OKRs and KPIs: 6 counterintuitive tips for leaders

When was the last time you rethought metrics? Consider applying some fresh, even unconventional ideas about Objectives and Key Results (OKRs) and Key Performance Indicators (KPIs)
Up
31 readers like this
OKRs explained

4. Don't use OKRs for everything

While an “all-in” approach will likely boost your chances for OKR success, that doesn’t mean: “Use OKRs for all of the things.”

“OKRs aren’t the answer in every situation,” Flora says.

Part of a successful OKR strategy lies in knowing where they’re best applied. The distinction between OKRs and KPIs matters here.

OKRs are typically forward-looking and often best-suited for new projects or priorities.

OKRs are typically forward-looking and often best-suited for new projects or priorities – how you want things to be in the future.

KPIs, on the other hand, tend to look at past performance and/or present state – how things actually are today (or were in the past.)

“When monitoring ongoing operations and making sure the ‘trains run on time,’ key performance indicators (KPIs) work well,” Flora says. “OKRs, on the other hand, work well with new initiatives and in organizations looking to rapidly grow and challenge the status quo.”

It’s a good rule of thumb: Doing something new and different? Trying to change direction or otherwise shake things up? Think OKRs. Maintaining a steady state or business as usual? OKRs probably aren’t a fit.

5. Drive environment and culture change with OKRs

There’s a tendency with OKRs and especially KPIs to focus on quantifiable, tangible results: Revenue is an obvious example. But what if you use them to drive more qualitative change, such as culture improvements? Yes, you can do that.

“Once you identify your enterprise strategy, rather than using OKRs to drive execution, use your OKRs to change the environment in which you operate,” Panikar says. “Culture-based OKRs allow you to identify root causes in the organizational culture that contribute towards your success.”

A problem-solution framework can help generate focal points here – as in, you identify an existing problem or challenge, and then design an OKR intended to solve it. Panikar shares an example challenge for IT and software teams: "We experience frequent delays in our design and development process due to managerial oversight and required approvals."

Panikar notes that you can certainly do things like root cause analyses or value stream mapping to try and solve the problem. DevOps practices are also keenly focused on eliminating that kind of friction.

“You could also consider a culture-based OKR approach where you use an OKR to change your environment through your process,” Panikar says. (Taking this approach isn’t mutually exclusive with those other strategies, either.)

Here’s what an OKR might look like in this scenario, according to Panikar:

Objective: Increase the quality of outcomes through high trust and collaboration.

Key Result: Decentralize three frequent decisions.

Key Result: Integrate 2x per sprint.

Key Result: Implement near-instant recovery practices for production safety.

Similarly, you could use an OKR to address team frustration with a lack of clear direction or cohesiveness. Panikar says the results could even be things like “rearrange the workspace to support collaboration” or “there is a designated owner of key priorities for each team.”

6. Raise IT's profile – and your own – with OKRs

While OKRs can be designed at the team and individual level, they’re usually aligned with the overall company vision and strategy. (If they’re not, you need to revisit your OKRs.) This means that OKRs run horizontally and vertically in an organization.

As such, they’re also a useful tool for boosting IT’s overall profile and reputation. While strategic CIOs have been doing this for years, the work is ongoing.

“IT leaders looking to raise their profile in an organization can leverage the cross-functional dimension of OKRs to help dispel the traditional view of IT as a back-office cost center,” says Jon Knisley, principal, automation and process excellence at FortressIQ. “Today more than ever, IT needs to be aligned with the business and OKRs, as well as KPIs, can help position IT for success.”

What this looks like will naturally differ by organization, but Knisley sees three areas as “prime targets” for more IT-focused (and less conventional) OKRs and KPIs to fuel your own thinking.

  • Operational resilience: “[It’s] required to survive in today’s environment, and executives are more focused on it than ever,” Knisley says. “Businesses must fully understand how each function and process contributes to the overall enterprise strategy and success. From connectivity and call centers to inventory management and supply chain, IT plays a significant role in every area.”

  • IT-driven revenue growth: OKRs and KPIs can help non-technical executives see the financial impacts of IT’s strategic work. And they need to see those impacts – both top line and bottom line – to understand just how important IT is today.

“Executives expect IT to actively contribute to the bottom line from both a revenue and cost perspective,” Knisley says. “Cost savings alone from IT are no longer enough.”

  • Cross-department partnership: Again, since OKRs are horizontal and vertical by design, they’re good tools for collaboration – especially among departments that once worked in silos. “The business-IT relationship continues to get better, but there is still room for improvement, and focused OKRs and KPIs can help,” Knisley says. “With technology today critical to every business function, IT needs to be seen as a partner to business and not a blocker.”

You can certainly develop your own ideas about how technology-focused OKRs, in particular, might benefit both IT and the broader organization. Just make sure there’s substance to them, and a shared commitment to see them through.

“If IT leaders treat OKRs and KPIs as more than a quarterly performance checklist and leverage them as a true management tool aligned with corporate strategy to improve the business, the impact will be felt across the enterprise,” Knisley says.

An OKR trap to avoid

Panikar shares some parting advice for leaders when they develop OKRs, from the very conventional to the total contrarian.

“No matter how you’re applying OKRs, the trap you want to avoid is making your Objective too high level and your Key Results too granular,” Panikar says. “You want to set a clear goal, or a series of cascading goals with your objectives, and treat your Key Results as the leading indicators that let you know whether you’re making progress to achieving those outcomes.”

[ Get exercises and approaches that make disparate teams stronger. Read the digital transformation ebook: Transformation Takes Practice. ]

Kevin Casey writes about technology and business for a variety of publications. He won an Azbee Award, given by the American Society of Business Publication Editors, for his InformationWeek.com story, "Are You Too Old For IT?" He's a former community choice honoree in the Small Business Influencer Awards.

Social Media Share Icons