By adopting the OKR methodology, Agile Lab goes beyond the well-known limits of most organizations which are based on a command-and-control model.

As a matter of fact, most of the traditional organizations deal with slow decision-making processes, difficulties in keeping a high level of innovation, and a lack of employees' commitment and ownership.

What are OKRs?

OKR

OKR (Objective and Key Result) is a goal-setting framework conceived to spread the company's strategy among employees and to support the efficiency in the execution of tasks with a transparent and collaborative approach.

From a historical point of view, the OKR method is generally attributed to Andrew Grove, who introduced it to Intel during his tenure and later to John Doerr at Google.

As the name suggests, an OKR is made of an objective and some key results

  • the objective describes the company priorities in the short term, consistently with the company purpose and the long-term vision. This is the outcome of the process since it explains "what" we want to achieve.

  • key results are a list of results that must be numeric, measurable, and linked to the objective. They show how near the company is to the objective. They are the output of the process since they explain "how" the goal will be achieved.

As a rule of thumb, a company should have no more than 2 OKRs per cycle. This will lead to the choice of real priorities. Ideally, one objective could be more aspirational and the other one more technical.

The cycle should last from 3 to 6 months.

A good objective should be:

  • feasible in one cycle
  • shared among the organization members
  • inspirational and not numeric
  • clearly in line with the company business
  • challenging, but realistic
  • under the team's control
  • in the form "verb + what do you want to reach + why + the application field"

Good key results should:

  • be measurable on a weekly basis
  • not be binary
  • not exceed the number of 3-4 per objective
  • clearly show how close the goal is
  • be limited to the only ones useful to reach the target
  • represents 100% of the objective
  • not be influenced by external actors and dependencies
  • in the form "verb + what will be measured + the extension of the result [owner]"

This is an example of a good OKR:

  • OBJ: Increase the employees' digital skills to sustain the ongoing digital transformation process of the company and to reduce costs by the end of June
  • KR1: Write a gap-analysis document with x pages comparing the internal skills to the ones of the reference market [owner: Training]
  • KR2: Reduce digital experts' turnover from x% to y% [owner: Peopleops]
  • KR3: Hire x digital experts [owner: HR]
  • KRn: ...

Cascading OKR

One of the most powerful aspects of the OKR framework is the ability to align each employee's effort and decision, from the front line through the most operational areas to the company strategy.

This is possible because a key result of the higher level becomes an objective of the lower level. These are called cascading OKR

Cascading OKR

Company OKRs are at the top level and Team OKRs are at the lower level.

Some organizations use more OKR levels.

Types of OKRs

Many organizations (e.g. Google) divide two types of OKRs: committed and aspirational. They have different purposes and they can be designed, interpreted, and acted upon in different ways.

  • Committed

    These are goals that have to be reached in order to achieve the objective.

    Everyone at the organization and at the team level recognise that they must be met in full. In general, committed OKRs are to be achieved within a set time frame.

    For example, if the objective states "To become partner of a vendor" and the vendor requires at least a minimum number of certifications, the "achieve 10 certifications" is a committed OKR because it must be totally achieved.

  • Aspirational

    On the other hand, aspirational OKRs reflect bigger-picture, higher-risk and more future-tilting ideas. They show how we’d like the world to look. They are sometimes called 10x goals or moonshots.

    Regarding aspirational OKRs, Larry Page said "If you set a crazy, ambitious goal and miss it, you’ll still achieve something remarkable.”

    With aspirational OKRs, there is no clear path to get there—and no real knowledge of what resources will be required.

    The expected success score of an aspirational OKR is 70%.

The relative weighting of these two types of OKRs is a cultural question.

OKR adoption in Agile Lab

Since there is no ‘one size fits all’ OKR process, Agile Lab adopted the framework by crafting its own process.

The Agile Lab/OKR Facilitator is in charge of the process milestones, timelines and outcomes.

OKR week

Each cycle starts with a definition stage called OKR week during which each employee can contribute to the company strategy by crafting in a collaborative way all the OKRs for the running cycle.

Here are the main steps we usually follow:

  • The CTO and the CEO communicate the cycle strategy
  • The company OKR objectives are defined and formalized
  • Employees get involved in the brainstorming process for the drafting of the key results (both at a company and at a team level)

The OKR Facilitator notifies the beginning of the OKR week to the whole company members and will then send an invitation to the employees interested in attending these events.

This is a sample timeline of a typical OKR Week:

OKR week timeline

Day Title Activities Goal of the day Attendees
1 OKR kick-off and groups formation The OKR facilitator introduces the new OKR cycle, recalling the main steps in the OKR process, the OKR week timeline and the relevant training material about the framework

The company CEO and CTO present the short-term strategy

The OKR facilitator communicates the next cycle company objectives to the whole company

The OKR facilitator forms small groups with (if possible) homogeneous functional representativeness and expertise.

Each work group is asked to produce ideas about company key results setting brainstorming meetings in the next few days.
Comprehension and sharing of:
- OKR framework fundamentals
- company's short-term strategy and objectives
- OKR Week goal

Working group defined
The whole OKR team
2 Proposals for company KRs Each group works autonomously setting brainstorming meetings to create proposal for company key results

Each group can also invite other colleagues belonging to other groups if an external point of view is needed (e.g: if the team needs the certification coach's opinion about a proposal, (s)he can be invited as external expert)
Groups work autonomously for 2 days
3 ... ... ... ...
4 Ideas gathering for company KRs A spokesperson chosen within the group presents KR proposals created by his/her group

Company KR proposals are evaluated, filtered and grouped in a collaborative way to create company key results
First draft for company KR OKR Facilitator + Group spokespersons + Main stakeholders
5 Company KRs tuning and owners assignment Company KR proposals are fine-tuned and converted into well-defined KRs

Each company KR is assigned one an owner. At this stage, a KR can also be temporarily assigned to more than one owner.
Company KRs defined according to OKR rules
At this point, company KRs can still contain approximate numbers that will be refined later on

Temporary company KR owner(s) assignment
OKR Facilitator + Group spokespersons + Main stakeholders
6 Proposals for team KRs Because of the "cascading" mechanism, company KRs become team objectives and they are assigned to a single owner

OKRs owners are now in charge to form a "focus group" with the goal to create KRs proposals for his/her objective

Older groups are dismissed and owners can now invite any person they need to these meetings, regardless of the old groups.
Focus groups work autonomously for 2 days
7 ... ... ... ...
8 Ideas gathering ideas for team KRs Each owner presents his/her group's ideas for team KRs

Team KR proposals are evaluated and filtered to create a subset of well-defined team KRs
OKR Facilitator + OKR owners + main stakeholders
9 Team KRs tuning e feasibility check Team KR proposals are fine-tuned and converted into well-defined KRs

If the company KR was assigned to more than one owner, the OKR facilitator selects a final owner according to the functional affinity
Each owner should accept his/her KR and conduct a feasibility check on it
Team KR defined according to OKR rules

Definitive company KR owner(s) assignment
OKR Facilitator + OKR owners + main stakeholders
10 OKRs owner buy-in and freeze Company OKR owners propose definitive numbers for his/her KRs while bearing in mind the difference between committed and aspirational OKRs

Each owner refines his/her KR, ensuring that it satisfies the OKR best practices and that it will be understandable along the cycle. No misunderstandings should happen during execution.
OKRs defined and reported in Holaspirit OKR Facilitator + OKR owners + main stakeholders

After the OKR assignment, each company OKR owner acts as a project manager.

For example, (s)he:

  • creates a project team undertaking all tasks related to his/her OKR ensuring that the people with the right skills are involved

  • identifies dependencies with external teams and plan tasks

  • assigns an owner to each team OKR

  • tracks the progress of all team OKRs linked to his/her company OKR

  • asks the OKR facilitator the needed budget

  • tracks tasks progress on Holaspirit

  • attends status update meeting communicating his/her OKR progress and issues with the proper level of detail

Execution and monitoring

Efficiency in the execution stage is one of the framework pillars. Therefore, after the OKR week we start tracking the progress of the OKRs projects in weekly status meetings.

These are vigorous conversations where OKR owners both explain the updates to be tracked and highlight roadblocks. That will keep everyone focused on the top-priority tasks.

During these meetings, each OKR owner gives thorough details of:

  • Progress: the percentage of OKR completion
  • Confidence level: to be labelled as "Healthy", "Need attention" or "Unhealthy". The owner can talk about roadblocks or issues he/she is encountering.
  • Week priorities: the list of priorities he/she will be focused on in the following week to meet the objective. The goal is to inform people about the main issues that they should be aware of.
  • 4 Weeks events: the list of the OKR-affecting events that could happen in the following 4 weeks. This is useful to keep the whole team on the same page.

Review and retrospective

At the end of the cycle, the OKR Facilitator organizes a review, and a retrospective meeting to understand what went wrong and how to improve the process.

An objective is achieved if the raw goal score is at least 70 percent. This numeric value is used to state if the object is reached in a "yes or no" fashion. A good retrospective cannot be based only on a numeric value, since it might hide a strong effort and extenuating circumstances, or weak management and procrastination of the activities till the last days of the cycle.

A useful tool the OKR Facilitator can use to drive the retrospective process is the scoring and assessment variations tables. Here is how an OKR can be filled in in the retrospective (in real case you'll have one row for each OKR, we report the same OKR just to show different scenarios as an example).

OKR Progress Score Self-assessment
Bring in ten new customers. 70% 0.9 Due to a slump in the market, the OKR was significantly tougher to achieve than I’d thought. Our seven new customers represented an exceptionally good effort and outcome.
Bring in ten new customers. 100% 0.7 When I reached the objective only eight weeks into the cycle, I realized I’d set the OKR too low.
Bring in ten new customers. 80% 0.6 While I signed eight new customers, it was more luck than hard work. One customer brought in five others behind her.
Bring in ten new customers. 90% 0.5 Though I managed to land nine new customers, I discovered that seven would bring in little revenue.

Columns meaning:

  • OKR: the name of the OKR
  • Progress: the objective value that state the percentage of completion of an OKR. If the progress is >= 70%, we succeeded in the work. Otherwise, we failed it.
  • Self-assessment score: the self-evaluation score that the OKR owner gives to himself/herself and to his/her team. It is a subjective score that can summarize several aspects: the team's commitment along the cycle, how significant that team's result was to achieve the goal, etc. During the discussion in the retrospective session, this value can be confirmed or changed.
  • Self-assessment comment: verbose explanation of the Self-assessment score column. "Why did we give a score of 0.9 despite the OKR failed?", "Why did we give a score of 0.5 despite the OKR succeeded?", "Was our result really relevant for the objective?", "Was the team's engagement consistent and well planned throughout the cycle?" These are some of the topics we want to clarify here.

If the OKR is achieved or not is still stated only from the progress column.

Keep in mind the only purpose of the table is to add contextual information to the final review. A 60% okr can bring more value to the company compared to a 90% okr just because the second result was set too low at the beginning of the cycle. This value brought to the company should be explicit. In this case, you'll have

OKR Progress Score Self-assessment
"60% okr name" 60% 0.9 The OKR was not reached but the team worked very well despite external blockers
"90% okr name" 90% 0.5 The team didn't work as a real team since the objective was too easy to reach. Spare activities all in the last two weeks of the okr allow us to reach the objective without issues

Credits

  • Measure what matters [John Doerr]
  • Radical Focus [Christina Wodtke]
  • OKR Performance [Francesco Frugiuele, Matteo Sola]
  • https://www.whatmatters.com/

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