Strategy Deployment and OKRs

This is the another post in my series comparing Strategy Deployment and other approaches, with the intent to show that there are may ways of approaching it and highlight the common ground.

In May this year Dan North published a great post about applying OKRs – Objectives and Key Results. I’ve been aware of OKRs for some time, and we experimented with them a bit when I was at Rally, and Dan’s post prompted me to re-visit them from the perspective of Strategy Deployment.

To begin with…

Lets look at the two key elements of OKRs:

  • Objectives – these are what you would like to achieve. They are where you want to go. In Strategy Deployment terms, I would say they are the Tactics you will focus on.
  • Key Results – these are the numbers that will change when you have achieved an Objective? They are how you will know you are getting there. In Strategy Deployment terms I would say they are the Evidence you will look for.

OKRs are generally defined quarterly at different levels, from the highest organisational OKRs, through department and team OKRs down to individual OKRs. Each level’s OKRs should reflect how they will achieve the next level up’s OKRs. They are not handed down by managers, however, but they are created collaboratively by challenging and negotiating, and they are transparent and visible to everyone. At the end of the quarter they are then scored at every level as a way of assessing, learning and steering.

As such, OKRs provide a mechanism for both alignment & autonomy, and I would say that the quarterly cascading of Objectives, measured by Key Results, could be considered to be the simplest form of Strategy Deployment and a very good way of boot-strapping a Strategy Deployment approach.

Having said that…

There are a few things about OKRs that I’m unsure about, and that I miss from the X-Matrix model.

It seems to me that while OKRs focus on a quarterly, shorter term time horizon, the longer term aspirations and strategies are only implied in the creation of top level OKRs and the subsequent cascading process. If those aspirations and strategies are not explicit, is there a risk that the detailed, individual OKRs don’t end up drifting away from the original intent?

This is amplified by the fact that OKRs naturally form a one-to-many hierarchical structure through decomposition, as opposed to the messy coherence of the X-Matrix. As the organisational OKRs cascade their way down to individual OKRs, there is also a chance that as they potentially drift away from the original intent, they also begin to conflict with each other. What is to stop one person’s key results being diametrically opposed to someone else’s?

Admittedly, the open and collaborative nature of the process may guard against this, and the cascading doesn’t have to be quite so linear, but it still feels like an exercise in local optimisation. If each individual meets their objectives, then each department and team will meet their objectives, and thus the organisation will meet its objectives. Systems Thinking suggests that rather than optimising the parts like this, we should look to optimise the whole.

In summary…

OKRs do seem like a simple form of organisational improvement in which solutions emerge from the people closest to the problem. I’m interested in learning more about  how the risks I have highlighted might be mitigated. I can imagine how OKRs could be blended with an X-Matrix as a way of doing this, where Objectives map to shared Tactics and Key Results map to shared Evidence.

If you have any experience of OKRs, let me know your feedback in the comments.

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5 comments on “Strategy Deployment and OKRs

  1. I see OKRs as, or similar to, the Tactics (O) and Evidence (KRs) part of the x-matrix. With the x-matrix, the Tactics at this level are the Strategies the next level down, keeping the Aspirations constant or in the same spirit or Intent. This shared intent 2 levels up keeps the cascading or nesting aligned. What I also like about OKRS is that you should be satisfied when achieving about 80%, giving it a healthy creative tension.

    For me, hoshin kanri x-matrix incorporates OKRs.

    Thoughts?

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    • I agree that the X-Matrix incorporates OKRs through Tactics and Evidence. I also like the ideas that Key Results should never score 100% so that they are ambitious. That relates to my choice of the word Evidence to avoid them being targets. However, I prefer the Strategies to remain constant, along with the Aspirations. And the Evidence for that matter. Then the cascade is ‘simply’ a matter of more granularity on how you discover and define the focus of the work.

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  2. How about cascading the XMatrix? I can see how you could have 2 to 3 levels of it in an organisation (probably no more). Sapient, a previous company I worked for had the strategic context: Purpose (hardly ever changes), vision (5 year horizon), objectives (yearly for next 3 years), then you had KPIs that would apply all the way from project level to the entire enterprise. That provided automatic alignment from personnel to CEO. It was before the days of Agile but very much in the same spirit. Cycles would probably be shorter now. But importance of the vision and cascading it has never been more essential. X matrix very applicable for this.

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    • Hi Philippe – yes part of Catchball can include cascading the X-Matrix, where each Tactical team can create their own version showing their specific tactical experiments and how they correlate and contribute to Strategies and Evidence. Sounds similar to what you describe at Sapient but with faster feedback 🙂

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      • Yeap – as i am thinking of frameworks to use with Clients, I always come back to the Xmatrix at the centre. Could it be that it is all you actually need? I love the simplicity of it, that direct linage of vision to strategy to action to feedback. It’s all very inclusive for leadership and team. All you really need is to track progress and refresh it often enough as you are making actual progress.

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