You’re considering the adoption of OKRs for your organisation, and what you really need is help to understand what’s involved in getting from where you are now to actually using and implementing OKRs. You’ve probably found there is a wealth of content on the internet about the benefits of OKRs, but at this stage what you need to know is:
- How will OKRs really affect my organisation and what can get in the way of a successful OKRs implementation?
- How do I prepare my leadership for OKRs?
- How do I prepare my people for OKRs?
- Some practical, simple advice on how to begin the process and set it up for success.
This article is one in a series that will shine a light in each of these areas. They will put you in a position to feel more comfortable with the idea of implementing OKRs, and help you feel more ready for the challenges you will face.
In this article, we’ll be looking specifically at the way OKRs impact an organisation and what you need to be thinking about to make them a success.
As you read this, remember that every organisation is different. The information here has been divided up to make it generally applicable and digestible, but your own situation may require differing approaches. The important thing is to cover all the bases and have a strategy to deal with the likely challenges ahead of time if possible. There is no silver bullet or one size fits all for OKRs – a good implementation is tailored.
How will implementing OKRs really affect my organisation?
The question is not asking what benefits your organisation might get from OKRs and why you might want them; we have another article that goes into detail on that question. We are looking at the actual mechanism of how OKRs create change and the effect this can have on your people. Understanding this is critical if you want to ensure that implementing OKRs is successful.
The key concepts here are culture change and mindset change. Most people talk about these things as if they are the holy grail: find them and you have suddenly the secret to greater business success. The truth is that these things aren’t found, they develop and grow within your organisation when it’s stimulated correctly. Like most processes of growth and transformation, they require careful nurturing, and going through them is often uncomfortable and difficult. You need to be ready to guide your organisation through this process and nurture it as it goes through the pain of culture and mindset change. In this way the benefits will manifest and be felt quickly, rewarding people for making changes and driving them on further.
The answer to the question of how OKRs will really affect your organisation is going to be specific to it alone. It will be primarily determined by how much change is required to move your organisation from where it is now to having a culture compatible with OKRs. That means a culture where value delivery is measured in close to real-time and decisions are data-driven, rapidly taken and devolved down the organisational hierarchy as much as possible. It also means there is widespread transparency about the performance and success of all areas of business operation. For some organisations, this will be simple, and for others, it will mean some hard work to transform into something better.
OKRs are designed to drive certain types of behaviour and discourage others, and since culture is just the aggregate of the behaviours typically exhibited by a group of people (in this case your organisation), your culture will change as the OKR process does its work. This change is, in fact, the primary channel by which the benefits of implementing OKRs are realised, and so this is something you need to be aware of, ready for, and keen to fuel.
The Inertia Triad and Jarring Change
Culture change is jarring and uncomfortable, and it will push your people and teams out of their comfort zones. We all know the cliché that to develop and grow this has to happen, but the reality is that unless people are aware and supported they will tend to resist and will naturally seek to migrate back into their comfort zones, often acting subconsciously. Let’s look at how jarring that can be.
‘Knowledge-work’ cultures have typical dysfunctions that exist mainly as a result of the way work is created, managed or funded. These tend to lead to huge inertia once a stream of work has started. Counter-intuitively, people are actually very comfortable with these dysfunctions and will react against efforts to change them. There are a triad of issues that usually cause inertia once work begins.
The Unstoppable Project
Inflight streams of work, often called projects, take on a life and untouchability of their own and, oddly, this is what people are used to. Once started they are managed by the “iron triangle” of “to budget”, “on time” and “to spec” (quality might be mentioned instead here, but it’s usually the neglected brother/sister to the other two). It can become almost blasphemous to question the project itself and certainly whether the work is delivering the right value.
When you add the sunk cost fallacy to this situation, it can make projects almost unstoppable, even when people are widely but quietly saying to each other, “why are we doing this work?”
The Higher Purpose
Work is often created without a clearly defined value proposition, or one that is dubious, especially if you’re in an organisation where work is often created by directive or initiative from senior managers.
The Funding Fences
Many organisations, particularly larger ones, have funding models that require planning a year or more ahead. Often, funding is tied to specific project-defined work, with changes to the outcomes of said work only changeable with new funding cycles (which may well not happen near the time of execution). It is widely accepted in the world of software development that requirements are rarely known this far ahead, and that change is a constant. Such funding models are blind to this, and lock in work ahead of time that might have limited value, forcing engineers and managers to engage in “creative requirements changes” to try and shoehorn value and meaning into projects that are no longer relevant. The inertia here to get changes into streams of work is obvious.
In the world of OKRs, this situation starts to change. OKRs are very good at giving quick feedback on whether an initiative or package of work is contributing towards the organisation’s objectives. This means it is easy to spot when some activity is not taking you where you expected to go, countering the first two dysfunctions by providing clarity. Suddenly, stopping a long-running piece of work, with sunk investment, could be a success story worth celebrating. You’ve stopped pouring money down the drain! However, to many organisations, this will be something very new and will feel deeply uncomfortable at first. The proportion of work cancelled as not providing value will appear to go up, but in truth, you are seeing the real value of projects and workstreams much sooner than you’re used to. In terms of finances, in principle, this allows for improvements in the way financial planning is done. Such rapid empirical feedback should allow for less rigidity and lead-time in financing new projects, as they now represent a far smaller commitment of resources before failure is detected. Experiment and fail fast!
Given what we’ve said about the potential cultural impact of adopting OKRs, it’s reasonable to expect that implementing OKRs might come with some challenges, and this is indeed often the case. The success of your implementation is likely to be decided by how well you can deal with these challenges. Let’s take a look at what they might be.
There are several key issues that will get in the way of implementing OKRs and delivering the impact you want:
Lack of grounded strategy: the mission, vision, purpose, etc.
OKRs flow from your organisation’s purpose, mission and/or vision, building up at each layer into a comprehensive and clear strategy. This includes a set of measures to show whether your business activity is genuinely helping you achieve your aspirations. It is impossible to define objectives to get you somewhere if you don’t have a clear and easily understood statement of where it is you want to go. There’s not much more you can say here, to be blunt, if you find yourself needing to explain your organisation’s purpose, mission, vision or strategy statements then you are going to have problems. This is where you need to be focusing your energy.
Implementing OKRs can be a catalyst to revamp your organisation’s direction and improve how clearly it’s expressed. This is not a step you can skip if you want OKRs to work. When first engaging with an organisation facing this issue, we like to ask a simple question to a sample of its people, “Can you share with us the organisation’s purpose and how does the organisation measure its success in achieving it?” Almost always we find that the majority simply don’t know the answer. In fact, most aren’t aware of how that information should link to the work they’re doing. Knowing the reason why you are doing work, beyond being paid for it, is a critical part of ensuring that the work you do is actually delivering value and worth doing.
Lack of data to feed into the system
A critical part of implementing OKRs is the feedback given by the key results. Key results provide data on the impact of your decisions regularly and often relatively quickly. If you don’t currently collect data on how your business areas are performing, this can present a challenge. The key, in this case, is, again, to be aware, and use the opportunity of adopting OKRs to start creating the types of framework that will collect and provide this data. In doing so you will help shift the company culture in the direction of data-driven decision making. This is the type of issue that would be highlighted early on in any competently run project implementing OKRs.
Even if you already collect data on business performance, it may still be difficult. Depending on how the project or solution-delivery-orientated your organisation is, the data you already have may not be useful in this context. Project delivery tends to focus on activity and outputs, rather than measuring the intended outcomes for the organisation (the thing we really care about), so useful data may be scarce to start with, and new metrics will need to be defined and measured. This can be one of the hardest elements of implementing OKRs and it’s something that can amplify the other challenges below.
Lack of leadership buy-in
Your fellow leaders may not feel the need for a new system to manage business strategy and performance. This is often the case in situations where your organisation has grown quickly from being small where a formalised system was unnecessary, or larger organisations where a system is already in place and there is little appetite to change. This is a huge area and pivotal to your success. We’ll look at this situation in more detail in part two of this series of articles, as it has complex dimensions and needs a complete approach to ensure full coverage.
Resistance to change generally
Change fatigue is a real and difficult condition to treat. 70% of all transformations fail and change fatigue is attributed as a major factor . If your organisation is rapidly evolving that’s a great thing, but tolerance for change depends very much on how well it is managed and whether your people feel swept away and powerless or able to manage and influence the changes. Your OKR implementation needs to be properly managed so that it becomes something empowering instead of just another change people need to survive. In practical terms, this means having OKR expertise available, and access to experience in managing transformative changes in organisations. If that’s in-house that’s perfect, if not, you need to consider where you’re going to get the expertise and plug it in.
The introduction of business performance management where there has been none before can often be viewed with fear and dislike, especially if it’s seen as a way to control or keep tabs on people. The key to avoiding this is demonstrating the empowering nature of OKRs and allowing people to see how they will help devolve decision making and empower leadership closer to the front line. Far from controlling people, they should actually open the door to greater freedom and autonomy throughout the organisation.
A well-managed successful pilot implementation is a good way to gain wider acceptance here. In addition, developing people to become champions for OKRs, who then promote the benefits throughout the organisation is very helpful.
Poor planning and execution of the implementation.
This sounds like it goes without saying, but when something appears simple, the way OKRs do, it can be easy to underestimate the depth of knowledge, planning and work that is required to make the transition and implementing OKRs a success. It is essential to have sufficient priority clearly attached to both planning and executing the implementation work. A simple practical consideration is that the time investment required is often much larger than it appears before you plan out the work, especially if any of the key challenges highlighted above are present in your organisation. Again, ensure you have access to the right expertise to plan and execute implementing OKRs successfully. Poor planning and bad execution will totally undermine the credibility of the OKR system, dooming or handicapping it before it has a chance to shine.
Lack of a clear and concise change story
This is perhaps an element of planning, but it’s worthy of a callout on its own. People need to understand and buy into why they are doing what they are doing, and that includes adopting OKRs. How you sell implementing OKRs to your people will be a key factor in its success. The challenge here is to get the change story right. You need to clearly elucidate why change is needed, what is changing and how it will address the issues indicated and the extra benefits it will bring for the organisation. You’ll need to be able to communicate how you’re going to make the transformation happen and what impact it will have on people. It needs to be relevant to everyone involved so it can motivate people, and get them used to the idea they will have changes to make and work to do. This is the tool that will help stop the implementation from being labelled and treated as just another management initiative with no relevance to the day to day working lives of your people.
If you can plan to implement OKRs to mitigate the risks we’ve discussed here, then you will have gone a long way towards removing potential roadblocks and ensuring a smooth transformation. If you have areas of your organisation that are going to be challenging, don’t let that stop you. OKRs are a way to help change the culture of your organisation for the better, and if you plan well the challenges can be overcome. The challenging areas of your business are probably the ones most in need of improvement, so be brave. The benefits of OKRs are bold because they create bold changes, and that requires a bold approach.
In part II of this series we’ll look at how to prepare your leadership for OKRs, the types of challenges you’ll face as you do this and some suggestions for how to mitigate them.
We also recommend listening to the following podcast, “How do some companies manage to successfully transform the way they work to become more innovative, whilst making their employees happier?” The fantastic team at Just3Things hosted this expert panel drawing on experiences from Deloitte, Admiral Group, Go Compare, RBS and Lloyds Bank, and involved our very own Mike Horwath.