Top 4 Reasons OKRs Break Down and How to Avoid Them

Hey folks,

It’s the end of February, which means it’s the phase of winter that seems to drag on and on, but spring isn’t quite in reach yet. I call it vacation season, and this past week my wife and I signed off to get some vacation time in Italy. We caught the last days of Carnival in Venice before heading to the Italian Alps for a bit of skiing. Highly recommend it.

Beyond vacations, this week’s newsletter focuses back on OKRs. Specifically on what I see as the main pitfalls organizations get into after adopting them. The key is, OKRs require a shift in ways of working top to bottom. But a lot of orgs end up in a plug-and-play situation, dropping OKRs into whatever structure they already have in place and expecting to continue business as usual, which undermines the success you can achieve by using them.

Read on for what to watch out for and how to avoid OKR implementation mistakes.

- Jeff

Article: Top 4 Reasons OKRs Break Down and How to Avoid Them

The Objectives and Key Results (OKRs) framework has become significantly more popular over the past several years. Organizations across industries have adopted it as their new structure for operations and goal-setting. And with good reason: OKRs is the most effective (in my admittedly biased opinion) framework for keeping your customers front and center while also ensuring organizational agility from top to bottom.

But getting started with OKRs and seeing their adoption through to completion are two different things. All too often companies stop after implementation, which means they don’t reap all the benefits the framework offers when done well. We can fix that.

Here are the top 4 reasons why OKRs break down and how to avoid each one:

1. The organization doesn’t change its ways of working to support OKR success.

This is a big one. OKRs isn’t the same as other goal-setting tools—you can’t simply swap out new terms for old ones and continue to run business as usual. To fully support OKRs and see the most success, the organization’s work structure and culture need to change. Here’s what to watch out for if they don’t:

• Performance management criteria stays the same

• Access to information remains scarce or opaque

• Customer research and product discovery don’t get enough of a voice and learning isn’t prioritized

• Work still gets prioritized according to lists of output instead of the outcomes you’re seeking as a result of your work

How to avoid it: Companies and leaders adopting OKRs (or instructing their teams to) need to understand that OKRs are not a system for making aligned task lists. They require you to embrace the uncertainty of product development, trust your teams and the process, and allow them to experiment and make decisions based on what they learn, relinquishing the need to gate-keep information and control the product.

2. Teams don’t write Key Results as changes in human behavior.

A lot of goal-setting frameworks prompt teams to create lists of features, products, or initiatives they plan to create, which equates completing those tasks with achieving their goals. But building stuff for the sake of it doesn’t necessarily drive business results, and the OKRs framework recognizes that. With OKRs, key results shouldn’t be features; they should be outcomes—a.k.a. the changes in human or customer behavior you will see if whatever feature or initiative you test or create is successful. It requires a shift in thinking that can take teams and organizations time to understand. When they don’t, here’s what to watch out for:

• Writing key results as task lists focusing on output and task completion

• Writing key results as measures of system behavior, instead of human behavior

• Repurposing their backlog of work to be their key results—or reverse engineering the language of the key results to fit their backlog so they can keep working as before

• Sandbagging the target metrics of their key results so they can easily “hit” their goals without needing to stretch, innovate, or change their ways of working

How to avoid it: Dig into the difference between output and outcomes and how each actually affects results. Understand that outputs and completed tasks are not the measure of success because they can’t tell you if what you’ve made is valuable. Seeing the behavior of your customers change is the only way to really know.

Ask, “What will people be doing differently if we choose the right feature/output/initiative?” Each team needs to determine which customer behaviors are most important to influence and target those. And set the bar high—setting low targets ultimately does a disservice to the customer, which will in turn lead to worse results for the company.

3. Leaders use OKRs as strategy, instead of having strategy inform OKRs.

Some organizations without a clear strategy mistake the OKR-setting process as the process for setting their broader strategy. But in order to write good OKRs and succeed with them, you need to know what you’re aiming for in the first place. Here’s what to watch out for: 

• No clear direction or objective from company leadership, or teams receive only vague directives to “increase revenue”

• Leaders expecting each team to set its own strategy

How to avoid it: Leadership sets the company strategy first. Answer three questions*:

• Where will you play?

• How will you win?

• And how will you know you have won?

Then, deliver the overarching strategy to your teams so they can write OKRs to tactically support that strategy.

*These questions are generously borrowed from Roger Martin’s legendary article, “The Big Lie of Strategic Planning” (HBR, 2014).

4. Leaders take back the reins when uncertainty creeps in, making OKRs defunct.

Without a clear, defined and approved list of features, leaders can have a hard time embracing the ambiguity that is part and parcel of using OKRs (and building digital products and services in general)—particularly when current events become tumultuous or the economic outlook is uncertain. They start to perceive the “risk” of working without predictable, designated task lists as too great. When this happens, watch out for the following behaviors:

• Leaders taking back some of the decision-making responsibilities and control (and trust) they’ve given their teams

• Leaders insisting on definitive lists of projects and initiatives the teams will work on

• Companies reducing the time and budget allotted to customer research activities

How to avoid it: Leaders, resist the temptation to pull back entirely. Have your teams work in short cycles, take on less risk with their experiments and tests, and adjust course at the end of each cycle as they learn from their activities. In other words, stay agile.

Remember that the only way to know what will get your company through and/or keep you on top is to stay close to your customers and test the ideas that speak to their needs. Incremental, informed product decisions will win the game no matter what state the world’s in.

Interested in working together?
Please reach out. 

In case you need it,
here's a description of what I do.