Portfolio Planning
Crafting Enterprise OKRs: Do's and Don'ts
The art of writing an effective OKR is in understanding the balance between ambition and realism. The best OKRs inspire action, not apprehension. They have a clear link to strategic goals and are quantifiable and time-bound. Here's a guide to help you craft great enterprise OKRs.
Step 1: Ensure Clear Strategic Alignment
OKRs should act as a bridge between your organization's strategic goals and daily actions. They should embody the strategic intent, thus ensuring that everyone's working towards the same overarching objectives.
| Do: | Set OKRs that stem directly from your organization's strategic goals. For example, if your strategic goal is to "becceome a leader in customer satisfaction within our industry," an OKR might be to "achieve a Net Promoter Score (NPS) of 8 or above by the end of the fiscal year." |
| Don't: | Avoid setting OKRs that are detached from strategic goals. An example of a poorly aligned OKR could be "Implement a new customer management software by Q2," without any clear connection to strategic objectives like customer satisfaction or efficiency. |
Step 2: Make it Measurable and Avoid Binary OKRs
While every OKR should be measurable, it's crucial to avoid binary or boolean OKRs—those with a stark "achieved" or "not achieved" outcome.
For instance, "Become compliant with GDPR" might seem straightforward, but it lacks insight into progress, doesn't acknowledge partial successes, and can demoralize teams. Instead of binary outcomes, aim for OKRs that give insight into the journey, like "Achieve 80% GDPR compliance milestones by Q3." Such OKRs recognize and motivate the incremental efforts that lead to larger successes, while also offering a clearer picture of where efforts need to be focused.
| Do: | Aim for quantifiable OKRs that allow you to track progress over time. For instance, instead of the above, you could have "Secure meetings with 10 potential big clients" or "Increase our pitch-to-win ratio by 20% with major clients." These provide more granularity on the progress and the efforts made towards the goal. |
| Don't: | Avoid setting OKRs that offer a simple "yes or no" outcome without providing insights into the journey towards that outcome. They can hide valuable learning points and can often be demotivating if the objective seems unlikely halfway through. |
Step 3: Be Ambitious, but Realistic and Consider the Stretch Goal Paradox
The Stretch Goal Paradox is a concept discussed by experts in goal-setting, including the Harvard Business Review. It refers to the delicate balance between setting targets that are ambitious enough to drive innovation and superior performance, and avoiding targets that are so tough they kill motivation and diminish morale.
In essence, while stretch goals can significantly accelerate an organization's performance, they're not universally applicable. When applied under the right circumstances, they can boost creativity, innovation, and lead to breakthrough solutions. But when the prerequisites for success aren't present — a foundation of learning, a positive performance trajectory, or the right resources — they can backfire badly.
| Do: | Set OKRs that are ambitious enough to encourage significant effort. For instance, "Increase our customer retention rate to 90% by Q4" can be a challenging but achievable goal. |
| Don't: | Avoid setting impossible key results like "Achieve 100% customer retention in the next quarter." These can be demoralizing and counterproductive. |
Step 4: Set a Specific Time Frame
Time-boundedness is a crucial aspect of OKRs. This sense of urgency helps focus efforts and gives a clear finish line, fostering a sense of achievement when met.| Do: | Always provide a clear deadline for your OKRs. For instance, "Increase employee satisfaction scores to 85% as measured by the annual employee survey." |
| Don't: | Avoid undefined timelines. A poorly defined time frame would be "Increase employee satisfaction scores at some point." |
Step 5: Engage the Whole Organization
OKRs shouldn't be a top-down imposition but a collaborative process involving all levels of your organization. The best OKRs resonate with everyone, fostering a sense of ownership and commitment.| Do: | Set OKRs that everyone can understand and engage with. For instance, "Implement at least three employee-suggested innovative initiatives by the end of the year." |
| Don't: | Avoid setting OKRs that are irrelevant or incomprehensible to the wider organization. A poorly conceived OKR would be "Implement a new data pipeline architecture using Spark and Hadoop," which may not mean much to non-technical staff. |
