Objectives and Key Results (OKRs) and Agile Management: How OKRs Can Support Agile Leadership

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The abbreviation OKR, which stands for objectives and key results, is a method that pursues the goal of promoting transparency, clarity and communication of goals and justifying the prioritization of activities (Schmidtmayer 2021). In this context, OKRs are an agile management system that derives partial goals for teams and individual employees from the corporate strategy and places a short-term focus on the next quarter (Haberstock 2022).

In February, Fabian Lehner already wrote about the basics and the potential of OKRs in the blog post “OKR – The Key to a Successful Company“. After all, many fast-growing companies such as Google, Spotify, LinkedIn or Amazon use this method. This contributes, among other things, to the attention and recognition that OKR has also enjoyed for some time with many other companies, which are also increasingly establishing these best practices (Handelsblatt 2018). Building on this blog post, today we would like to explore the question of how OKRs support agile management and how agile leadership with OKRs actually works.

Recap OKR Basics

The OKR method is based on three main concepts, which we would like to summarize again and explain in more detail here (Murakamy 2018):

1. Objectives: Setting a binding target

Example: Users of electric scooters can use a scooter at all Zurich streetcar stations at any time

2. Key Results: Include the measurable results that contribute to the achievement of the objective.

Example:

  • Increase number of operational electric scooters to an average of 1,000 per day
  • Increase range of electric scooters to 5 km per battery life

3. Initiatives: Planning and implementation of concrete activities that contribute to the fulfillment of the key results.

Example:

  • Purchase new electric scooters
  • Equip electric scooters with new batteries

For a more detailed overview of the basics and origins of the OKR method, we recommend Fabian’s blog post.

OKR and Agility

Although OKR is not an agile software development method like Scrum or Kanban, the basic idea of OKR is based on the same values and principles as agile methods. Therefore, OKR is also understood as an agile management system that can support agile leadership and target systems and promote the meta-goal of increasing agile maturity in the company.

But which aspects of the OKR method are relevant with regard to agile management and how does this strengthen the agility of a company? The following four aspects are crucial here (Schmidt 2020, Murakamy 2020):

  • The focus is on the result
    OKRs are formulated in such a way that the focus is on the result and thus on the output of an activity.  This leads to a change in the content and focus of a leadership model: In discussions with their employees and in their understanding of leadership, managers increasingly focus on the goal to be achieved and less on which specific activities are to be performed. This gives employees greater freedom to decide which activities they consider to be goal-oriented. This promotes the self-organization of agile team members, which is an essential component of the agile way of working.
  • Increased transparency
    Values such as clarity, transparency and an open feedback culture are crucial for agile leadership. The OKR method offers a suitable system of objectives to promote these values, as goals are communicated transparently and clearly and progress and results are measurable and traceable. In addition, OKRs enable the quick and targeted identification of potential learnings from the past OKR cycle. This gives managers the opportunity to identify potential for improvement and to factor it into the next OKR cycle.
  • Structured definition of objectives
    The identification and formulation of SMART[1] goals is of great importance for the agile way of working and also for agile managers. Since agile principles focus on the customer, it is important in agile goal formulation that the process of defining goals also takes into account operational aspects in addition to strategic aspects in order to do justice to the customer focus. This means that employees from the operational level, who are closer to the customer and can often better assess their needs, are involved in goal formulation. The OKR method ensures this by having 60% of objectives come from the operational level of the company and aligning these with the remaining 40% of objectives from management. This ensures that the objectives defined are both strategically and operationally relevant, but also that the two elements are aligned.
  • Agile control
    Ensuring the adaptability of companies is the central goal of the agile way of working. This requires an adaptive system of objectives that takes into account the adaptability at the overall company level. The system used must be flexible, i.e., leave enough room for adjustments and creativity, but at the same focus on the factors relevant to the success of the company that can be achieved through disciplined work. OKRs fulfill these requirements through their being defined, realized and scrutinized in a quarterly cycle. This focuses the relevant activities on achieving the relevant goals, while the short OKR cycle makes it possible to respond quickly to changing circumstances.

These four aspects make it clear that the basic idea behind the definition of OKRs coincides with the basis of an agile leadership understanding and that these two concepts should go hand in hand in an agile world. Since the individual facets of the agile way of working such as OKRs, agile leadership style and agile methods such as scrum complement each other, the OKR method can promote an increase in the agile maturity of the company as a whole.

[1] Specific, measurable, attainable, realistic, time-bound

Sources

Handelsblatt (2018). Ziele und Schlüsselergebnisse – die neuen Wunderwaffen moderner Führungskräfte. https://www.handelsblatt.com/karriere/new-work/okr-methode-ziele-und-schluesselergebnisse-die-neuen-wunderwaffen-moderner-fuehrungskraefte/22965862.html?ticket=ST-2385271-5334FAv62ms27mGNYmTP-cas01.example.org

Murakamy (2018). OKR BEISPIELE: SO FORMULIERT MAN GUTE OBJECTIVES AND KEY RESULTS. https://murakamy.com/blog/2018/10/19/okr-beispiele-so-formuliert-man-gute-objectives-and-key-results

Murakamy (2020). OKR: DIE AGILE MANAGEMENT METHODE VON GOOGLE, LINKEDIN UND CO. https://murakamy.com/okr

Schmid (2021). Auf diese Führungsmethode schwört man im Silicon Valley. https://www.impulse.de/management/unternehmensfuehrung/okr-methode/7311743.html

Schmidtmayer (2021). Agiles Management: OKR-Methodik im Detail. https://www.visioneleven.com/blog/okr-methodik-teil-2/

Katharina Schache
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