One of the major reasons why companies use OKRs is to get their teams rowing in the same direction, to execute on the same goals and advance the company strategy.
If this is true, then it’s critical to ensure that OKRs are aligned. And so it’s no surprise that the most frequent question we get asked is “How do we ensure our team goals and OKRs align to the company goals? What process should we follow to align?”.
Why do we need to align?
In professional cycling, riders often make use of drafting – the idea that you can save energy by “sitting” on someone’s wheel, which means that your front wheel is as close as 10cm from their back wheel while travelling at breakneck speeds. Research shows that cyclists who draft well can reduce up to 44% of the drag caused by wind resistance. This leads to a commensurate reduction in energy expended.
You cover the same distance while using less energy. This is the value of alignment.
When an organisation aligns around their goals, they can make the same amount of progress on their strategy (i.e. cover the same distance) while using less energy. Less wasted effort.
We worked with a team where one of the brightest young team members understood the value of “thought leadership” within their industry. With this understanding, she took it upon herself to write a piece for publication. This was, however, not part of the company’s strategy at that stage, and the piece never got published. Neither the work done (it was great work) nor the individuals involved (they were bright individuals) could be faulted. The problem lay in alignment – the individual didn’t align with the company strategy. Again, no one is “at fault”. The situation required better communication from all fronts, and because of a lack of communication, effort was wasted.
Wasted effort is like a dropped ice cream – it not only spoils the ice cream but also spoils the mood.
Wasted effort in an organisation will impact the culture. To drive constant innovation, a culture of risk-taking needs to be created – innovation doesn’t come from those sitting on the fence. But risk-taking within bounds. Those bounds are set by the company strategy. When risks are taken within these bounds, you find leaders saying to teams: “Go for it, I’ve got your back”.
Aligning well will impact two important elements. Firstly, the effectiveness of efforts will increase – you’ll cover more ground with less effort. Secondly, a culture that fosters an environment for risk-taking (within the bounds of the company strategy) is created.
1. Company-level OKRs need to align with the company strategy
OKR is a goal management framework used to define, track and execute strategic goals. By this definition, OKRs, especially at a company-level, should align with what the organisation is trying to achieve over the long term. There’s no explicit alignment here – it’s not a 1-to-1 relationship where every strategic theme flows into an OKR. (Although strategic themes are helpful guides for drafting OKRs.) It’s useful to consider whether your OKRs address all your strategic themes – and if not, why not?
When crafting company-level OKRs, have the strategy in front of you, with your strategic themes. Refer to it and ask “If we achieve these goals, are we progressing towards our ultimate ambition, our winning aspiration or our BHAG?”.
We worked with a professional services organisation recently where part of our engagement was to assist in developing their strategy. Because we knew OKRs would be the enabler to execute the strategy, we could craft their strategy with this in mind. This made subsequent alignment of OKRs to the strategic themes seamless. Examples of strategic themes could be “pursue high calibre clients”, “sector specialisation”, “leveraging digital assets”, etc. These are big themes that would remain relevant for the next 3 to 5 years, and we then build out the appropriate initiatives to drive each of these.
We view alignment as concentric circles, not as a cascading structure. Drafting a strategy with this in mind makes subsequent alignment of OKRs seamless.
2. Team-level OKRs need to align with Company-level OKRs (vertical alignment)
Note that we’re talking about alignment, not cascading. Waterfalls cascade, goals align. Cascading refers to top-down prescription and autocratic leadership. Alignment talks to co-creation and teams working together. With this in mind, we find the distinction that What Matters makes between two types of alignment very helpful: explicit alignment and directional alignment. Explicit alignment is when you inherit a Key Result as your Objective. The famous football example has “Fill the stands to 90% capacity” as a Key Result for the General Manager, which then becomes the Objective for the Head Coach. Directional alignment is when you get a direction on which OKRs to choose. For example, your company might publish their company-level OKRs, and you use these OKRs to answer “how can my team and I contribute towards achieving these OKRs?”. We seldom recommend explicit alignment, and often if not always recommend directional alignment.
Leaders need to be transparent about the direction in which the organisation is heading. There are many ways to do this – publish company-level OKRs, talk about it at all-hands meetings, make check-ins visible and open to anyone. The most important role of a business leader is the prioritisation of scarce resources (people and capital), and this prioritisation needs to be communicated. Communication is the railways on which an organisation is built. Make company-wide communication part of your execution cadence.
Don’t communicate priorities only when OKRs are set. If we do this, teams will hear about priorities once a quarter, if they’re lucky. Rather, talk about top priorities often, which could be in the form of OKRs or not. We worked with a startup recently that had no regular cadence yet. One meeting that we scheduled was the monthly all-hands, which is simple and nothing new, but critical to creating an ongoing focus on strategy. In 80% of these meetings, they used OKRs to facilitate the conversation and highlight the top priorities. This meant that teams didn’t have to wait until the end of the quarter to understand the priorities, but saw it regularly and therefore could easily align to it once they set their OKRs.
Talk about top priorities often, which could be in the form of OKRs or not… teams saw (the priorities) regularly and therefore could easily align to it once they set their OKRs
3. Team-level OKRs need to align with each other (horizontal alignment)
Again, communication is key. High levels of communication enable organisations to ‘do business at the speed of trust’. Use horizontal alignment to highlight dependencies across teams – often, a team-level OKR will depend on another team to ensure success. This is because OKRs are about advancing the company strategy, so it often happens that teams can’t successfully execute in isolation. Isolation kills alignment.
When drafting OKRs, ask teams to specifically highlight dependencies on other teams. Make it explicit. Also, all dependencies are not going to be known upfront. Include other teams in weekly check-ins where dependencies are suspected – a check-in should be 15-30min only, and the pain prevented will far outweigh the time spent in the meeting.
There’s often a dependency on support departments or shared services like finance. Here we stress that OKRs is not everything that you need to do, it’s the few things you must do. When we worked with an organisation recently, the finance department raised objections saying there are too many dependencies on them, because each team required tracking of some metric. They couldn’t deliver on all the metrics required to track the business. However, they focused on “all the metrics to track the business”, as opposed to the metrics that were prioritised. Through OKRs, we were able to highlight the most important metrics for each team, create an understanding of why that metric is important for the company strategy, and then ask finance to deliver on those.
Ask teams to specifically highlight dependencies on other teams. Make it explicit.
4. Teams need to align within each OKR
This is one of the most important reasons for following a framework like OKRs. If everyone uses the same framework, we all speak the same language. And if we all speak the same language, our speed of execution increases. The standardisation that the framework brings, with the critical thinking that is done when drafting OKRs, will assist in aligning expectations within a team.
Key Results need to be specific, outcomes, measurable, and objectively verifiable. Submitting to these four criteria is one way of ensuring alignment. Take time to set Key Results – if it’s over in 5 minutes, you’re probably doing it wrong.
Key Results should be specific, not detailed. Project plans are detailed, OKRs are specific. A Key Result that reads “increase number of projects tracked from 60% to 90%” could look great, but there’s still a lot of ambiguity to it. Is it all projects that start this quarter, or the ones that end this quarter? Does “tracked” mean it’s being reviewed regularly, or just in some sort of online tool? Is the intended outcome that more projects are tracked, or that more staff engage with the tracking mechanism? Revising the Key Result as “increase the projects loaded onto our project management tool before kicking off from 60% to 90%” is more specific and a step up!
Key Results need to be specific, outcomes, measurable, and objectively verifiable. Submitting to these four criteria is one way of ensuring alignment.
Here’s an example of what an aligned OKR looks like:
If you’re finding alignment challenging, OKRs might not be the solution, but rather the tool that highlights other areas requiring attention. Why are teams not aligning behind the company? Is the strategy still applicable? Do your people buy into the strategy? Are the top priorities communicated? Is the leadership team “walking the floors” and engaging with their colleagues?
Organisations are organic, not mechanic. There are “organic” elements required to make alignment happen – it’s not a formula, it’s not a one-way street. Increase communication, and you’ll improve alignment.