In the natural world, evolution is a form of trial and error, and those who learn from other’s mistakes tend to stay alive longer. Similarly, in the business world sometimes your only competitive advantage is in how fast you learn and respond to the market changes. And, of course, you can learn either from your own experience and/or from the experience of others.
Clearly, the trial and error approach takes more time so in this article, we will summarize the main challenges and missteps of the OKR implementation journeys. And you can save a lot of time and resources by avoiding these pitfalls.
Confusing Company level Objectives with revenue targets
The most common understanding of a Company level Objective is that it should be either “increase revenue by X%” or “reduce cost by Y%”. These are not Objectives, these are KPI targets – levels of performance you want to achieve.
A Company Objective is a directional statement clarifying the overarching focus area for a quarter. If a company wants to achieve a higher revenue number, a quarterly Objective could be focused on new partnerships acquisition, or expanding to a different market, or improving brand reputation, or improving customer satisfaction, etc.
There are many specific things a business could focus on, and it might be hard to prioritize. That is why leaders should be asking for input from team managers and their teams.
Neglecting bottom-up feedback about the Company level Objective
How do you ensure successful execution of company goals if people do not agree with or understand these goals?
This is a topic of communicating important strategic priorities throughout the organization in a digestible way and involving people in validating these goals from an execution perspective.
Employees have front line information and expertise that they bring to the table. So once your quarterly Company Objectives are clear enough, take the time to explain them to the teams and ask for feedback. If teams can come up with ideas for their own Team OKRs to drive these company goals forward, then your Company Objectives make sense.
As a quick example, if leaders tell everyone to focus on customer acquisition, and don’t ask for feedback about this direction, they might fail to recognize that the current retention levels are dismal, and any acquisition efforts would go down the drain if you cannot keep the customers long enough.
So asking for feedback instead of unilaterally deciding on high-level goals helps to figure out whether the Company Objective is achievable or realistic for this quarter. In our example, the proposed Company level Objective does not make sense for the quarter so leaders should change it completely to focus on early-stage retention, and invite the teams to think about their own roles in improving the situation.
Cascading Objectives and/or Key Results
Under no circumstances should leaders unilaterally decide what teams’ OKRs should be. A team should be responsible for writing their own OKRs because having the power of decision-making increases ownership and accountability. Team OKRs should drive the Company’s Objective forward, and that is how goal alignment is achieved.
Companies with 10+ employees normally would not have measurable Key Results under the Company Objectives. Simply because if it’s a company-wide KR, which team exactly is going to take ownership of moving it forward? Instead, leaders should communicate the value and the meaning of the Company Objective and ask the teams to link their Team OKRs to this Objective. Technically, a Team Objective then becomes the Company level Key Result.
Demanding personal OKRs from employees
OKRs should be team goals, and individuals will have plans contributing to achieving these goals. Individual OKRs almost always end up focused on task completion with no consideration about how this task would contribute to business value. Moreover, demanding OKRs from every single person would amount to an unmanageable number of so-called goals, thus, defeating the purpose of achieving better focus, clarity and alignment. If you are still considering personal OKRs, learn more about this topic from this article: Team OKRs vs Personal OKRs.
Using OKRs to evaluate performance and calculate reward
Another common OKR mistake is using the methodology for performance management. OKR is not a framework for evaluating performance and calculating compensation. Teams should feel comfortable taking risks and trying new things, and they would not be able to do so if their annual bonus depends on it. People tend to scare themselves back into their comfort zones when stakes are high for them. Unfortunately, staying in the comfort zone will not bring growth to the company. You can read more on the topic here: OKRs versus Performance management.
You have too many Objectives
More Objectives for a single team does not mean more accomplishments, and too many of them will take away focus from your priorities. Also, if a team has 20 Objectives for a quarter, take a good look at them: are they really Objectives or are they projects that they would like to complete?
An Objective is an improvement area or a problem that a team would be solving within 90 days, and there can be many projects contributing to a single Objective. So if you have too many of them, consider taking a step back and learning how to write good Objectives.
One team should have a maximum of 3 Objectives per quarter. That way, the amount of work will be much more manageable and far less confusing.
You have too many Key Results
There should be no less than 2 and no more than 5 Key Results under a single Objective, and the golden rule is to have 3 KRs per an Objective.
If you have too many KRs, you might be confusing them with your business-as-usual performance metrics or project headlines. KRs are neither KPIs, nor projects, they are measurable outcomes that a team can realistically achieve within 90 days.
Learn more: How to write Key Results
Your Key Results are not measurable
Key Results (KR) should be numeric. They are what makes it possible to track progress towards your Objective. Key Results help to define what success looks like. They help you understand when you can say “Oh we did great!”. KRs are not actions to achieve an Objective, they actually are how you define the success of the Objective.
It’s important to remember Objectives (Goals) are your big, ambitious goals, Key Results (Outcomes) measure the achievement of an Objective, and Weekly Plans (Outputs) are the daily plans and initiatives you do to reach your goals.
Learn more: Outcomes versus outputs
Your OKRs s are too challenging or not challenging enough
You might think that your team completing 100% of their goals is great! However, this could actually mean that you have set goals that are too easy. Objectives should be ambitious, but not too difficult in order to push employees to achieve more without overwhelming them.
If you set ambitious enough goals, achieving 70-80% of them could already be a great accomplishment. When teams “expect” to achieve 70%, on the other hand, 70% becomes the new 100%, and it defeats the purpose of stretch goals.
Setting and forgetting your OKRs
When you have no actionable ideas on how to drive progress on your KRs, you would naturally abandon these goals and switch to other things to do. You should update the progress of your Key Results regularly, and that is why OKRs should be discussed every week. Create a weekly ritual around OKRs to review them with your team. Otherwise, during the quarterly review, you may find that you are way off track.
Not keeping the big picture in mind
This common OKR mistake occurs when Team level Objectives are not aligned with company goals; or when individual Weekly Plans are not contributing to achieving Team Objectives.
Management should be discussing with team leaders the role their team plays in the bigger picture, and employees should understand how their activities help achieve team goals as well as the Company Objectives. Make sure to have a meeting when OKRs are created so you can move everyone in a unified direction.
A word of encouragement: “I have not failed. I’ve just found 10,000 ways that won’t work.”
This quote by Thomas Edison should help you remember that mistakes are a part of the process, and there is really no avoiding at least some of them. So don’t be too hard on yourself when you recognize some of these challenges as your own experience.
But what you should put in writing and never forget is that OKRs are supposed to bring everyone together and improve teamwork. This can only be achieved through communication and working together on figuring out the most important priorities.
Yes, it will take time. And, yes, you will not regret it.