How OKRs Drive Strategic Alignment and Team Autonomy

In this episode of Definitely Maybe Agile, hosts Peter Maddison and David Sharrock dive into the world of Objectives and Key Results (OKRs). They explore how this increasingly popular framework helps organizations create alignment, measure progress, and foster autonomy while moving away from traditional KPIs. From the origins at Intel in the 70s to widespread adoption by tech giants like Google, Peter and David discuss the nuances of implementing OKRs effectively and why they're particularly well-suited for organizations operating in rapidly changing environments.

This week´s takeaways:

• Unlike KPIs which measure performance, OKRs measure progress and alignment to strategy. They should never be tied to individual performance metrics as this undermines their exploratory nature.
• Successful OKR implementation requires ongoing conversations, regular reviews, and a cultural shift. Many organizations underestimate the effort needed to maintain OKRs effectively.
• Effective OKRs should be limited in number (3-5 objectives with 3-5 key results each), represent stretch goals beyond business-as-usual, and serve as a prioritization mechanism for the organization.

Chapters

• 0:00 Introduction to OKRs and Their Purpose
• 2:15 OKRs vs Traditional Metrics
• 5:44 Common OKR Mistakes and Anti-patterns
• 10:01 Cultural Challenges of Implementing OKRs
• 12:50 OKRs Measure Progress, Not Performance
• 15:14 Implementing OKRs Successfully
• 18:25 Prioritization and Culture Fit

Transcript

Peter: 0:04

Welcome to Definitely Maybe Agile, the podcast where Peter Maddison and David Sharrock discuss the complexities of adopting new ways of working at scale. Hello Dave, how are you today?

Dave: 0:14

Peter, it's great to catch up with you again, looking forward to our topic today. So where are we going?

Peter: 0:20

We're going to talk about OKRs, objectives and Key Res results, which is something that I know both our organizations offer. We both quite often get asked in organizations to help senior executive teams work out what are their objectives, how those align to their strategy. How are we going to measure them? And this all ties into the OKR model, and so we thought we'd explore a little bit around this, because there's a lot of topics and we both are offering training and all sorts of things to help with it.

Dave: 0:48

I find it quite interesting. There's been a big kind of shift towards using objectives and key results OKRs as an alignment mechanism in an organization. It's replacing key performance indicators or KPIs, and other management by objectives from way back in the day. For sure, but this sort of idea of metrics and how do we measure whether an organization is moving in the right direction I think in a healthy way has been shifting towards. If you're really going to try and do that, let's use OKRs. There's some really good things about OKRs that make them suitable to rapidly changing scenarios and and working with people in complex, large organizations yeah, and they've been around for a long time, I mean decades.

Peter: 1:37

There's back in the 70s, intel and then Andy Grove and then brought into Google famously and I think it was Google using him and then John Doerr's book Measure, what Matters, that sort of brought them to prominence again. And I think before that, in the 90s, we had balanced scorecard and, as you say, even further back we had management by objectives. But all of these mechanisms were really about how do we create alignment within the organization and make sure that we're all rowing in the same direction?

Dave: 2:10

Well, I think there's more subtlety than that as well, because the cases held up as success stories from Intel through to Google, through to LinkedIn and Uber and all of the so many of the Silicon Valley success stories really talk to the fact that each of those success stories are technology driven first of all, but also exploring and discovering where they can be successful over time. And I think this is what's so valuable about OKRs is that they're really well-suited to an exploratory nature where you don't actually know necessarily where your organization might be in a year or two or three years, because you're still discovering what your product strengths are or you're fighting to get into a market, and so it's very difficult just to have a simple metric of you know, X percent market share by first half, the end of the first half of 2026, as an example they enable is autonomy for teams aligned to that larger piece.

Peter: 3:25

This is that we're talking about the vertical alignment in the organization to make sure that, without having to say I need to know exactly what you're doing this minute of this day, here's the objective we're trying to reach. This is how we're going to measure progress. Go, figure out what you can do to move that needle, and so being able to cascade those up and connect them into the organization's strategy gives you that ability to create autonomy within teams. At least that's the idea.

Dave: 3:55

Well, and I think what you're touching on there. So the way you just described that is yes, there's an objective, this is where we're trying to get to, or this is the objective we want to be able to create. And then you effectively said and here's the team go away. You've got the autonomy to go do that. And that's exactly where the key results are Team. Here's how we know you're moving in the right direction.

Dave: 4:15

Let's agree some key results that the team will figure out themselves how to go and deliver, and I think that structure works really, really well. We're very familiar with it. This is where we're trying to get to. There's some key results which are stepping stones on our journey towards that objective. But also implicit in what you're describing is there's this two-way conversation, so the team doesn't have this change mandated, this direction mandated onto the team. The team actually has to. Well, we're an agile conversation, right, so they're going to want to pull into their team. Yeah, we think this key result would move us forward. So that dialogue is an intrinsic part of the OKR value of the OKRs?

Peter: 5:03

Yeah, but you still need KPIs because your OKRs are not going to give you the performance of the organization.

Dave: 5:10

The performance of the organization is going to be measured by your KPIs, I feel I mean typically they'll be tied into the objectives, right? So the key results are your stepping stones on that route towards an objective which could well be described in terms of KPIs as well. Right, but there's a difference between the metrics and the sort of overall direction, and I think that's I like, that healthy sort of mix of. You know, we live in a world where everybody's looking for the simple single thing that allows us to move forward, and what I like about OKRs is they're driven by conversation. Yes, you need KPIs. We also like to see a plan coming in behind the key results. Very often we see key results landing on a team. They think they know where they're going, but they have no plan, and so they kind of sit around. So I love that idea of OKRPs coming in, where you've got a plan behind the key results as well, so you can add bits to this as well.

Peter: 6:07

Yeah, the concept of what actions am I going to take to get to the key results. I wouldn't normally think of it as directly tied to that, but yes, the team then needs to come up with a plan of how they're going to get to those key results and figure out what they're going to do. But the overarching goal here is to create that alignment, and if you've managed to organize your teams across value streams, then these become awfully valuable again, because now you can start to think of them as a way of aligning value streams for delivery based on a set of objectives. How are we measuring progress against those objectives and moving forward.

Dave: 6:47

Okay, so what doesn't work about OKRs?

Peter: 6:51

They're surprisingly tricky. One of the things that, as simple as they might be, that we always say when we're training people is you won't get them right the first time You're going to have to come back and iterate on them. It's going to take some practice and to get used to being able to set out objectives in this way. There are a number of anti-patterns related to them having too many of them. For example, your objectives. They should be small enough that you can understand them. They should be stretch goals as well.

Peter: 7:23

The intent of these objectives is that things that you're striving for you should be measuring for where you're aiming to get to and beyond, not if they're just things which are business as usual that you can achieve without any effort, then they're not really okay. They're not really things that you're using to drive your organization forward and so they're probably not going to align as well into the strategy. They're just business as usual. So there's things like that. The other common mistake that we see is people create like 14 key results. So they create all of these metrics to try and measure something and then it becomes meaningless and very difficult to track. So you should only have like three to five key results on an objective, because otherwise it becomes too difficult just to even capture all the information.

Dave: 8:11

Quite often, I sort of see in just to agree with everything that you're saying. One of the headaches around objectives and key results OKRs is how much effort they take to put them in place. Well, if I am mandating KPIs, I can make a decision. I open an organization and just mandate, send an email out that says here are your objectives as we're going through this year. Whatever that might be With OKRs, that requires a conversation and automatically now I've got to bring people up to speed with what an OKR is, what the commitment is, who's accountable for different pieces of it. And then we've got to help people kind of cascade these OKRs down through an organization. So, to your point, if you have 15 OKRs, then you can imagine how that just explodes exponentially as you try and get that sunk into your organization. So I think there's that side of it that the overhead has to be balanced with the value it's creating.

Peter: 9:17

Well, and the intent, as we were saying, is to create a culture of an organization that is capable of being adaptable and going faster and has greater alignment to its strategy, because they're measuring progress across these objectives that align to that strategy and goals, versus a set of pushed down metrics from the KPIs, which may or may not actually, once they get to the bottom, have any relevance to what it is you need to do and they almost certainly aren't going to drive the types of behaviors you're looking for to be able to move things forward. So that's where there's a difference between the two and one of the things you're seeing there is a very different culture needs to go along with this.

Dave: 10:01

There's another element that, even if I've got the culture right, even if I'm having great conversations and one of the benefits of spreading this out is that it's a little bit like product owners and user stories the product owner doesn't have to write every user story.

Dave: 10:18

In the same way the executive doesn't have to write every OKR. You can kind of set the ball rolling and then see what comes back as the teams take those and interpret them and turn them into OKRs within their parts of the value stream or the organization. So you can quickly end up with these OKRs to some extent. But the management of that, the conversations, the alignment, the review on, say, a six-monthly basis or something like this that management often gets ignored and so many times we sit with executive teams, create the OKR, start cascading them down and the next time they're brought up for a conversation is 12 months down the road, and that's not the intention of the OKRs. The OKRs are really sort of a living, continuously being discussed at different levels in the organization, and that overhead is often just missed or it's added on to an executive or a leadership meeting which is already overloaded with topics for discussion.

Peter: 11:19

Yeah, you have to make sure that there's the space to review, update, manage, maintain, ensure that they're still relevant. And all of that comes in with OKRs and they need to be front and center in a lot of how you do the type of alignment activities. Now, in a lot of organizations those alignment activities presumably were happening already. It's just that often what happens when you put the OKRs into place is now you have the old way that things were being done and the new way that things are being done. Now you have the old way that things were being done and the new way that things are being done and if you haven't been careful about how you do this, they may not have really got separated and you've now got both going on.

Dave: 12:03

Yeah, and the real sort of the value that comes out of OKRs is the redefinition as you go forward, because as we've taken OKR, we cascade it down. So I'm on a team, somewhere in the organization, we feel confident. The three key results that we've defined to deliver a given objective are absolutely what we need to do. And then, three or four months down the road, what we figure out as we learn and we talk to partners or customers or whatever it might be, we find out that those key results are actually misaligned or they're not going to give us what we need for the objective. Now that leads to a conversation and if we're going into that conversation, where it's, you're held accountable to a key result you committed to. As you mentioned, that old mindset, the, the, the different mindset towards OKRs, we're now losing the real benefit. So instead we want to be able to renegotiate, suggests we're still, but it's actually discover, learn, modify, because of what we're learning on that journey.

Peter: 13:02

And then this is takes us back to what one of those key pieces that I was saying earlier is that OKRs measure progress. They don't measure performance, and so another mistake you see organizations doing is tying OKRs to individual performance, and that's the wrong way to look at OKRs. They're not there to measure that. They're there to create alignment so that you can see progress and that that progress is aligned to what your overarching goals are. They're not there to measure individual performance, which is often where KPIs come in. So there's a difference there, too, that individual KPIs are often more tied to individual performance, whereas an OKR wouldn't be.

Dave: 13:42

Yeah, we need a conversation about performance metrics on that one, because my immediate thought there is I'd much rather have a team, individuals on a team and a team that are really good at exploring and driving towards OKRs, because I think that's moving the organization forward, rather than teams or individuals that hit pre-prescribed milestones in terms of performance. There's a missed opportunity there, and what I like about OKRs is they are continuously reviewed and there is something that we can change and modify as we're learning what's really working and what's not, and I think that leads to much more rapid, relevant feedback, which is exactly what we're looking for in a performance context.

Peter: 14:30

Exactly, and I think we're actually saying the same thing is that they allow you to progress. They allow you to strive for the next level of progress. Your teams are working towards that next piece, so they've got something they can guide to and they're not scared of trying things because it's going to directly affect their individual performance. They can experiment, they can try, they can see where they can go, whereas the problem you have with KPIs is well, I can't do that, so it might impact my bonus, and if that's what OKRs are coming in and directly impacting that, then it's not going to create the results that you're looking for Maybe wrapping up, how would you suggest getting OKRs into an organization?

Dave: 15:14

What's your key takeaways or what's your experience tell?

Peter: 15:18

you around that Well, you either hire Zodiac or Increment One to help you develop them in the first place Absolutely, and we've got training coming up that people can sign up for in Toronto and I know you offer some training as well and online. So I mean, those are the great ways of doing or bringing OKRs into organization is having an organization like us.

Dave: 15:41

Know about educate.

Peter: 15:43

Educate, figure it out, work out what they are, work out whether they're a good fit for you.

Peter: 15:47

That's one of the first things we do is look at the organization, talk to you, interview people and work out Is this something that's going to work for you and how much effort is it going to be to roll this out within this organization?

Peter: 16:04

So there's I think that's a key piece as a key takeaway. Talking about the actual conversation we had, I think there's a even as we're talking through this, I think it's very clear that there are a lot of nuances to what, on the surface, appears to be quite a simple idea, and so coming up with an understanding of how you're going to implement this understanding as well that it's going to take more effort than you think it is going to take is a very key point, because even when we've seen executives go through the effort of creating this, they haven't necessarily then done a good job of rolling it out or helping others come on board, or they've missed parts of this or different parts of the steps of putting this into place. So it can be very, very powerful when it works, and that's been evidenced in all sorts of organizations and some of the ones we mentioned, but and it's been very successful when we've implemented it in some organizations too. So it is an effective method, but it does take quite a bit of effort to put it into place.

Dave: 17:03

I think there's a really important point that you mentioned earlier on, which is around the fit towards the culture as well.

Dave: 17:08

So one of the headaches certainly we've experienced when working with executive teams to begin the process and actually follow through and deliver that OKR implementation is there is a trade-off. You can't have OKRs for every single executive's pet projects that they're trying to get done. You mentioned the number of objectives but you often end up with somewhere in the order of, say, three to five within, say, a value stream or an arm of the business or even across the entire organization, which then cascades down into, you know, a few more okay hours at each level in the organization and by definition you can't sort of shoehorn everything in. So it's really a prioritization mechanism at that point, saying we're going to put our attention and effort behind these ideas and there are other things that will be going on in the organization that aren't going to get the same level of attention and effort. As these OKRs can already be problematic because there's an element whether it's letting go entirely or whether it's just downgrading the attention other initiatives are getting or other work is getting that's going to come into those OKR conversations.

Peter: 18:25

Yeah, and then one of the things that you bring up there too around the prioritization, is that they are a prioritization method in themselves too, because any other work that you have coming in can be prioritized against what your objectives are, so you can look at them there too. Well, I enjoyed the conversation, dave as well.

Peter: 18:45

Yes, we'll wrap it up. So, as always, contact us at feedback feedback@ definitelymaybeagile. com, and I look forward to the next one, dave. Until next time. Thanks again. You've been listening to Definitely Maybe Agilecom, and I look forward to the next one, dude. Until next time. Thanks again. You've been listening to Definitely Maybe Agile, the podcast where your hosts, Peter Maddison and David Sharrock, focus on the art and science of digital agile and DevOps at scale.