Why Failing With OKRs Could Be The Best Thing to Happen to Your Org
What companies can learn when Silicon Valley's favorite performance framework collides with organizational reality
“What do you mean, our strategy?”
The executive spun toward me, incredulous.
Many of my Objective and Key Results (OKR) -setting workshops have followed the same predictable pattern. I sit down with a bright, energetic, and enthusiastic team, and they’ve read my articles or heard me speak on a podcast, and they’re all excited to start setting their first OKRs.
And then I throw a wrench in the works by asking them to tell me what their strategy is.
After a moment of panicked surprise akin to hearing a word for the first time during a spelling bee, what follows next is some variation of:
“That’s easy; our strategy is to Increase growth by 10% next year.”
“Our strategy is to develop and launch the new insurance claim adjustor’s platform to replace the legacy one the vendor’s about to sunset.”
“Our strategy is to be the premier purveyor of single-cask bourbon.”
Which doesn’t amount to more than some lofty goals or a disconnected set of software features.
But with almost every single group I’ve worked with, there’s been a sense that they could solve all their problems and achieve the impossible just by having me help them write a good set of OKRs.
But this is the purest form of “magical thinking,” where believing, “hoping,” or “wishing” for something can somehow make it come true.
OKRs’ Seductive Promise
I’d trace the problems with OKRs to “Measure What Matters,” John Doerr’s wildly successful book chronicling Google's path to Silicon Valley startup superstardom thanks to the framework.
After you’re done reading “Measure What Matters,” you’re convinced OKRs could cure every one of the business world’s ills, purely based on John Doerr’s missionary fervor.
Spoiler Alert– Your Org Isn’t Google
But never forget that Google was young, flexible, and built for speed when they adopted OKRs under John Doerr’s coaching.
More importantly, Google was on the verge of inventing one of history’s greatest business models: a way to charge advertisers for words fueled entirely by an endless army of people searching for things they were already interested in.
OKRs in Google’s early days might have helped them focus, but any other management system would have worked just as well: SMART goals, Balanced Scorecard, whatever.
Hypnotized by the intoxicating appeal of alignment and clarity that Doerr promises, companies jump in and try to implement OKRs.
However, the early signs of trouble emerge immediately after most organizations take their first few steps toward implementing OKRs.
When Reality Hits
Why? Because there’s a general feeling on the part of many management teams that simply setting better goals should be enough.
“Once we’ve defined the perfect set of Objectives and Key Results, we can file them away on a shared drive somewhere, go back to doing exactly what we were doing before, and somehow, magically, we’ll achieve 10X more innovation and alignment!”
But this is an approach that sets in motion a series of steps that deterministically progress from Enthusiasm → Confusion → Frustration
And then things start to get really bad….
The Ugly Truth Emerges
Companies feel betrayed. Managers point fingers at their people.
And rank-and-file workers in turn resent their managers for dumping one more “passing management fad” onto their already over-full plates as they struggle to juggle one too many “top” priorities.
The backlash begins, and people inevitably take to bashing the goal-setting framework with the kind of fervor usually reserved for opposing sports teams.
“It’s not our fault! OKRs suck!”
A Ray of Hope
Surprisingly, an unexpected opportunity lurks in every one of these "failed" implementations.
In many ways, this expensive and painful failure could be one of the best things to happen if companies can be open to learning the lessons it offers.
Just as companies that “failed” to “transform” to an “Agile Operating Model” exposed certain organizational habits and cultural barriers, those struggling and failing with OKRs are now poised to learn an essential lesson hindering their success on multiple levels.
Dead Giveaway: OKRs for Planning
Whenever I see teams approach OKRs as a planning and project management tool to generate task lists, it reveals some stark truths about that company’s culture.
At a fundamental level, it exposes how they think about their clients.
Because the difference between planning and strategy is that planning is an analytical and internally focused exercise focused on sequencing and making the best use of your people, time, and resources to accomplish a result.
Strategy, on the other hand, is a creative and client-centric approach to making choices that compel client behavior to change in ways that mean success for them, as well as for your business.
And understanding where OKRs play in strategy design can help us put them in context.
What Role do OKRs Play in Strategy?
Take, for example, the simple yet powerful “Playing to Win” strategy framework.
Where would OKRs fall across the five boxes?
Dead last.
Because OKRs are nothing more than a "management system."
Management systems set goals, gather data, review the latest actions, measure progress, and continuously improve a company’s strategic capabilities, much like the entire array of modern American football coaches do for championship NFL teams.
But it’s laughable to think a single management system could ever be considered a substitute for a comprehensive and well-designed strategy.
That’s like saying the team’s nutrition coach could be responsible for winning the Super Bowl.
The Sunshine of OKR Failure
As companies try and fail to implement the framework, it’s crucial to remember that OKRs don’t create these problems – they merely shine a bright light on them, bringing the symptoms front and center.
As such, they spotlight the true underlying cause of organizational dysfunction: A widespread and general lack of strategy across the entire company.
It’s like people told to simply “execute” are forced to work, drone-like, on random tasks without any unifying purpose or focus, like rowers chained to the hold of a galley ship, paddling in circles.
Adding the clarity of a set of strategic choices can help people find their own meaning and their own ways to help row in the right direction to fulfill the company’s broader purpose.
So remember, it’s not that OKRs are failing your company;
It’s your organization's inability to make clear strategic choices that’s failing your OKRs.
Learning the Lesson
Most organizations react to their failed OKR implementations by dumping them faster than gym memberships in February.
Some companies even go as far as to ban the use of the word “OKR,” telling everyone to call them “KPIs” instead, much like “He who shall not be named” from the Harry Potter novels.
But if they can avoid blaming the OKR framework and remain open to learning the right lessons, they can write a new ending:
Enthusiasm → Confusion → Frustration → Insight
Great article Mike! thanks for sharing