Turbo Charged OKRs - It's A Process Problem!
by Mark Withington, on Aug 23, 2022 10:00:00 AM
Turbocharging OKRs with Operating Model Design
In his book, “Measure What Mattersi”, John Doerr described the performance management framework he calls Objectives and Key Results (or OKRs) as having four key Superpowers that help an enterprise:
1. Focus and Commit to Priorities
2. Stretch for Amazing
3. Align and Connect for Teamwork
4. Track for Accountability
Doerr cites numerous examples in the book from Intel, to Google, to Bono who have used OKRs to achieve remarkable results.
Simply stated, OKRs are the coordinated planning efforts of individuals within an organization identifying the high-level objectives – or WHAT they intend to accomplish over the year as measured by a very concise set of key results – which are operational metrics that indicate progress toward the objective… and then sharing those OKRs across the enterprise.
Doerr’s superpowers – particularly, “Align and Connect for Teamwork” – leave it to the reader to ensure the processes and projects intended to achieve those objectives - requiring teamwork and collaboration - align with the corporate strategy necessary to navigate today’s competitively crowded marketplace; a perfectly reasonable assumptions intended to limit the book’s scope and help it ‘stay in its lane’.
In reality, however, we’re finding that the challenge to “Align and Connect for Teamwork” has become the Achilles Heel for most organizations facing the “digital transformation” challenge. Namely, how do we ensure the organization is:
b. Connected (e.g., motivated)
For the processes and projects that will transform the organization to master capabilities (People, Process, Technology) that will carry us to the next generation of business model.
Looking for car keys
In fact, a recent KPMG survey revealed that 78% of the CEOs polled said they needed to be quicker to shift investment to digital opportunities and divest businesses that face digital obsolescence.
Much of this challenge starts at the top; we find most leaders struggle to define a meaningful transformation agenda that will steer the enterprise toward new, 2.0 business model opportunities often opting instead for simple operational optimization of their existing 1.0 business model. Much like the poor soul who lost their car keys in Soho, yet is looking for them in Time Square, “because the lighting is much better”, this incrementalism does not address the CEO’s quest… and they know it.
We believe this challenge stems from a combination of antiquated, “steady-state” strategic planning/annual budgeting process that relies on the organization chart as an accurate divining rod to new customer value and Conway's law[i] that states, “any organization that designs a system (defined broadly) will produce a design whose structure is a copy of the organization's communication structure.” In other words, looking to the existing organization will simply optimize Business Model 1.0.
This type of analysis takes the wrong perspective. Rather than looking retrospectively within the organization, senior management needs to lean in toward new capabilities and business processes that will drive the transformation toward Business Model 2.0 (Figure 2).
Accelare’s Strategy to Execution (S2E) process uses the concept of the Operating Model as the basis of transformation rather than the Org-Chart and although both the Operating Model and the Org-Chart are simply conceptual models of the enterprise, there’s a critical difference between the two.
The Org-Chart takes an inside-out perspective to describe what the employee does for the company – the chart’s origins come from management’s need to “know who was doing what” within the division of labor to achieve the economies of scale identified during the industrial revolution. The Operating Model on the other hand leverages concept first discussed in Michael Porter’s Value Chain framework to identify “What we do for our customers”. It uses concept discussed within Clayton Christensen’s Jobs To Be Done framework – often in verb/noun form – to free the CEO and their management team from the constraints of their current organization, and thereby creates the canvas/lingua franca that connects technology advances to NEW end-to-end business processes, & stakeholder experiences.
Accelare’s S2E framework leverages both the traditional org chart and forward-looking Operating Model to create a matrixed organization that turbocharge Doerr’s OKR framework – particularly Superpower number three, “Align and Connect for Teamwork”.
Invest or divest?
So, let’s illustrates how the operating model can turbocharge the OKR process. At its core Objectives and Key Results or OKRs only answer the questions where do we need to go, and how do we know we're getting there. However, adding the Operating Model Design answers the question that baffles most organizations what must we do to get there.
Using a community banking example (see Figure 3), senior leadership have recognized they must improve their customer experience by streamlining touchpoints and handoffs between the front, middle and back-office operations. And so we will list this as one of the organization’s key Objectives for the upcoming year (see Figure 4). Which they intend to measure through increased instrumentation on their customer journey, noting the number of incomplete journeys... in other words journeys that did not result in the organization's desired outcome.
Using Accelare's operating model design approach, illuminates the processes and projects are necessary to progress the organization toward those objectives.
Mapping that Objective to the processes within the operating model that support the customer journey will reveal a set of projects that will transform the organization. Once those projects are complete, the organization can then use the key results to determine if the projects are moving the organization toward the objectives
The Hybrid Organization
Furthermore, the operating model leverages those influencer individuals within the organization anointing them as Process Champions. These individual typically are frontline personnel familiar with their particular processes who are neither afraid of change nor the technology that might support that change.
Referring back to Doer’s OKR Superpowers, Aligning & Connecting via the Operating Model and its champions – rather than the org chart and functional leads - ensure the output of those capabilities are indeed delivering the OKRs, avoiding the siloed thinking and artificial barriers the org chart often encourages.
Mind you, we are not advocating the elimination of the org chart. Quite the contrary, we see the org chart and process model happily coexisting through the glue that joins the function leads with the OKR projects and the process champions.