OKRs and their 10 main dysfunctions

At Knowledge21, we’ve recently noticed a growing demand for information about OKRs (Objectives and Key Results). There are many questions about this technique created by Andy Grove at Intel and made popular by John Doerr, who took it to Google.

The advantages of OKRs include the way they connect an organization’s strategy to teams’ work, and to an agile mindset. More than a tool to demand results, OKRs are above all a form of cultural change.
Because we’re dealing with cultural change, a series of challenges emerge whenever we adopt OKRs, and it’s important to stress how commonly we see companies trying to apply OKRs but not achieving good results. The first thing that needs pointing out is that OKRs are a tool and, like all tools, are a means rather than an end.

Usually, when we analyze cases of failed adoption of OKRs, the problem lies less on the tool side instead of the presence of a series of dysfunctions that must be addressed should the organization run well (which is the case in non-OKR situations anyway). Here, we discuss the 10 main dysfunctions we usually find.

1- OKRs aren’t potatoes

OKR isn’t something you scatter on the ground and leave it there to grow by itself. It’s an organization’s culture evolution tool: from a culture of task delivery, individual vision and low commitment to corporative results, to one of high engagement, a sense of ownership, focus on results and widespread collaboration. The most common error in using this tool is to hesitate to define the OKRs and then thinking that’s just good enough. Often, facilitation and creation of productive conflicts during check-ins are just as important, perhaps more, than defining the OKRs themselves. It’s the check-in that ensures the execution of the action plans, collaboration between people and departments, and the sense of ownership of the result. This is one of the main differentials of OKRs compared to major strategic planning events, which many organizations do once a year, after which the strategy can be framed in an announcement. But it’s not something that is regularly revisited, remembered and connected to in the organization’s day-to-day running. To change a culture, we must guarantee transparency and consistency, and the check-in is the right moment to do so.

2- Strategic, pero no mucho

We find enormous difficulties in working at a strategic level. That’s second nature: when you experience a problem, your mind will quickly jump to a solution’s most granular and tangible form. That’s why the first attempt at putting together OKRs generally ends up having a very strong tactical slant. The symptom that demonstrates this is when check-ins are unable to connect all the departments in the OKRs and a blame game breaks out: “That’s your department’s responsibility”, “That metric isn’t mine”. This is usually a clear sign that the OKRs need to “go one level up”.

3- Tactical OKRs? Where are they?

Another common issue is the absence of tactical OKRs. Starting with the strategic ones isn’t a bad idea, but the longer it takes to get onto the tactical ones, the harder it will be for people involved to form tangible, everyday actions. The check-ins will become demoralizing because actions are still on a very abstract level and no one can see the metric evolving with the speed needed to secure people’s engagement.

4- Strategic OKRs? Where are they?

This is the other side of the coin of missing tactical OKRs. “Let’s just do the tactical ones” ends up creating a disconnect with the strategy. In this scenario, those involved often have an impression that the tactical OKRs aren’t working, need to change, but don’t know exactly how. This necessity for change increases after each check-in, because no one knows which strategic OKRs the tactical ones are anchored to, so you can’t ensure they’re pointing towards the right direction. Deriving tactical OKRs from tactical directives, BSC, targets or whatever model, will be better than nothing, but will still create this same sense of insecurity. Any results will fall short of satisfactory.

5- Falling makes you fall

Less common, but still very relevant, is the belief that we can get an organization to just “fall” into OKRs. Falls can hurt, folks. Applying OKRs to a whole company at once only works if you have a start-up or small firm. If your organization is medium-sized or large, ideally you would start with one business unit and define its strategic and tactical OKRs, involving the relevant departments in order to achieve those results. Then we will be able to change the culture, resolve conflicts (which always exist, but OKRs will bring them to the surface) and demonstrate that it’s viable to create collaboration and focus to enhance the business.

6- Operational OKRs for micromanagement

Another dysfunction that often arises from “falling” is establishing operational OKRs (at an individual level) right away. Operational OKRs are more of a way to support someone’s professional development and be connected to the tactical and strategic OKRs, rather than a form of micromanagement or activity reporting. In order to use operational OKRs, management must be prepared to focus effectively on developing people and evolving skills. This is usually a major cultural change. And if that’s not the objective, then operational OKRs will be dysfunctional.

7- OKRs as Goals

If I got a dollar for every time someone said that OKRs are agile goals, I’d be rich by now. Goals (in the sense of something I strive for to get a bonus or promotion) are a form of extrinsic motivation, and have already been shown to be inadequate if our objective is to enhance collaboration and the results of knowledge workers. They create competition, encourage individuality and increase a tendency for toxic behavior often counterproductive to the desired overall result. OKRs are meant to create intrinsic motivation, and when they’re well applied naturally generate systemic thinking, collaboration and a sense of ownership. That’s why comparing them to goals comes with a high risk of dysfunctional behavior and frustration, and of not providing the desired change. If you’ve worked with goals and want to use OKRs, that can’t be done without transition work and connecting the goals to the OKRs at the highest level possible.

8- Too many KRs or not enough KRs

We often see two scenarios: either the company doesn’t have a culture of metrics and can’t easily define KRs, or it often works with metrics and wants to measure absolutely everything. In the first scenario, the company ends up using one single metric, or none, and forgets to balance efficiency with efficacy, say, making the OKR easily distorted by actions that cause the number to be reached, at the cost of invisible loss. For example, an OKR with one single KR relating to sales and none relating to customer satisfaction may mean that people focus on bringing unqualified leads, or during sales push services the client doesn’t need. In the second scenario, we see OKRs with 15 metrics for the same objective. This makes focus and prioritization impossible. People spend more time measuring than solving problems, and can’t identify which metrics serve as a guide for knowing whether the object is being achieved.

9- Strategic objectives, tactical metrics

This is great! The directors, or board, or senior management, define top-down objectives with no metrics. Then the departments establish, silo fashion, the metrics for achieving those objectives. Nothing works, the departments remain in conflict, and they get no results. This shows that senior management still haven’t understood the importance of having strategic metrics which are unique and transparent for the whole company. On the other hand, it also points to the risk of brainwashing the environment, because it won’t matter what metrics were defined on a tactical level, senior management will always be able to say the objective hasn’t been reached. This dysfunction seriously affects the engagement on a tactical level, and responsibility on a strategic level, of the company management.

10- Task-based metrics

In the book Measure What Matters, by John Doerr, there are dozens of examples of OKRs. Some are excellent, while others leave room for improvement, and that’s exactly how OKRs work. When we define OKRs initially, that is usually not an easy task, and nor is achieving a result straight away. The whole point of short cycles is to learn, and fail and adapt quickly. But one failure we see time and time again is establishing a KR such as “deliver ‘X’ project by date ‘Y’”. Come on! That’s not a KR. That’s a task. When we come across such a KR, we need to ask: “Okay, and which metric will improve when this project is delivered?” Generally, that’s our KR.

Regarding this last point, whenever we ask that question, it’s very common for people not to know the answer. This shows us that things are being done because someone said so, and not because of an understanding on how they connect to the strategy, to the result we need to achieve as a company, and how we can change the way people work and live.

That’s the connection that creates engagement and allows us, if we see that a certain project or action isn’t going to bring the expected results, to propose other solutions and ensure the result is achieved. So if you want the people working with you to use their intelligence and creativity in favor of the business result, you need to avoid these dysfunctions. Otherwise, OKRs can end up being just another name for something you used but didn’t create the expected results.

Have you seen or yourself managed the resolution of any of these dysfunctions in your company?

Want to know more about OKRs?

The ebook “OKRs and business strategy for transformation: a brief guide to best practices” is already available at Amazon!



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