Driving OKR Alignment

CREATING EMPLOYEE ENGAGEMENT

A five-part series: 1. Introducing OKRs, 2. Preparing for the OKR Journey, 3. Crafting Great OKRs, 4. Driving OKR Alignment, and 5. Managing Effectively with OKRs.

Summarized by Bill Gelbaugh from: Objectives and Key Results by Paul R. Niven and Ben Lamorte, With additional material from Measure What Matters, Lattice OKR 101 and Perdoo.

Having crafted our Objectives & Key Results (OKRs), it is now time for a coordinated approach by teams within your company to accomplish the desired goals.  Although a significant amount of autonomy should be given to teams as they develop their OKRs, the key to overall corporate success is connection and alignment.  As you communicate your corporate OKRs, it is imperative that everyone in the organization understands them, what they precisely mean, why they were chosen, and how they are vital to the company’s success.  A well-executed connection process provides a direct line of sight from every individual employee all the way back to the corporate OKRs.

Illuminating the relationship between what employees do and how those actions lead to overall strategy execution is best accomplished by connecting OKRs from top to bottom in your organization. By connecting, we mean creating sets of OKRs throughout the company that align with your highest-level OKRs (which could be corporate or business unit, depending on where you’re starting) and signals the unique contribution offered by teams and individuals throughout the organization.

When you connect OKRs, you generate learning opportunities in two directions. First, as business units, departments, and individuals develop their OKRs, it provides them the opportunity to showcase their unique role in creating overall value for the company. To do this effectively, they must understand the business’s strategy in order to develop OKRs that align with it. So, as they create OKRs, they learn more about and deepen their understanding of the organization’s purpose and strategy. Simultaneously, as OKR scores are analyzed across the company, leaders benefit from the ability to examine results spanning the entire company.

How Deep to Connect

Ultimately your goal should be to spread the use of OKRs throughout the entire company. The question is one of timing. Do you rush to connect from top to bottom, perhaps in the first year? Alternatively, do you employ a more measured approach, staggering the implementation over a period of years?

OKRs can be a transformative device for your business, sparking new thinking that leads to previously uncontemplated levels of success. To fulfill that potential, the framework must be embraced and used at all levels of the company, allowing you to foster fluency in a new corporate language; that of strategy execution. Obviously, the faster you connect, the faster your employees master this new taxonomy, the sooner results will improve.

We firmly believe in momentum and suggest you move aggressively but thoughtfully in connecting OKRs. That sounds like a contradiction, so we’ll unpack the key terms. Aggressive is self-explanatory, meaning you connect quickly and deeply to all levels of the company. However, we temper that with the word thoughtfully, which in this context implies you have contemplated and can answer to the affirmative, these questions:

• Do we have executive support for OKRs?
• Do we have a clearly documented strategy that is reflected in our top-level corporate OKRs?
• Are we committed to using OKRs, regardless of the initial results, to manage the business?

If you can successfully overcome these hurdles, then rapid rollout may be appropriate.

Preparing your Groups for Connecting

Previously we discussed the importance of a mission statement, which conveys your core purpose as an organization. All business groups that are going to create connected OKRs should create a mission that clearly outlines why they exist and how they add value to the organization.

Armed with their mission statements, each connecting group must then answer this fundamental question: “How do we support the organization’s mission and strategy?” In broad brush strokes, how does this group contribute to the company’s success? As we’ll learn shortly, the concept of influence is the key to connecting, and this question primes groups for the task by having them enumerate, in advance, how they are going to support the company’s overall strategic goals.

As you communicate your corporate OKRs, it’s imperative that everyone in the organization understands them, what they precisely mean, why they were chosen, and why they are vital to the company’s success.

The Key to Connecting is Influence

Allowing all groups, even individuals, to show how they influence overall corporate OKRs is the purpose and goal of the connecting exercise. It all begins with the top-level set of OKRs. These are the critical levers of your success, and everyone in the company must possess a deep understanding of them before you begin connecting. We’ll assume you’re starting from the corporate level. If that’s the case, the first actual connection occurs as business units study the corporate OKRs and ask, “Which of these OKRs can we influence the most, and how?”

The goal: a well-executed connection process provides a direct line of sight from every individual employee all the way back to the corporate OKRs. 

Creating Alignment

Ensuring your people are aligned around a common purpose is job number one for any successful corporation. As demonstrated, connecting OKRs provides an outstanding opportunity to drive that alignment through every job and function of your firm. In this upcoming section, we’d like to share the two types of alignment you’ll be fostering during the alignment process: vertical and horizontal.

Vertical Alignment

This is the type of alignment most people think of when considering connecting goals through an enterprise. As the word implies, vertical connecting creates OKRs that flow downward, eventually reaching the individual employee level. However, as we’ve previously noted, it does not mean the executive team dictates a number of obligatory goals that are essentially forced upon lower-level groups regardless of fit or necessity. Instead, vertical connecting is facilitated when teams, departments, or individuals look to the OKRs of the group to whom they report and ask: “How can we influence those OKRs? What can we do, and measure, at our level to drive both our and their success?” Again, the process is one of loose coupling. With vertical alignment, we’re attempting to create a direct line of sight from what your group does every day to the group to whom you report and ultimately to the company’s overall aspirations.

Vertical connecting is facilitated when teams, departments, or individuals look to the OKRs of the group to whom they report and ask: “How can we influence those OKRs?

Here’s an example of driving vertical alignment: The CEO of a mid-sized company declared that customer retention was their top priority. Traditionally, customer retention had been the sole domain of the customer success team; it managed ongoing client interactions and renewals. Soon after the CEO’s announcement, everyone assumed that the customer success team would work harder to drive customer retention, and other departments would continue to focus on their current priorities. However, with OKRs in place, they could create a culture of alignment across the company.

The product team had traditionally focused on what they felt new customers would want or differentiate them from the competition. However, with the advent of OKRs, the product team now asks the question before approving a new feature request: “How does this product improvement drive customer retention?” The marketing team also shifted its outlook because of the OKR implementation. They took the time at their user conference to interview customers and gather valuable survey data. Finally, even the sales team changed their paradigm thanks to OKRs. They are now taking time to call on their installed base and ask questions around how they can add more value. They do this to build the relationship and emphasize the importance of working together over the long haul. Again, the goal is to help promote and drive customer retention. Each of the teams profiled above is doing something different, something pertinent to the specific function. Still, the common denominator is identifying actions that help them drive the corporate strategy of increasing customer retention. That’s vertical alignment in action.

Horizontal Alignment

We mentioned in the previous section that when it comes to connecting goals, most people are familiar with the concept of vertical alignment or cascading down. This familiarity results from the fact that vertical cascading is widely employed in most organizations, and effectively at that. The deeply entrenched notion that execution hinges on alignment has been accepted for decades (at least as far back as Drucker’s work in the 1950s). Thus, it has been rigorously studied, with best practices shared and widely used throughout the business population. Why is it then, if organizations are aware of the value inherent in alignment and have been utilizing vertical cascading for generations, our strategy execution rates remain so stubbornly low?

Horizontal Alignment entails having the discipline to hold detailed conversations with other units throughout the company to discover mutual dependencies and ensure both teams then create OKRs that reflect them.

It turns out that there is a second form of alignment, one that most companies have largely ignored, that may prove even more critical in the quest to execute strategy: horizontal alignment. As shared earlier in the text, much of the work in the modern enterprise involves disparate teams (silos) coming together to solve customer issues or create new value (separately and individually). When one unit can’t depend on another, many damaging events tend to ensue: duplication of effort, missed opportunities, and escalating conflicts that damage the company’s culture. Once again, we believe OKRs can fill this void.

The good news is that creating horizontal alignment is not a complicated endeavor whatsoever. It simply entails having the discipline to hold detailed conversations with other units throughout the company to discover mutual dependencies and ensure both teams then create OKRs that reflect them. The resulting OKRs may be unique for each unit, or they may sometimes decide to use “shared OKRs.” These come into play when multiple teams work very closely to achieve a result, and thus it makes sense to share the same OKR. Shared OKRs help avoid situations in which one team may be celebrating because they completed their component of the project, but another is working frantically on their piece (which relies on the first team), and as a result of this lack of cooperation, the company fails to reach its overarching goal.

Confirming the Alignment of Connected OKRs

Creating a set of corporate OKRs that can improve focus on what really matters is one thing. However, the value of an OKR implementation can increase exponentially when you connect, thereby allowing all participants to announce their contribution to the bigger picture. Connecting may be the most essential part of your OKR process; therefore, it is critical to ensure it is done well and serves its purpose. For that reason, once you begin rolling out the program and having lower-level groups develop their OKRs, you can’t take it as an article of faith that those OKRs are, in fact, aligned. You’ve got to check each and every set of OKRs to ensure they are drawing a line of sight back to your strategic goals.