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Every strategy needs a way of executing it. The OKR framework is a way of doing exactly that if you use this powerful goal setting methodology correctly. Which is what we want to show you how to do in this article and in more details via the Strategic Planning & OKR Course & Workshop toolkit, where Step 5 is dedicated to mastery of OKRs (Objectives and Key Results).
If you have followed a structured strategic planning process you will have strategic narratives that describe where you are, the problems you need to solve that requires change and your hypothesis for the solution that will give you the edge and a competitive advantage. You will also have KPI scoreboards that will tell you if your strategy is working.
OKRs are the strategically aligned Objectives with measurable outcomes called Key Results that will act as your executional roadmap.
Before we dive in, please don’t get hung up on the acronym. They are simply a type of goal that describes what teams need to achieve every quarter to keep you moving towards delivering the strategy that aligns with your vision and winning aspiration.
We’ve already mentioned that to use the OKR methodology to drive business growth there needs to be a well articulated strategy in place that includes KPI scoreboards.
In order to get to a position where you can write that strategy you will have had a number of structured conversations in and across teams. This was Step 3 of the FAST Transformation planning process. These conversations will have included conversations on KPIs, Issues, Opportunities and Capabilities that are needed to deliver your value proposition.
With that work done and your strategy being clear, you can now ask what we call the OKR genesis question.
To execute the strategy: “What do we need to commit to and make progress on next?”
Learn & Unlock The Benefits Of The OKR Framework For $800
New capability requirements refer to the development or acquisition of entirely new skills, resources, or competencies that are essential to achieving your strategy.
Existing Capability Enhancement OKRs
Existing capability enhancements focus on improving and leveraging the organization’s current skills, resources, or competencies to achieve better results or gain a competitive edge. It involves setting goals that aim to enhance and maximize the effectiveness of existing capabilities.
When using the OKR framework to set goals, it’s essential to consider both new capability requirements and existing capability enhancements. By defining objectives and key results in these areas, organizations can ensure a well-rounded approach to goal setting.
New capability requirements address the need for innovation and adaptation, while existing capability enhancements maximize the value and impact of the organization’s current strengths. Ultimately, the balance between new capability requirements and existing capability enhancements will depend on the organization’s strategic priorities, market dynamics, and the specific goals they aim to achieve.
The third type of OKR is Performance OKRs. These focus on enhancing the overall performance of existing processes, functions, or teams within the company. They aim to optimize efficiency, productivity, quality, or other performance metrics without necessarily requiring new capabilities. Here you would ideally have a bias towards leading indicators that change frequently enough to track and act as lever on a slower moving lagging indicator.
Key Results are how you will measure the success of your Objective. As such the success of your Objective is conditional on the completion of your Key Results. The types of Key Result you choose will depend on the Objective. Typically an OKR has two or three Key Results.
The examples and tutorials in the FAST Transformation Toolkit talk you through and show you how to write and combine Key Results to tell stories. For example, here’s one of the patterns we show you.
The story of this OKR is: “This KPI is underperforming. If we achieve the targets in these leading KPIs we should be able to solve the underperformance issue.”
In the above example this OKR is likely to have what we call Activities. Activities in the context of OKR are what you will need to commit to doing in order to make progress on the OKR. These activities can have sub-tasks and can also have sequence, which includes keeping a list of ideas of things you ‘could do’ to move this OKR forward.
Activation Activity planning like OKR planning should be an inclusive activity. And by planning Activation Activities you have:
Note that it will make sense for all OKRs to have Activation Activities. Which is something that will make more sense as you learn and start to use the OKR methodology to set goals that align with your strategy.
Ultimately, the key to using the OKR methodology successfully is to prioritize OKRs that align with the company’s strategic direction, have the highest potential for positive impact, are feasible given available resources, and mitigate risks effectively. Effective communication and collaboration within the leadership team are essential in making informed and balanced resource allocation decisions. Here are some of the decision making criteria we teach you to use and platform in our software.
Key Result 3: Reduce customer support tickets related to that issue by 70%
Unlike other goal setting frameworks, the OKR framework encourages you to set goals that are hard and a little aspirational, but should be doable. You know they are doable because you have taken to time to plan the steps needed to achieve the OKR.
You will notice in the examples we’ve written in the FAST Transformation Toolkit that we’ve added ‘aspirational’ and ‘committed’ labels to Key Results. These tell the reader how ambitious the target is and whether it’s expected that 100% progress towards that target is expected. The general rule-of-thumb is progress of 70% or more of an aspirational Key Result is seen as success, and 100% of a committed Key Result. A complimentary approach when using a KPI as a Key Result is to have two targets, a target you’re happy to commit to and a stretch / aspirational target. This way you don’t worry about success thresholds.
Philosophically the OKR framework encourages ambition, transparency, and learning and discourage low-balling targets, hidden progress, and fear of failure, and in doing so unlocking the additional performance benefits associated with being stretched. This means that you need to have or develop a ‘psychologically safe’ culture – which is something you want anyway.
We go into this more as part of the FAST Transformation Toolkit should this be new to you and something you’d like to learn more about.
The OKR Methodology Comes To Life In ZOKRI
In addition to being a home for your Vision, Mission, Winning Aspiration, Strategy and KPI Scorecards, ZOKRI has class-leading OKR features that ensure the OKR framework is used correctly and drives growth.
1
Strategy & OKR Planning Course
Follow a proven strategic planning process, learn new skills like OKR, run amazing planning workshops.
2
Fractional Expert Support
Get coaching and ongoing support from our global team of Fractional Chiefs of Staff.
3
Strategy & OKR Management Software
Let our strategy, OKR and people management software keep everyone on-track and watch KPIs improve.
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