OKR Benefits: 6 reasons why you should start with OKRs now

Markus Stenglein is a partner in the New Work Squad, a team of experienced consultants and agile coaches – all with many years of management experience in established companies, agencies and start-ups. "We support people and organizations in their individual and organizational adaptations in a rapidly changing working world. In the OKR sector we see ourselves as boutique consultants – specialized, exclusive and individual". For Workpath magazine, Markus has summarized six good reasons why you should introduce Objectives and Key Results (OKRs) especially in a crisis situation like the current one.

If you want to know more about the OKR framework, take a look at our article "Objectives and Key Results (OKR) - A Definition"

‍It is now clear that the coming months will be a gigantic challenge – not only for our society, but also for (almost) all companies. The question everyone is now asking: What will happen after the crash? Three scenarios for the post-corona period are currently being discussed: the V, U and L models.

‍The V-model: in this variant, optimistic economists assume that the economy will recover just as quickly as it collapsed – the graph looks like a V: Fell to the ground, but as soon as the opponent (Covid-19) is defeated, everyone goes back to work, makes deferred purchases and the GDP rises again.

‍The U-model: This curve resembles a bathtub. After the rapid fall, the curve flattens out in the sediment. And we all know the scenario – if you want to get out of the bathtub, you have to work hard. And often it doesn't work on the first try.

‍The L-Model: This scenario describes the worst case – the curve remains flat after the crash, and there is no recovery in sight. Unfortunately, there are arguments for this too. After all, debt continues to rise due to the ongoing crisis, while sales fail to materialize and liabilities increase at the same time.

Why OKRs (not only now) are the most sensible management method

Whatever scenario may come, it remains difficult for everyone at first. What now helps companies and employees more than ever is orientation, coordination, and focus. And that's why it makes sense to manage your company with the OKR method. Here are six reasons for this!

Reason 1: OKRs provide the necessary business clarity

Reason 2: OKRs work in short cycles and provide immediate grip

Reason 3: OKRs are suitable for every business focus

Reason 4: OKRs push collaboration within the company

Reason 5: OKRs provide transparency and meaning

Reason 6: OKRs provide psychological security

But step by step.

Reason 1: OKRs provide the necessary clarity

Is our company even relevant? What benefits do we generate for customers? Are we doing the right things? Questions like these have been asked by tens of thousands of companies in the last few weeks – not only in Germany, but all over the world. The OKR method forces companies to define their Vision and Mission, as the starting point for working with OKRs is a clear and understandable mission statement pyramid. Once they have been defined, the organization's actions can be aligned with it. And the more precisely the strategy is defined, the better the operational results will be.

It is true that almost every established company has a Mission Statement somewhere (hidden in a drawer). Quick quiz question: Can you – without checking – clearly reflect the vision of your company? And is your idea of the company vision in line with that of your colleagues? These questions need to be clarified so that everyone in the organization has the right orientation and clarity and is doing the right things – this is especially, but not exclusively, true for the current situation.

Reason 2: OKRs work in short cycles and provide immediate grip

Typical annual target agreements for companies, teams and individuals have become obsolete at the latest since the outbreak of the pandemic. Companies that have already worked with the OKR method have an advantage. They were able to react faster and in a more controlled manner in the middle of March than traditional companies with the classic 12-month business planning. The reason: the OKR method works with planning cycles of either three or a maximum of four months. Objectives and their Key Results are anchored in these short cyclical periods. Which OKRs are included in each cycle is determined, among other things, by the company's roadmap – and the roadmap in turn is based on the company's strategy (see pyramid diagram above).

‍Planning for 3 or 4 months: Which OKR cycle is better? Right from the start, both cycles work very well in practice. And the best thing is: The OKR method is so agile that even an adjustment during the year is possible. For example, at a company with almost 1000 employees, we switched from the 3-month cycle to the 4-month variant in March 2020, i.e. in the middle of the corona crisis and at the time of the actual OKR set planning phase. The advantage of this is that in the greatest stress (transition into a home-office setting) the pressure was immediately reduced noticeably and now in April the next OKR set (all targets and the respective success drivers) can be planned in a focused  manner. The idea is of course not to constantly jump back and forth between different cycle lengths. However, the OKR framework does give you the opportunity to make adjustments, for example in times of crisis like these.

‍The advantages and disadvantages of the two cycles can be seen here at a glance:Advantages of the 3-month cycle:

• Orientation towards the classic annual quarters
• Extremely fast adjustment possible
• Maximum response capacity
• More output through 4 OKR sets per year

Disadvantages of the  3-month cycle:

• Costly, since more coordination necessary
• More expensive because more capacities (e.g. meetings) are needed
• High time pressure with accompanying high expectations
• Q1 planning has to be made in the stressful turn of the year, when classic annual quarters are used as a basis

Advantages of the 4-month cycle:

• Reduced planning effort
• Cheaper, as fewer resources are required
• Clever, if the 3-cycles are not mapped in one year, but over the turn of the year

Disadvantages of the 4-month cycle:

• Lower output as only three OKR sets are processed per year
• Less focus due to a longer cycle
• No adjustment to classic annual-quarterly structures possible

Reason 3: OKRs are suitable for every business focus

The idea of using OKRs to gain more clarity, focus, and orientation is obvious. But how can this be implemented in a company? First of all, it helps to take complexity out of the conversation in order to clarify what should be reflected in the OKRs – and how much time you want to spend on it. Does it make sense to plan only strategic goals, or does day-to-day business also have to be anchored in the OKR sets? The answer is: it depends on what you want to focus on and how much time you (and your company) have available. The following matrix helps to understand where you can start with OKRs for your company.

‍Where and how you can get started with OKRs:

Day-to-day business/project work: This is the recurring, reproducible work and project work – such as operational work that needs to be done every day and takes up almost all of the time.

‍The free resources (strategy focus): Through effectiveness and efficiency measures, every company can acquire new time contingents. These freed-up time slots (for example 10 percent) are then not additionally invested in operational work, but in strategic topics.The good thing about the OKR method is that you as a company can decide which quadrant suits you best. If you want to immerse yourself in the OKR world for the first time, Quadrant I is certainly the best choice.

Reason 4: OKRs promote collaboration within the company

The Corona crisis impressively shows how quickly companies have been able to digitalize their internal communications – and how well this works in most cases. Through the intensive, ritualized exchange in the regular video dailies and weeklys ("Let's start an update conference at 10 a.m. every day on Zoom and close a joint check-out towards evening"), a new type of digital corporate culture is currently emerging. Many companies are only now realizing how meaningful it is when everyone works together – and how many good ideas are in their company. The OKR method is based precisely on this basic collaborative idea because in the vertical (i.e. from the top of the company down to the teams) OKR sets are always put together top-down and bottom-up, so that the perfect mix is guaranteed.

‍Top-down in this case provides the Strategy/Vision/Mission. For example, if you work with five Objectives per vertical OKR set, the top level contributes two of the five Objectives – the other three objectives come from below.

‍Bottom-up, i.e. one level down, also contributes Objectives to the top of the OKR set, which pay into the Strategy. These can also come from the areas of corporate culture or personal development.Since each OKR set is developed in a vertical structure in a network, a clear line is created and shared by everyone in the company. Now the goals are clear to everyone. In these extremely challenging times, it is essential that all employees know what needs to be done – and above all why! This type of target agreement stops the tiresome silo thinking in the company and promotes understanding for each other. It becomes clear at a glance how the contributions of each individual are related to the contributions of others.

Reason 5: OKRs ensure transparency and create meaning

The OKR method has always focused on transparency. After all, in most companies the OKR sets – regardless of hierarchy or department – are visible to everyone in the company. Even before Corona, OKRs have proven to be a valuable tool for leading remote teams. OKRs support communication and transparency within the team by giving members a good overview of how successfully they are working towards common goals. Through regular discussions and the documentation of progress, all employees are always up to date and can therefore work and decide more autonomously. Having access to all of an organization's Objectives in an OKR system, whether it is a custom spreadsheet or dedicated OKR-Software, helps to create more transparency in the organization regarding strategic priorities across all teams and hierarchy levels.

The alignment processes during the OKR goal-setting process also strengthen the transparency within and especially across teams. In addition, OKRs make performance and progress visible week after week by discussing and updating Key Results, thus promoting recognition. It also makes it easier to learn from past performance and to optimize it over time.

Reason 6: OKRs provide psychological security

Psychological safety is one of the most important factors for functioning teams. When employees feel safe, they are ready to try new things and produce innovations. This security was strongly torpedoed by the Corona crisis. OKRs provide a team or company with a framework of security because they immediately provide orientation, transparency, and focus. Especially in established companies, OKRs ensure more appreciative communication through their ritualized meeting occasions.

Conclusion: Now is the best time to start with OKRs.

Regardless of what happens with Corona, this is the ideal time to get started with OKRs:

• You will get immediate clarity about the direction of your business.
• Short cycle planning sets the right priorities and focus.
• Jointly formulated goals and their success drivers bring grip.
• The working method establishes a digital corporate culture.
• The transparency of the tasks ensures clarity at all levels.

Stay strong and healthy.  

If you have any further questions, we and other experts and practitioners will help you in the Workpath Community – especially in times of social distancing a space for mutual support and motivation.