OKRs Role in Strategic Management

Organizational goals and objectives are often divided by a thin line of what they want to achieve and what they can actually accomplish given their resources. Apart from effective communication and micromanagement techniques, companies have to set goals to motivate their workforce and other stakeholders to work towards that common objective. Companies struggle to develop a measurable, consistent, and predictable business model, which impacts their decision-making in one way or another. This is where OKRs, an acronym that stands for Objectives and Key Results, come in handy to help managers enhance their teams’ performance and productivity.

We see this becoming more and more apparent post-covid 19 outbreak (20′, 21′) and the transition from workplace management to remote management and an increased necessity in employee trust, transparency and measuring KPIs that matter.

OKRs is increasingly becoming a powerful strategic management tool for businesses. Several reputable international companies have adopted it, including Google, Intel, BMW, Oracle, Twitter, Disney, Facebook, and Dropbox (Post 2019, par 51). Although OKRs are not the sole reason for these organizations’ success, they have been of significant value and helped to redefine organizational management. Thus these companies continue to implement OKRs up to today despite having thousands of workers. OKRs have several benefits as they help provide a clear direction, effective communication strategy, accountability, and strategic alignment and enable managers to track their objectives and outcomes. This paper will examine how Objectives and Key Results support strategic management, thereby improving an organization’s effectiveness and performance.

How OKRs Support Strategic Business Management

Objectives and Key Results (OKRs) have become an essential tool in strategic management as they present several benefits to organizations that implement them appropriately. OKRs support strategic business management in the following ways:

Effective Communication

OKRs provide managers with a powerful communication tool. Communication is a vital aspect of strategic business management, as it ensures that information flows effectively throughout the organization. When implementing OKRs, it is crucial to communicate the nature of stretch goals and the thresholds for success (Wodtke 2016, p.9). Besides, communication helps develop a mutual understanding of the company’s vision, goals, and objectives among the employees and other stakeholders. For instance, in case several workers had separate objectives to achieve, at some point, their objectives might overlap, and the only way to accomplish them effectively is through collaboration. Initially, they might collaborate out of necessity, but they would eventually start engaging in constructive interactions.

Setting OKRs at all management levels enables the team members to communicate with each other for the company’s good. The OKRs model can transform an ordinary workforce into an exceptional, high-performance team due to effective communication. Communication is a vital aspect of building effective teams and helping individuals to reach their potential. Effective communication at all organizational levels and departments allows employees to share ideas and seek assistance where necessary, an attribute that improves the efficiency of teams within the workplace. Applying Objectives and Key Results as a communication tool can help alter and enhance strategic communication dynamics. Besides, OKRs help ensure that all stakeholders are informed about the business’s priorities and ways forward, which eases the cross-department flow of information. If all the OKRs are implemented and shared throughout the organization in the right way, employees in one department would have a comprehensive understanding of what the other department is up to, which is good for the company. Moreover, this makes strategic communication and productive interdependencies easier.

Provide a Clear Direction through Focus and Prioritization

In today’s environment, where things are changing rapidly, organizations need to develop a vivid roadmap before entering any business. Many managers still develop ambitious goals, yet they lack a comprehensive, clear understanding of how to accomplish them. This is where Objectives and Key Results (OKRs) come in to close this gap and ensure that the company succeeds in its endeavors. OKRs provide a clear view of where the company wants to go and highlights the key steps that it should take to accomplish its objectives. For instance, if a team has a clear view of what they want to achieve within a specific period, it improves its performance and productivity by concentrating on things that matter the most. In other words, Objectives and Key Results allow the managers to help their subordinates prioritize the vital objectives in a given period, motivating them to work harder.

When the company has an objective with scalable key results to be accomplished, it allows workers and other stakeholders to streamline their efforts by focusing on attaining results that matter in that particular period (Castro n.d, p.4). In this context, focus and prioritization become an essential aspect of strategic business management as employees put all their efforts into what matters at that particular moment. Workers should have the ability to determine if what they are currently focusing on affects their OKRs negatively or positively. Suppose they realize that they are spending a lot of time and effort on irrelevant tasks at that particular time. In that case, they should immediately come up with a viable solution to remedy this problem. For instance, they could decide to post pone some tasks, especially those that have longer deadlines. However, managers have to ensure that post-poning the execution of these tasks does not impact the organization’s progress. Consequently, this would help workers spend their time and efforts on work that is more productive and benefits the company. It is wrong for organizational managers to expect their subordinates to align themselves to their goals when they (employees) do not know the organization’s goals and objectives.

Besides, this impedes their collaboration with their colleagues in other departments and hampers the team’s capability of accomplishing a common goal. Objectives and Key Results are essential in equipping employees with valuable knowledge and a comprehensive understanding of its goals. Moreover, this allows them to know how they fit into the organization’s grand plan and provides them with a more vivid idea about the bigger picture to discover their role in this process.  Once the employees know their purpose in the organization, they find it a lot easier to accomplish their goals and objectives. Certainly, this makes this aspect of OKRs extremely essential in strategic business management.

Strategic Alignment

Most successful companies invest significant efforts in aligning their employees to the organization’s objectives for goal-driven and productive activities (7Geese.com n.d, p.19). Notably, OKRs come from the firm’s vision and mission in an alignment process whose ultimate goal is to inform all stakeholders of the company’s objectives towards which they should work. Sometimes, there could be an obstacle between the company management’s objectives and how workers execute day-to-day business activities. As soon as the manager realizes that this is happening in the company, they should seek an effective way to solve this issue. OKRs offer an ideal channel that company managers can use to track organizational goals and objectives. Through the alignment of team OKRs and Individual OKRs with the company’s long-term goals, managers can assess their firm’s productivity while keeping all the workers focused on the tasks assigned to them.

Objectives and Key Results is a method that requires deployment and implementation. Besides, it improves the employees’ productivity and performance by boosting the company’s level of alignment, trust, autonomy, and communication. All these aspects are crucial for the development of effective team leaders. If organizations have a comprehensive understanding of how this goal-setting structure operates, this can easily enhance efficiency and employee engagement across all organizational departments. In addition to that, they can assess their goals, improve all their employees’ performance, and accomplish their team management specifics, which all contribute to the company’s growth and development.

Track Progress, Establish Markers and Indicators of Success

Perhaps, one of the most crucial aspects of strategic business management, OKRs help track progress towards goals and establish markers and indicators of success for a particular organization (O’Neil 2019, par 3). OKRs are usually updated after a set period where teams and individuals discuss goals to ensure that everyone remains focused on the company’s progress. More so, it enables employees and managers to be more flexible and quickly change their operations if the organisation’s priorities change. The success of any business is measured typically based on its result. Much as this approach of measuring a company’s success is right; it has its limitations as it is one-dimensional and does not usually account for the other elements involved. For instance, it ignores the methods applied by the company on its way to success. Additionally, it undermines the dedication, hard work, and skill-sets used in the process.

On the other hand, the OKRs method plays a significant role in redefining the meaning of success and determining how to measure the company’s goals. OKRs set targets visible to everyone, which helps to transform work into something that can be calculated as it shows the amount of effort a particular worker expended on a specific task. All these aspects are ignored in the conventional methods of measuring success, yet they are relevant when assessing an organization’s progress. 

Enhances Accountability, Collaboration, and Transparency

OKRs tend to follow the bottom-up approach when it comes to setting goals, and this method provides workers with a chance to define the goals and take up the responsibility of any problems that may arise. This is vital in strategic business management as encourages employees to work with all their heart, which improves the company’s general productivity. When managers trust their workers with greater responsibilities, they (workers) feel valuable to the organization, which encourages them to work harder, resulting in better outcomes. OKRs’ collaborative approach helps define goals and enhance employee engagement at all organisational structure levels, giving workers a feeling of authority for their work. Further, it highlights organizational goals and objectives for every employee to see, facilitating transparency and clarity between individual workers and departments. When all workers are aware of each other’s roles and priorities, different teams can collaborate to ensure that they improve their performance and the company’s overall productivity.  

In addition to that, Objectives and Key Results are vital in strategic management because they take some burden away from the managers. Notably, This may entail explaining to the employees what the company’s priorities are and determining what and when to do something since the OKRs present all these aspects. In this context, the brainstorming sessions of establishing OKRs do all the managers’ work, sparing them more time to focus on other issues. Notably, OKRs are set in a decentralized way, which gives a voice and power to all the employees through participation and employee engagement (Homem de Mello 2019, p.41). The OKRs model is a very engaging approach. Employees can set their OKRs, align them with other bigger goals (for instance, company goals), and then discuss them with their organizational managers to ensure consistency. In the end, every individual becomes accountable for something during the lengthy process. Indeed, employee accountability as an aspect of OKRs is essential in supporting strategic business management.

Improves Resource Allocation and Management

OKRs help to support strategic management by providing a detailed overview of all the organizational departments to managers, which enables teams and individuals to identify the areas that need more reinforcements in the form of resources, thereby improving the allocation of work for better performance and efficiency (Kank 2019, p.30). Effective resource allocation involves planning, managing, and assigning resources appropriately to help a company achieve its strategic goals. Through the Objectives and Key Results, companies can assess their performance based on their mission objectives and results. Effective resource allocation and management are essential in strategic management because they help companies save money as managers assign tasks to teams and individuals that can execute them flawlessly.

Further, it also helps to boost a company’s performance and productivity since the tasks are most likely to be executed by teams or individuals who are experts in that particular field using the right equipment.  Moreover, improved resource allocation helps managers know who is free and who is overloaded at a specific time to reallocate some of the tasks to the resource that has less workload. Through the implementation of OKRs, organizations can determine how long it would take to complete a particular project. Sometimes specific projects may go beyond the expected timeframe, but this does not indicate the ineffectiveness of the OKRs. Instead, it might be due to other unexpected situations that may hinder the smooth execution of organizational operations, most of which are usually external. Technically, this means that the company has no control over them. Otherwise, when company resources are appropriately allocated, it always becomes easier to estimate the time needed to execute a particular task. This aspect of the OKRs is essential in strategic management as it helps companies meet deadlines and ensure a smooth workflow.

Enables Short Cycle Implementation

Unlike the conventional goals run on yearly cycles, OKRs are set and reset in shorter cycles that typically span from one to six months, depending on the business’s maturity and operations. These short cycles are nested into longer ones, and these are supposed to reflect the organization’s vision and mission (Homem de Mello 2019, p.39). In other words, short OKRs cycles are part of the annual cycle, which can change depending on a range of factors, including the market and strategy implemented by a particular organization. Organizations in volatile markets tend to implement shorter OKRs cycles than those in stable markets. However, today’s business environment is increasingly becoming unpredictable or volatile, and this is why short OKRS cycles have become the norm of any successful business. These shorter cycles are important in strategic business management as they help the company identify how they perform and the challenges they face very quickly, instead of waiting for a whole year when the problems might be so severe and irreversible. The managers can know what works and what doesn’t in advance to focus all their effort and time in the right area.

Additionally, these short cycles allow companies to increase the pace at which they course-correct and respond to market changes and innovations, which is vital for strategic management (Homem de Mello 2019, p.61). Notably, it is essential to know that short cycles are the cornerstone of strategic business management. Short cycles typically consist of three phases, which include planning, monitoring, and debriefing. The planning phase involves setting OKRs throughout the organization. In the monitoring phase; this is where the company builds teams, and individuals or create their Objectives and Key Results in alignment with the organization’s OKRs and those of other workers. In the third phase, debriefing, the company and individual employees have to plan how they will achieve their primary goals. They have to decide on the hypothesis and plan the actions they will undertake to implement that hypothesis. All these steps are crucial in strategic business management. For this reason, companies should implement short OKRs cycles as they have proven to be very useful in the contemporary business world.

Improves Objective and Informed Decisions-Making

Objectives and Key Results support strategic business management by providing qualitative assessments and evaluations, which are vital in helping organizational managers to make informed decisions. When a company tracks its goals and objectives more regularly, it can get valuable feedback, enabling it to make informed decisions (Gil 2019, par 17). Managers and employees get to understand what works for their company and what does not. Making informed decisions is crucial as it prevents the company from gambling its way into this harsh economic environment which is continuously changing. Moreover, it allows the proper allocation of resources, which significantly reduces the company’s possibility of failing. The nature of OKRs allows organizations to regularly and frequently reassess their progress while looking towards their goals, which helps managers to make objective decisions about direction and initiatives in the long and short run. OKRs are typically equipped with enough data that allows them to align their operations. Thus, managers and their employees can use that information to make the best decisions that help their organizations thrive. Without Objectives and Key Results, strategic business management becomes more of a myth than a reality in the contemporary business world.

Enable the Analysis of Root Causes Why the Company is not Achieving its Objectives

OKRs also support strategic business management by identifying and analyzing why the company is not accomplishing its goals by performing a root cause analysis (Haak 2019, par 6). The root cause analysis identifies the root causes of specific problems and suggests approaches to respond to them. Besides, with regular check-ins, managers can update projects and key results. This implies that there is adequate documentation of the daily work and organizational operations, which allows everyone to get a comprehensive understanding of the company’s progress and find the appropriate solutions for areas that seem to be lagging and why they are off track. The analysis of root causes fuels conversations around priorities and tactics, which helps teams to find a way out of this dilemma.  Subsequently, they can then come up with an effective solution to remedy the problem. Many companies fail to accomplish their goals, yet the managers struggle to identify the root cause of the problem. However, with the implementation of OKRs, the root cause of these issues becomes visible to everyone, making it easy to address them. More so, one can quickly deploy the appropriate methods to curb the problem, making OKRs important in strategic management.

In essence

Objectives and Key Results are essential in strategic business management as they present a lot of benefits that enhance the performance and efficiency of an organization. Besides, OKRs equip managers with a powerful communication tool, which is crucial in supporting strategic business management as it enables the free flow and sharing of information and ideas in all organizational departments. They also help the company have a clear direction of where they want to be and what they want to achieve shortly, and this enables teams and individuals to focus and prioritize things that matter the most. Through the strategic alignment of team-OKRs and Individual-OKRs with the company’s long-term goals, managers can assess and evaluate their firm’s productivity while keeping all the workers focused on their assigned tasks. One of the most crucial aspects of strategic business management, Objectives, and Key Results, helps track the company’s progress towards its goals and establish markers and indicators of success for that particular organization.

Additionally, OKRs foster accountability, collaboration, and transparency in the organization as these attributes enhance employee engagement, which gives workers a feeling of authority for their work. OKRs also improve the allocation and management of resources as teams and individuals can easily identify the areas that need more help, improving the distribution of work for better performance and efficiency. Further, OKRs are set and reset in shorter cycles that typically span from one to six months, and these increase the speed at which companies course-correct and respond to market changes and innovations. OKRs allow organizations to frequently measure and reassess their progress, which helps managers to make informed decisions regarding their direction and initiatives in the long and short run. They also enable companies to analyze the reason why the company is not living up to its expectations. All these aspects of OKRs are essential, and they support strategic business management, so organizations ought to embrace OKRs to improve their efficiency. OKRs to me can be seen as a way to ensure a collective understanding of strategy into the tactical level and the stars we follow as we navigate new waters.

Reference List

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s