How to Make Strategy Agile, too? Agile Strategy with OKRs

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 OKR

Agile strategy planning and execution with OKRs helps organizations to better achieve their goals and bridge the gap between strategy and daily operation.

2020 is almost over and it’s time to set goals for the next year. Why not approach it differently this time?

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!

What is an Agile Strategy?

An agile strategy follows a simple iterative approach and helps organizations set ambitious, measurable goals that are tracked, evaluated, and readjusted on a regular basis. An agile 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 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.

Agile strategies are based on well-defined objectives, which are linked to measurable results and actionable tasks

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 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 Agile Strategy Planning and Execution

An agile strategy approach helps organizations setting clearer goals and focusing their resources to achieve them.

  • Higher business value – Agile strategy supports 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 strategies 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 strategies 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, companies can respond to changes early on and adapt their daily operations faster. This helps closing the strategy-operation-gap.

Agile Strategy and Agile Operations Complement Each Other

Agile strategies can help your organization to better achieve your goals and to 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 in your organization is determined by your current setup. Different approaches ranging from introduction in selected pilot areas towards a full organizational roll-out are possible. Get in touch to find out how you can introduce agile strategies in your organization.

Agile Lead neoverv Aigerim Zhuankhan

Author

Managing Technology Strategist

Embracing change – always. Agile Coach, Trainer and Change Agent focusing on new ways of working, agile tools as well as cultural change.

Contact Author