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Strategy is a choice. Strategy means saying no to certain kinds of things.
- Michael Porter
Annual Strategy retreats take up immense amounts of time and energy. It’s not surprising that over 90% of strategic plans focus on growing revenue, and rightly so, else companies would most likely perish over time.
A strong strategy helps in determining what to do and not to do, especially when there are multiple opportunities, limited resources, and focus required to deploy these.
Once Strategy is defined and communicated, that's also the point for a slip between the cup and the lip. Leadership teams do spend time during town hall meetings to communicate the company’s strategy. Powerpoints are emailed and goals are probably written to one’s interpretation, reviewed quarterly or mid-year.
Most often than not, having a strategic plan in place does not necessarily mean that it would be actioned. To action strategy, everyone in your company needs to understand it the same way as you do. Your teams must gain an understanding of how their efforts sum up to contributing to the overall company strategy and that’s where the frameworks like OKRs help in connecting the dots – not just for your teams but also for the leadership teams.
OKRs help in translating strategy in a way that everyone in the company, no matter the role understands it in the same way and aligns their efforts to contribute to the critical metrics which help in executing strategy.
To get started with OKRs, one would need executive sponsorship and commitment. OKRs are not a project, but a way of rewiring organizations and teams to row in the same direction. The process starts with writing high-quality Company OKRs.
While writing Company OKRs, the leadership or top team members and the Internal OKRs champions are part of the conversation.
This executive exercise is about choosing the Vital Few, over the Trivial Many, mostly written for 6-12 months.
The intent of writing Company OKRs is not to come up with an Annual Operating Plan or throw out a bunch of financial KPIs. Now, we totally understand that revenue metrics are the health of an organization. However, on their own, they will not move the company forward, unless supported by Processes, People, and Customers.
That’s where tools like strategy maps become a powerful way to facilitate and channel conversations.
Strategy maps are a visual representation of the various interconnections in your organization, to actually make your strategy work. While strategy maps are linked to Balanced Scorecards, we are not suggesting that OKRs are balanced scorecards. OKRs are an evolution of management practices that have over a 50-year pedigree and have borrowed best practices, coupled with the very fact that OKRs are super agile. If you want to know the differences between OKRs and Balanced Score Card, here are some key insights for you.
When you think about Strategy Maps, think about the four dimensions of Financial, Process, Customer, and People.
Let's take an example of an airline company. One of their strategic themes is to Drive Profitability. That’s great! The next question is: Which are the strategic levers to pull, to get to increased Profitability?
The executive team then goes on to visually represent their priorities using Strategy Maps. They draw up the four perspectives of financial, customer, process, and people, and carefully list down how exactly they should achieve. Increasing revenues is written under the financial perspective, and to do so, they need their loyal customers to fly repeatedly (so they jot it down under the perspective of Customers). Now to achieve this, automation and digitization are important processes and they cannot achieve these without people and learning. So, process training and capability building become important.
By writing a step-by-step approach using a powerful tool like strategy maps, executive teams can clearly spell out their execution map as well.
Now how exactly do we transfer these to OKRs? Let's find out!
Let's zoom in on the first two perspectives of Financial and Customers. Once the team has agreed that these are indeed the levers, the next step is to call out how exactly they would measure these. That’s where the magic of Key Results comes in, against each of the 4 perspectives.
Key Results help answer the question “Hey! How do we know if we are successful?” So, teams can start with an exercise we call ‘Free Listing’.
Free Listing is an unconstrained exercise, where leadership teams (individually) list down measures that will define success. Unlike KPIs which are catch-all, KRs require mindfully thinking through the most strategic metrics that would give them unfair leverage over the competition.
Let's get back to the airline company. When they consider the lever of Revenues, the executive team also calls out ‘Revenues from Loyal customers as a measure they would want to track and improve’ Or to reduce the turnaround time of flights, they go on to call out increasing flights per customer by using low-cost airports.
While writing OKRs, one would need to keep in mind the fundamentals.
Can you visualize how a simple yet powerful Objective statement can drive the much-needed impact and engagement needed within the company, where different teams work together to pick metrics/KRs where they can create an impact? This means Focus, Collaboration, and Alignment, all at the same time.
However, we recommend that you practice writing high-quality OKRs, give strategy maps a try, and use powerful insights to translate them into OKRs. Fitbots has helped 1000s of teams get OKRs right, by deeply looking at company strategy and building consensus on key metrics that would help propel the organization forward. Click here to schedule time with one of our OKRs experts and track OKRs using Fitbots.
Vidya Santhanam is the Co-Founder of Fitbots OKRs. Having coached 600+ teams, and conducted 1000+ check-in meetings, Vidya likes writing about Metrics, high performance, and leadership.
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