How well OKRs work in practice
6 reasons why you should start with OKRs now
Markus Stenglein is a partner at New Work Squad, a team of experienced consultants and agile coaches - all with many years of management experience in established companies, agencies and start-ups. “We support people and organizations in their individual and organizational adjustments in a rapidly changing world of work. In the OKR area we see ourselves as a boutique consultancy - specialized, exclusive and individual ”.
For Workpath Magazine, Markus has summarized six good reasons why you should introduce objectives and key results (OKRs) in a crisis situation such as the current one.
It is now clear that the coming months will be a gigantic challenge - not only for our society, but also for (almost) all companies. The question that everyone is now asking: What happens after the crash? Three scenarios for the post-corona period are currently being discussed: the V, U and L model.
The V, U and L models
The V model: With this variant, optimistic economists assume that the economy will recover as quickly as it collapsed - the graph looks like a V. Jerk, jerk into the cellar - but as soon as the opponent (Covid-19) is defeated, leave everyone is back to work, making deferred purchases and GDP is rising again.
The U model: This curve is like a bathtub. After the rapid fall, the curve flattens out in the sediment. And we all know the scenario - if you want to get out of the tub, you have to work hard. And often it doesn't work the first time.
The L model: This scenario describes the worst case - the curve remains flat after the crash and a recovery is not in sight. Unfortunately, there are also arguments for this. After all, debt continues to rise as a result of the ongoing crisis, while sales are absent and liabilities are rising at the same time.
Why OKRs are the most sensible management method (not just now)
Whatever the scenario, it remains difficult for everyone at first. What is now helping companies and employees more than ever is orientation, coordination and focus. And that's why it makes sense to control your company with the OKR method. Here are six reasons why this is so!
1: OKRs now provide the necessary business clarity
2: OKRs work briefly and provide grip immediately
3: OKRs are suitable for every business focus
4: OKRs force collaboration in the company
5: OKRs ensure transparency and meaning
6: OKRs ensure psychological security
But one after anonther.
Reason 1: OKR now provide the necessary clarity
Is our company relevant at all? What benefits do we generate for customers? Are we doing the right things? Questions like these have been asked by tens of thousands of companies in the last few weeks - not only in Germany.
The OKR method forces companies to deal with the vision and mission, as the starting point for working with OKRs is a clear and understandable pyramid of principles. If this is tidy, the organization's actions can be aligned with it. And the clearer and more precisely the strategic area is worked out, the better the operational results will be.
Admittedly, almost every established company has a mission statement somewhere (hidden in a drawer). Short quiz question: Can you - without looking - clearly convey the vision of your company? And does your idea of the company vision match that of your colleagues? These questions need to be clarified so that everyone in the organization has orientation and clarity and does the right things - this is especially, but not exclusively, applicable to the current situation.
In our OKR management workshops, we smooth the top of the pyramid in one day. Why does it happen so quickly? All participants receive an extensive prework before the workshop. This preparatory work saves lengthy basic discussions in the workshop, because each participant had to think about it in advance. The vision, mission and strategy are then worked out together with the design sprint framework. The structured process quickly leads to results that everyone involved finds convincing (“team alignment”).
Reason 2: OKRs work short-cycle and immediately provide grip
Typical annual target agreements for companies, teams and individuals have become obsolete at the latest since the outbreak of the pandemic. Companies that have already worked with the OKR method have an advantage. Because they were able to react more quickly and in a more controlled manner in mid-March than traditional companies with classic 12-month business planning.
The reason: the OKR method works with planning cycles that are either three or a maximum of four months long. Objectives and their key results are anchored in these short-cycle time periods. The company's roadmap specifies which OKRs are included in the respective OKR cycle - and the roadmap, in turn, is based on the corporate strategy (see pyramid diagram above).
Planning for 3 or 4 months: which OKR cycle is better?
First of all, both cycles work very well in practice. And best of all: the OKR method is so agile that it can even be adjusted during the year. For example, at a company with almost 1000 employees, we switched from the 3-cycle to the 4-month variant in March 2020, in the middle of the Corona crisis and at the time of the actual OKR set planning phase. With the advantage that in the greatest stress (moving to the home office) the pressure was immediately noticeably reduced and the next OKR set (all goals and the respective success drivers) can now be planned again in April. The idea is of course not to keep jumping back and forth between different cycle lengths. However, the OKR Framework gives you the opportunity to make adjustments, for example in times of crisis like this.
The advantages and disadvantages of the two cycles can be found here at a glance:
Advantage 3-month cycle:
- Orientation towards the classic annual quarters
- Extremely quick adjustment possible
- Maximum responsiveness
- More output thanks to 4 OKR sets per year
Disadvantage 3-month cycle:
- Complex because more coordination is required
- More expensive because more capacities (e.g. meetings) are required
- High time pressure with accompanying high expectations
- The Q1 planning has to be done in the stressful turn of the year, if one is based on classic annual quarters
Advantage of the 4-month cycle:
- Less planning effort
- Cheaper because fewer resources are required
- Clever if the 3 cycles are not mapped in one year, but over the turn of the year
Disadvantage of the 4-month cycle:
- Lower output as only three OKR sets are processed per year
- Less focus as the cycle is four months long
- No adjustment to classic year-quarter structures possible
Reason 3: OKRs are suitable for every business focus
The idea of using OKRs to get more clarity, focus and orientation makes sense. But how can this be implemented in a company? First of all, it helps to take the complexity out of the topic and to clarify what actually should be mapped in the OKRs - and how much time you want to spend on it.
Does it make sense to only plan strategic goals, or does day-to-day business also have to be anchored in the OKR sets? The answer is, it depends on what you want to focus on and how much time you (and your company) have available. The following matrix helps to understand where you can start with your company with OKRs.
Where and how to get started with OKRs:
Daily business / project work: This is the recurring, reproducible work and project work - such as operational work that has to be done every day and takes up almost all of the time.
The free resources (strategy focus): Every company can work out new time quotas through effectiveness and efficiency measures. These freed-up time slots (for example 10 percent) are then not put into operational work, but into strategic topics. You can read about how this can look in concrete terms in the whitepaper “Agile control with OKRs”.
The good thing about the OKR method: As a company, you can decide which quadrant suits you. If you want to immerse yourself in the OKR world first, Quadrant I is certainly the best choice.
Reason 4: OKRs force collaboration in the company
The Corona crisis shows impressively how quickly companies were able to digitize their internal communication - and how well it works in most cases. The intensive, ritualized exchange in the regular video dailies and weeklys (“Let's start an update conference on Zoom every day at 10 o'clock and close a common check-out in the evening”), a new type of digital corporate culture is emerging . Many companies are only now realizing how meaningful it is when everyone works together - and how many good ideas there are in their company.
The OKR method is based precisely on this collaborative basic idea, because in the vertical (from the top of the company down to the teams) OKR sets are always put together top-down and bottom-up, so that the perfect mix is guaranteed.
Top down in this case supplies the strategy / vision / mission. For example, if you work with five objectives per vertical OKR set, the upper level contributes two of the five objectives - the other three objectives come from below.
Bottom up, i.e. one level lower, also brings objectives upwards into the OKR set, which contribute to the strategy. However, these can also come from the area of corporate culture or personnel development.
Since each OKR set is developed in a vertical structure as a group, a clear line is created that everyone in the company follows along with goals that are clear to everyone.
Right now, in these extremely demanding times, it is essential that all employees know what to do - and above all why! This type of target agreement stops the annoying silo thinking in the company and promotes mutual understanding. It becomes clear at a glance how the contributions of each individual are related to the contributions of the others.
Reason 5: OKR ensure transparency and meaning
The OKR method has always focused on the topic of transparency, after all, in most companies, the OKR sets are visible to everyone in the company - regardless of the hierarchy or department. OKRs have proven to be a valuable tool for leading remote teams even before Corona. OKRs support communication and transparency within the team by giving members a good overview of how successfully they are working towards common goals. Through regular discussions and the documentation of progress, all employees are always up to date and can work and make decisions more autonomously. If all goals of an organization are accessible in an OKR system, be it a specially created spreadsheet or dedicated software, this helps to create more transparency in the company with regard to strategic priorities across all teams and hierarchical levels.
The alignment processes during the OKR goal setting process also strengthen transparency within and especially across teams. In addition, OKRs make achievements and progress visible week after week by discussing and updating key results, thus promoting recognition. It also makes it easier to learn from previous performance and to optimize it over time.
Reason 6: OKR ensure psychological security
Psychological security is one of the most important factors for a functioning team. When employees feel confident, they are ready to try new things and innovate. This security was severely torpedoed by the Corona crisis. OKRs give a team or company a framework of security because they immediately provide orientation, transparency and focus. Especially in established companies, OKRs ensure more appreciative communication through their ritualized meeting occasions.
Conclusion: Now is the best time to start with OKRs
Regardless of what happens to Corona, this is the ideal time to start with OKRs:
- You immediately get clarity about the direction of your company.
- Short-cycle planning sets the right priorities and focus.
- Jointly formulated goals and their drivers of success bring grip.
- The way of working establishes a digital corporate culture.
- The transparency of the tasks means that there is clarity across all levels.
Stay strong and healthy.
If you have any further questions, we, many other experts and experienced practitioners, are also available to you Workpath Community to the side - especially in times of social distancing a great opportunity for exchange and a space for mutual support.
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