OKRs vs Strategy: Understanding the critical difference

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At a Glance

• Strategy is an opinionated, directional approach to your biggest challenge, not a plan or checklist.

• OKRs track whether your actions are moving you toward the outcomes your strategy aims for.

• Without strategy, OKRs drift. Teams optimize locally and misalign across the org.

• Together, strategy and OKRs create clarity, cohesion, and meaningful progress.

Hey folks,

A year or so ago I sat down to work on OKRs with a new client and asked them what their strategy was for the coming year. They looked at me, puzzled. 

“Aren’t OKRs supposed to tell us that?” they asked. 

In short, no. This wasn’t unique to this client. All too often, given the multitude of direction- and goal-setting options available to leadership teams, the push is to simplify the process and produce the minimum amount of deliverables. I appreciate that. However, OKRs and strategy are not the same thing. Both are important, and there is a relationship between them. 

In this newsletter, we’ll dive into what each of these tools are, what they’re used for and how they relate to each other. And we’ll do it quickly and clearly so you can get ready for the post-summer “planning season” that’s inevitably already on your calendar. 

– Jeff
www.senseandrespond.co (check out our brand new website!) 

P.S. I've got two exciting workshops coming up—a public storytelling online cohort and our latest collaboration with Eric Ries and Lean Startup Co, a webinar called Lean AI.

Strategy vs OKRs

Let’s start by clarifying definitions. Strategy is an opinionated and coherent approach to addressing an important challenge. This is the definition Josh Seiden and I have come up with by synthesizing the work of Rummelt, Martin, Porter and others, as well as the work we've been doing with teams for nearly 20 years.

Strategy is not a plan, but rather a coherent mix of policy and actions that requires making explicit choices to overcome specific challenges. It is deliberate and flexible. In the face of contradictory evidence, your strategic direction must change. To put an even finer point on it, this is what matters to your organization right now and for the mid- to long-term foreseeable future. 

Here’s an example of a good strategic statement: Our focus for the next 12–18 months is the micro- and small businesses and merchants in low-bandwidth areas of sub-Saharan Africa. We will make sure that they are able to transact in all payment formats apart from cash, regardless of connectivity or bandwidth. 

This statement makes it very clear what target audience we’re focusing on and how we plan on converting them to our products and services. It also makes it very clear what we are not going to work on in the foreseeable future. Strategy is about direction and choices. 

Objectives and Key Results are the goals we set to help us understand if we are making progress towards our strategy. They describe what the world looks like when your strategy succeeds, including the behavior you expect to see in the people you serve. They are not our strategy but rather a way for us to filter work through an objective lens. Will this project, product, service, or policy bring us closer to the behavior changes we hope to see in our micro and small merchant audience? If we think that’s the case, the work gets further consideration. If not, it falls into the “not now” column.

In this way, OKRs are dependent on strategy existing, being clear and well-understood across the organization.

OKRs without strategy are risky

Can you write OKRs without having a clear strategic direction? Yes, you can. In fact, every team in your organization can do that. However, without that strategic foundation to anchor the teams, provide guardrails, and offer the constraints they need to set their goals, it’s highly unlikely the OKRs your teams write will end up being aligned. 

Every business unit in your organization will focus on its own, local priorities rather than the good of the company as a whole. Teams will begin to optimize their unique needs regardless of how those optimizations impact teams around them and in other departments. And no one in the organization will be able to clearly say, “That’s not the direction we’re headed in as a company” because there is no actual direction that company has agreed upon. 

The net result here is waste. Teams pulling in opposing directions or actively and unintentionally  impeding the progress of others. This is inefficient and leads to broken customer experiences.

OKRs & Strategy are two sides of the same story

OKRs and Strategy are like chocolate and peanut butter: two great flavors that taste great together. Can you have them separately? Absolutely. Together, however, they make for a powerful combination of direction, measurement, alignment and prioritization that your teams not only crave but need to do efficient, effective, innovative work. Here’s a great place to get started as the next planning season starts.

What I’ve Been Up To

June has been spent mostly at home with friends visiting and my annual music festival outing with “the boys.” I saw so many bands this year, it’s hard to count them or even remember them all. The best part? I found myself in a mosh pit at 4 am on a Sunday morning briefly questioning all of my life’s decisions and then realizing this is what it was all about ;-) 

Aside from that, I am entering a stage of life I believe is called “empty nesting.” Our kids are growing up and leaving the house. While it’s sad, a part of me is looking forward to this new chapter in my life with my wife. If you’re already in this particular phase, I’d love to hear about how the transition went for you. 

Finally, most of my non-client time is spent working on Sense & Respond Learning. We’re growing rapidly with a network of more than 30 trainers worldwide. Our Certified Training Partners can bring any of our classes to your organization in a variety of languages now (Spanish, Dutch, Norwegian, Swedish, among others). Hit reply to this email if you want more information and check out our upcoming classes here. 

Read, Watch, Listen

Read: Baltic: The Future of Europe by Oliver Moody. The book club this month is taking on geopolitics and I’m here for it. So much change in the world right now means that the future of Europe and other parts will likely come from places that haven’t had as much global attention in the past. I’ll share what I learn next month.  

Watch: The Gentlemen (Netflix). With most of my favorites now on hiatus, I went back and rewatched the first season of this Guy Ritchie dramedy based on the film of the same name. It was even better the second time around. It’s fun. Interesting. Well acted (Jimmy the stoner is just so good) and a touch violent. What’s not to love? 

Listen: Durand Jones & The Indications. I’m a sucker for neo-soul, funk, and groove bands. I don’t know that these guys are the greatest that’s ever been but it’s groovy, soulful and funky and makes for easy listening when working or when trying to lighten the mood at a get-together. 

What’s New on the Blog

How to measure the success of your AI initiative - If I had to guess, I’d guess you were working on an AI project. If I also had to guess, I’d guess you were measuring the success of that initiative by whether or not it’s deployed and works. But did it add any real value to your customers? This post shares how to figure that out.

From behavior to business impact: tracking ROI in product practice change- Leaders will invest in transformation and then demand to see impact from that investment immediately. We know it’s unrealistic to expect change to happen overnight. So what can we measure? And how do we bring our leaders along with us on the transformation journey in a way that updates our success metrics over time? This article shares an exact plan for how to do that. 

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