives to make even better predictions and implement them more consistently in the next quarter.

If there are uncertainties in dealing with OKRs, coaches or consultants can help. They can assist in developing a plan that suits the specific team and organization. We are happy to help you with the necessary steps, either personally or in one of our OKR courses.

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