Brett Knowles, pm2 Consulting
Brett is a long-time thought leader in the Strategy Execution space for high-tech organizations, beginning in the late 80’s while teaching at Harvard and being involved in the initial Balanced Scorecard research and books. His client work has been published in Harvard Business Review, Forbes, Fortune and countless other business publications.
Pub: September 22 2021
Upd: May 6 2022
No. OKRs (Objective and Key Results) are not just for Leadership
Some people don’t understand the benefits of OKRs and we are often asked “Are OKRs just for the leadership team?”, but there are many variations of this question, such as:
- “Do OKRs need to go down to every employee?”, or
- “Is there any level or department where we should start our OKR building process?"
The answer is no, but the issue is this; sooner or later OKRs will naturally radiate to every value-adding portion of your organization.
Let's assume we start at the top of your organization, where leadership has the budget, interests, and responsibilities to develop a better OKR management process to ensure the entire organization is aligned towards and executing its strategy.
As a metaphor, this is kind of like building a pyramid from the top down! Those top few rocks are suspended in mid-air. Now, this is not a great metaphor, because in the case of OKRs we can actually start at the top, we can build the top of the house OKRs without any structure beneath them. The dilemma is limited information to support an OKR in the business model. It's kind of like building a car dashboard but not attaching it to the car.
For the short-term, you can run your company OKRs solution by doing manual data input to that top-level OKR goal-setting solution, but two things quickly happen:
- As soon as leadership sees a performance issue that they want to know more about, that OKR system does not support that drill-down into the details and suddenly we are back in today's world with a hodgepodge of disconnected spreadsheets, silo-based solutions, and the need for managerial time to gather and research the data.
In other words, the lack of drill-down capability makes the top-level OKR solution less effective than we would like as it does not provide any diagnostic capability.
- Once leadership makes decisions about how to deal with this performance issue, the OKR system does not provide the ongoing monitoring tool to provide the required feedback to leadership to determine if they have in fact solved the problem or do they need to find a different solution.
Without the OKR feedback, the entire organization continues to fly blind.
Unfortunately, many OKR solutions fall into disuse at this point. Leadership has invested time and resources into building desktop-level views and does not see the benefits it was anticipating. In our experience, organizations seem to spend too much time fine-tuning their strategy and objectives before turning on the system and realizing the value comes not from building the top of the pyramid but by building the connections between the top of the pyramid and the foundations. In this case, your foundations are your transaction systems - Salesforce, ERP, HRIS, accounting, etc.
Obviously, the next move is to build the drill-down objective and key results around that one performance issue. The payback is immediate. Dealerships can set clear objectives for the corrective action that they believe will solve the issue, the organization has clear instructions on what they should do and how they'll measure success, and all participants can closely monitor and fine-tune the corrective action.
The unintended consequences of this approach include:
- The organization rapidly develops strategic thinking and managerial skills across the organization as that process for setting and monitoring strategic OKRs becomes completely transparent and everyone begins to understand how to repeat that process within their own employee goals, responsibilities, and authority.
- A culture and mindset around the importance of performance and the clear alignment between us and that performance builds engagement.
- We build an agile management capability that reduces the need to forecast into the future and allows us to quickly respond to whatever unexpected events will occur.
You can easily visualize how this begins to progress in the organization; as problems are observed, drill-downs are built in each of those areas, and eventually, the pyramid looks like a three-legged stool, then an eight legged spider, than a centipede, and eventually, the full pyramid is built out.
The benefit of this approach to building of OKRs include:
- It is a low effort / immediate benefit approach whereas if you build each node of your OKR system; you get big benefits through better strategy, alignment, and execution.
- It breaks the project of implementing OKRs into small, easy to execute, and economic steps.
- It allows the “early adopters” (see Geoffrey Moore's “Crossing the Chasm” book) to lead the way to the benefit of the mass majority and laggards.
- It creates a “cone of inevitability” where all parts of the organization can see and prepare for what is coming their way.
- It allows the organization to take on the associated topics, such as simplifying your planning process, developing more concise role clarity frameworks (e.g. RACI), providing effective links to compensation, etc.
The need to build out these cascaded OKR “drill-downs” is inevitable, even if you are fortunate enough to start at the top of your organization because no real value-added activity occurs at the top of the organization. Although strategy is set at the top level, all value-added activity occurs lower down the organization chart, and therefore effective monitoring, management, and direction setting need to eventually cascade down to where the value-added activities are occurring.
What does this mean? It means that as you drill down your strategic OKRs, you may have more depth in some areas than others due to the profile of where value-adding activities occur.
It is also important to note that OKRs can move up the organization just as easily as they cascade down. This means that it does not really matter where you have your first OKR pilot as they will inevitably migrate within the organization to where they add the greatest value.
It is far less important to consider where you start your OKR management work than it is that you set the expectation that they will naturally migrate throughout the organization to the places where they add the greatest value.