Agile strategy planning and execution with OKRs helps organizations to better achieve their goals and bridge the gap between strategy and daily operation.
Agile strategy planning and execution with OKRs helps organizations to better achieve their goals and bridge the gap between strategy and daily operation.
Traditionally, annual goals were set by top management executives and cascaded down the hierarchy. The problem with this legacy approach is a lack of connection between company goals and daily operation: These days only 40% of employees across the organization know their company goals. But, if the mission is not clear, how should employees contribute to it? Moreover, in a VUCA world company goals must permanently be adjusted to new realities. Otherwise, this threatens to even increase the disconnect between strategy and day-to-day operation.
How to bridge this strategy-operation-gap? It is easy: In an agile world strategy planning and strategy execution must be agile, too!
How to Make a Strategy Agile with OKRs?
In order to bridge the strategy-operation gap, tech companies such as Google and Dell started introducing a fundamentally different approach to strategy name OKR – Objectives and Key Results. Here is how the orginator John Doerr summarizes this agile OKR approach:
„Agile OKR is a management methodology that helps to ensure that the company focuses efforts on the same important issues throughout the organization.“John Doerr
An agile OKR strategy approach follows a simple iterative process and helps organizations set ambitious, measurable goals that are tracked, evaluated, and readjusted on a regular basis. An agile OKR strategy is based on well-defined objectives, which are linked to measurable results and actionable tasks.
Compared to traditional approaches, the setting and reflecting objectives happens frequently (usually quarterly), making a company nimble enough to respond to changing conditions. Embraced by tech-& data companies (such as Dropbox, LinkedIn, FlixBus and MyMuesli), agile strategies help companies to stay on track in fast- changing environments, while encouraging innovation at the same time.
In contrast to traditional strategy approaches, an agile strategy involves everyone in the organization and encourages them to contribute to the overall success. This ensures that everyone goes in the same direction and pursues the same priorities.
Agile strategy does not make long-term company objective obsolete, neither an inspiring company vision. The opposite is true. In dynamic business environments, a clear “north star” element is even more important to stay on track. However, how you achieve your objectives is flexible and can be adjusted to day-to-day circumstances.
How to Implement an Agile OKR Strategy?
An agile strategy approach combines specific steps that set clear and measurable goals and link them to daily operations. These are the most important steps:
Annual priorities: In a first step the annual priorities should be made clear. Derived from long-term objectives and motivated by the company vision, the leadership team sets top company objectives. For instance, if your overall priority is customer-orientation, one of your annual priorities could be to provide the world-class customer service. Missing this step can lead to a significant gap between long-term goals and quarterly objectives that set in the next step.
Team objectives: After the annual priorities are clear and communicated, all departments and teams discuss their respective contributions – namely objectives and key results (so called OKRs) – to these goals. First the team sets objectives for the next three months (e.g. improve the customer support).
When the team objectives are clear, the next question is: What are the results we want to achieve? To answer this question each team defines measurable results they strive to accomplish. For example, to decrease the number of negative customer feedback by 50%.
Cross-team alignments: Once the team objectives and results (OKRs) are clear, the next step is to ensure that the entire organization is working towards a common goal. In scaled agile environments, alignment across several agile teams is essential because they often strongly depend on each other. For instance, to achieve the sales goals, the sales team needs to ensure that the marketing team follows similar priorities.
Initiatives and to-dos: After these alignments, the teams focus their discussion on laying out initiatives and activities that contribute to achieving the desired objectives and key results. The central question here is: How do we achieve the desired results?
This concludes the quarterly planning. To stay on track, the teams conduct weekly check-ins, where they review progress towards the defined results (e.g. in terms of KPIs) and plan the next immediate activities. This also includes adjusting their “tactics” to achieve the results if circumstances have changed.
At the end of each cycle (so after the quarter is passed), all teams analyze their results, compare them with the set objectives, and reflect on lessons learned. Afterwards, a new OKR cycle starts.
Benefits of an Agile OKR Strategy
An agile OKR strategy approach helps organizations setting clearer goals and focusing their resources to achieve them.
- Higher business value – Agile OKRs support a shift from long-term milestone thinking to continuous business value creation. Agile teams regularly prioritize their work and focus their resources on activities that contribute to the overall company objectives the most.
- Increased motivation – Agile OKRs empower employees to take ownership for their objectives and for key results. Seeing their clear contributions and working autonomously towards their goals, increases motivation and team morale.
- Overcoming organizational silos – By aligning goals, agile OKRs help breaking down organizational silos. Teams work together and collaborate to achieve common goals.
- Adaptability to change – By adopting shorter goal setting and reflection cycles through Agiles OKRs, companies can respond to changes early on and adapt their daily operations faster. This helps closing the strategy-operation-gap.
Agile OKRs and Agile Operation Complement Each Other
Agile OKRs can help your organization to better achieve your goals and give your teams clearer directions. By applying agile methods such as Scrum and Kanban at operational level you already have taken an important step, now you extend application of agile to the strategy level. Combined application at operational and strategy level will boost productivity, shorten time-to-market and ensure that the entire organization is effectively working towards a common target.
The best way how to best embrace agile strategy planning and execution with OKRs in your organization is determined by your current setup. Get in touch to find out how you can introduce agile OKRs in your organization.
How To Accelerate Your Organization’s Agile Journey?
You are right in the middle of your agile transformation or just starting? Here is how our agile assets can help you making the next step:
- You want to learn how to apply an OKR strategy in your organization? Our neoverv Academy provides agile trainings (OKRs, Scrum, other), workshops and agile coaching.
- How agile is your organization already and how are you doing compared to your industry peers? Find out with your Agile Assessment tool and receive an individual report that points out the next steps in your agile transformation.
- What does it take make your organisation a truly Agile Organisation? Download our Agile Playbook and learn about all agile enablers and how to make them work for your agile transformation.
Contact me or schedule a free consultation (German / English) to discuss any specific question regarding OKRs and your agile journey!
Tech Expertin, Agile Trainerin and Change Agent mit Schwerpunkt auf digitale Strategien, agile Methoden und Tools.
