By Colin O’Neill

Colin O’Neill is an entrepreneur, thought leader, business executive, international trainer, organizational change agent, conference speaker, and executive coach.

For many business leaders, there is no doubt that Objectives and Key Results (OKRs) are a good way to document and communicate strategy. So why do organizations often struggle with successful OKR implementation? Given our years of OKR consulting experience, we believe there are several factors that determine the success or failure of adopting OKRs. To make sure your organization has a high probability of success, consider these five critical success factors (CSFs):

1. Leadership leads by example

2. Focus shifts from outputs to outcomes

3. Strategy drives funded initiatives

4. Align up, down, and across the organization

5. Establish an OKRs Practice

Let’s take a closer look at each of these CSFs:

1. Leadership leads by example

First and foremost, senior leadership must embrace the use of OKRs as the primary strategy communication approach. While other strategy development methods are still in vogue (e.g., Balanced Scorecard, 4 Disciplines of Execution [4DX], Management by Objectives [MBOs], etc.), OKRs provide a flexible yet rigorous mechanism that brings the clarity necessary for true organizational alignment. Leaders need to use OKRs themselves (“do as I do, not as I say”) and ensure that they are effectively employed at lower levels of the organization. OKRs cannot be optional if they are to work effectively.

2. Focus shifts from outputs to outcomes

One of the most obvious mistakes is when the Key Results (KRs) of OKRs are written as a list of things to do, which are really outputs. On the other hand, outcomes are results that make a measurable impact, such as improved customer satisfaction, higher quality, lower costs, to name a few. Simply completing a task or delivering a feature doesn’t necessarily make an impact. Outcomes have to move the needle on a measure that is important to the organization.

3. Strategy drives funded initiatives

In many companies, initiatives are funded during the annual planning and budget allocation cycle. Unfortunately, many initiatives are funded because they seemed like a good idea at the time; or maybe it’s been in the queue for a while and an executive thought it was still important. The problem with both of these scenarios is that capital funds (which are almost always in short supply) are allocated to activities that may or may not contribute to the company’s latest goals. This often results in a missed opportunity to shift that money to more important projects that could make a direct impact on the achievement of enterprise objectives. In this case, OKRs provide the guardrails for funded initiatives, ensuring each one can be directly traced to a corporate goal and measured to show that the investment was a wise one.

4. Align up, down, and across the organization

We’ve all seen the cartoon where people in a boat are pulling their oars in different directions, then wondering why they’re not getting anywhere. Lack of organizational alignment is the biggest contributor to wasted money and effort. A 2017 LSA Global survey of 410 companies across eight industries revealed that highly aligned companies grew revenue 58% faster and were 72% more profitable while outperforming misaligned companies at impressive rates. It’s just common sense that if all parts of an organization are working towards the same end, it will be more effective in many ways: increased productivity, better employee engagement, improved customer satisfaction and retention, etc.

When implemented correctly, OKRs provide the opportunity for alignment across multiple dimensions. Each level of the company internalizes and interprets the higher level’s OKRs from their unique perspective leveraging their core strengths. The aggregation of each organizational department’s outcomes all contribute to the accomplishment of higher level objectives.

5. Establish an OKR practice

Finally, it’s important for an organization to formally establish an enterprise-wide practice that ensures OKRs are being created and used correctly. Not only does the OKR practice become a center of excellence in its own right, it also provides the training, coaching, and tooling necessary to give an organization the greatest potential for OKRs to lead to operational success. Tools such as Gtmhub provide an excellent way to organize, track, and measure a company’s OKRs. In addition to consistent OKR implementation, the formal practice also allows for customization of an OKRs adoption/transformation program to account for the uniqueness of the corporate culture.

Remember, just because your organization is using or moving to OKRs doesn’t mean you’ll automatically succeed. Taking into consideration these five critical success factors will improve your chances of an auspicious adoption.

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