Agile strategy implementation? With Objectives and Key Results (OKR) to a goal-oriented organization
Successfully implementing corporate strategies - an agile structure and process organization alone is not sufficient for this. It is much more important to formulate the goals across the board and to coordinate them transparently. Our experience shows: The agile journey runs much better with Objectives and Key Results. OKR help to manage budgets and resources optimally.
You have introduced agile product or service development in your company, but the big boost you were hoping for is not materializing: While the established agile implementation is working, its value proposition is similar to your previous projects? Or the value contribution of your agile organizational unit is measured primarily by the speed of implementation? If this "sand in the gears" sounds familiar to you, OKR could be the next right step for your agile journey.
Targets often unrealistic and not in line with corporate strategy
Our everyday consulting work shows: Teams or departments are often decoupled from the overarching corporate strategy. Often, the strategy is not clearly formulated. As a result, employees at all levels of the hierarchy find it difficult to transparently recognize the value contribution of their work to the overarching goals. It is not uncommon for management to set goals in a top-down manner without having sufficient insight into the actual challenges faced by the team on a day-to-day basis. Thus, unaligned, or unrealistic goals as well as expectations are communicated. In doing so, the goals are usually broken down directly to individuals and measured using fixed KPIs.
Our experience is thus: Employees try to meet their personal KPIs as easily as possible. The focus is then on the achievement of personal goals (measured by output) instead of on a value-creating outcome regarding the corporate strategy.
Benefits and reasons for the OKR method in the agile environment
What can be done to ensure that employee goals "pay off" against corporate goals and that employees can contribute in a targeted manner? Practice shows: Objectives and Key Results (OKR) are the ideal tool for this.
OKRs focus on the overarching alignment of agile organizations with corporate values and goals. A successful agile company is based on the interaction of the following three elements:
- Agile Delivery organization
- Agile target management for strategy operationalization
The guiding principle here is: "Develop the right product (vision/strategy) correctly (agile delivery organization) for the right goals (agile goal management)".
In our day-to-day project work, we see that it brings several advantages when our customers design their agile target management with OKR.
Comprehensible alignment: In particular, the focus on the targeted implementation of the corporate strategy makes it tangible for all employees.
Easy adaptation: Due to an agile process based on agile cycles, goals can be revised regularly depending on the time horizon and adapted to current market conditions.
Better collaboration: Thanks to cross-functional alignment, collaboration between departments and teams is strengthened to deliver real value.
Higher productivity: The OKR framework enables a clear process for goal setting as well as mapping the progress of product and service development.
Increased motivation & engagement: We experience this with our customers who work with OKR: Because employees can formulate their own team goals, they are significantly more motivated.
Conclusion: With OKR, goals are usually more realistic, transparent and strategy implementation in the agile context is structured. An agile transformation is thus "manageable" and the progress of the company is tangible and measurable for everyone.
How the OKR Framework works
OKR is a goal management framework for agile organizations to implement corporate strategy. The management tool places a clear focus on the overarching goal management of the company, not on the performance of individual employees. OKR is used in particular in complex networked companies to react iteratively to (market) changes across all company levels. In the spirit of the agile mindset, OKR also provides for decentralized decision-making on goal setting within various organizational units.
OKR is to be understood as a link between the corporate vision and the agile operationalization of agile teams (see graphic). Here, OKR basically defines an interplay between qualitative, long-term goals as ambition levels and concrete, measurable OKR sets.
The core elements of the OKR framework are the agile OKR ceremonies, which run in a clear cycle for an established goal management process. Medium-term annual goals (objectives) fundamentally indicate the direction in which the company would like to develop. The annual goals are achieved in fixed, usually three-month OKR cycles. An OKR cycle begins with OKR Planning to align the goals and operationalize them with measurable 3-month targets. In line with the agile way of working, the operationalization of the goals is accompanied by weekly reviews, reviews of goal achievement and internal retrospectives.
The NTT DATA approach of integration OKR in SAFe
We often already accompany our customers during the implementation of an agile delivery organization according to SAFe (Scaled Agile Framework for Enterprises). Therefore, we have made it our business to actively link the frameworks OKR and SAFe on all levels.
The similarities between the two frameworks are obvious (see graphic). While OKR focuses on operationalizing the strategy in an outcome-oriented 3-month cycle, SAFe pursues the purpose of setting up an agile organizational model for product/service development in a likewise 3-month cycle. Both frameworks cascade in four steps across all hierarchy levels and end with the same element that unites both frameworks - the specific tasks of the employees.
We often see that entire organizational units are already working in agile cycles, but others are working with classic project management methods and structures. Even in this especial context, OKR can integrate cross-cutting processes for alignment. This is because the OKR ceremonies for agile goal setting run independently of the events of agile delivery organizations.
For this reason, we can also recommend our approach to integrating OKR and SAFe in terms of our- i.e., combining agile with classic structures.
OKR Consulting with NTT DATA – benefit from our experience
Our OKR Consulting can be applied flexibly. You receive a solution approach that our experienced consultants adapt to the individual needs of your organization.
Together with your executives we define the way of your individual OKR implementation, so that OKR becomes an integral part of your basic agile structure and methodology.
To this end, we bring successfully established best practices from other projects and offer a comprehensive toolkit with recommended standards. You benefit from the following three services in particular:
- Fast start with OKR Readiness Assessment and derived action recommendations for OKR implementation
- Customized OKR coaching for management and executives and OKR practice training for all end users and stakeholders (incl. NTT DATA certifications)
- Change management to accompany the OKR transformation
Insights in a client's project – Get impressions from our OKR practice
Our OKR Toolkit provides you with a fixed and proven framework for OKR implementation that can be customized without disregarding cross-OKR standards. Here is a concrete example from our everyday OKR consulting work:
The initial situation: One of our automotive customers is in the process of developing a central IT collaboration platform for more than 10,000 users. More than ten teams with different cultural backgrounds are working on the realization of this platform. Although the teams have varying levels of agile readiness and maturity, they have adopted different agile methodologies for their work as they work together.
The Goal: The main goal of the transformation was to standardize the way all teams work and align them around common goals. In addition, a closer connection to the company was to be established and performance was to be increased through results-oriented customer centricity.
The implementation: With a total of six consultants and Agile Coaches, we supported the client in establishing OKR-supported structures over a period of 14 months. In the process, we transformed an ART (Agile Release Train) that was too large and had more than 160 members into a multi-ART solution (see our article "Multi-ART Management"). This required coaching and training of the Release Train Engineer, the Product Manager, the Business Owner and the teams in SAFe, Scrum, Kanban and OKR. To ensure a successful implementation in the long term, we also provide consulting in the application of SAFe, Scrum, Kanban and OKR.
The advantages: An important benefit of the specific NTT DATA approach for our client was the harmonious linking of all cycles of the different agile frameworks for a coordinated and synchronized flow.
Overall, the application of agile methods was not simply "by fiat," but was oriented around values and a Lean-Agile mindset. Due to the incremental prioritization and delivery of new functionalities based on the needs of the user:inside, the added value is sustainably increased. This approach also fosters a better mood and increased self-awareness within teams, as well as improved, coordinated collaboration, even among globally distributed teams.
In addition, stronger end-to-end accountability leads to greater efficiency and higher quality of teams. Similarly, we perceive that predictability is increased through improved planning and expectation management, which will lead to shorter development times in the long run.
Is the topic "combination of OKR with SAFe" interesting for you? Let's get into a conversation!
Sven Bauer, Senior Consultant Transformation Management, NTT DATA DACH