5 myths about the agile target system OKR

Objectives & Key Results (short: OKR) is a form of corporate and people management. The basic idea of OKR is that a company becomes more adaptive and agile through transparent, self-organised and cyclical objectives.

The interest in Objectives & Key Results has increased dramatically in recent years. Google Trends reports that in Germany alone, search queries for OKR have increased more than fivefold. Unfortunately, a number of misunderstandings have also arisen, which I would like to counter with a controversial view here.

Myth 1: Objectives & Key Results are a target system

Objectives & Key Results are often sold as an agile target system. From my point of view this is wrong.

What are target systems anyway? A classic target system, such as Management by Objectives or the Balanced Score Card, are instruments of corporate and employee management. In such target systems, corporate goals are worked out and then, like a rippling waterfall, are passed on from the top to the last employee.

Objectives & Key Results is also primarily about goals. But what is an objective in OKR is in reality an entrepreneurial hypothesis. During the lifetime of an objective (usually 3 months), this hypothesis is anticipated and tested as a 100% truth within the team. Later, at the retrospective stage, the hypothesis is evaluated using data, the key results. Subsequently, the next hypothesis is planned and validated on the basis of the knowledge gained.

This may sound adventurous or dangerous to you. Experiments, hypotheses? Yes exactly, because what I am describing here is nothing more than entrepreneurial action. Objectives & Key Results is all about bringing entrepreneurial thinking to work. OKR are, correctly thought, an implementation of Effectuation, i.e. the idea that a manager acts as an entrepreneur.

Peter Drucker says: “It is not about doing things, it is about doing the right thing”. But what is the right thing? The only way to find out is to make hypotheses, implement them and evaluate the results using data.

Myth 2: OKR are agile

No, OKR are not agile. Objectives & Key Results are also not based on the Agile Manifesto and have never been developed as an agile target system. Andy Groove, the late inventor of Objectives & Key Results, would most likely vehemently deny this. The question is even whether an agile target system is not a contradiction in terms.

But using OKR takes agile work to a higher level.

Let’s be honest. Where does agile work actually take place in most organisations? Right, on the implementation level. Even scaled agile frameworks, such as SAFe 5.0, deal exclusively with the implementation level, i.e. the production and delivery of products. In short, I see a focus on output in many agile projects.

In the end, agile work degenerates into delivery services. This situation is certainly not what the inventors of the Agile Manifesto intended, but it is a common corporate reality.

OKR have nothing at all to do with an output orientation. Objectives & Key Results is all about impact, it is about outcome. Good objectives lead to a desirable state in the future. They are a validable hypothesis of change.

Key results are also nothing more than impact objectives. Key results are effects that can be measured via data when an objective has been achieved.

Therefore, OKR do not measure velocity, costs or jelly bears. Objectives & Key Results measure the market and customer-oriented impact of business hypotheses.

Myth 3: Objectives & Key Results are a strategy

No, OKR is not a strategy. Objectives & Key Results need a strategy. Objectives & Key Results are only used to implement an existing strategy.

And anyway, what is a strategy?

In this context I would like to thank OKR guru Felipe Castro for his contribution. He describes the understanding of strategy by Jeff Bezos, the founder of Amazon:

“I am asked again and again. Jeff, how do you see the future of Amazon in 10 or 15 years? I say to that, I don’t know. The much more exciting question for me is this: What will be the same in 10 or 15 years as it is today? And for me, the answer to this question is clear: people want to be supplied faster and have lower prices in the future. My strategy is therefore to work intensively on the solution of this very question.”

And it is only now that the Objectives & Key Results come into play. Objectives & Key Results are the entrepreneurial approach to implementing such a strategy.

Myth 4: Goals are cascaded in OKR

That sounds plausible and is recommended again and again. You should cascade your objectives when using OKR. In this context, a cascade means that the objectives become increasingly detailed and concrete from top to bottom. With Objectives & Key Results this seems to work very simply: the key results of the company level are the objectives of the divisions.

Unfortunately this approach is wrong. Thinking in cascades neither leads to self-organisation in the teams nor to the desired entrepreneurial thinking.

OKR is about setting goals in 360 degrees within the company. This step, known as alignment, ensures that all goals in the organisation are in line with each other. It often even makes sense to share goals with other teams.

So I don’t just look from top to bottom, I don’t just look from right to left. I look quite openly at the organisation and agree on the development of goals. This is one reason why all objectives in Objectives & Key Results must be transparent and accessible.

Myth 5: In Objectives & Key Results the goals must be ambitious

Maybe you’ve heard of them? I’m talking about the so-called stretch-goals, i.e. the ambitious goals that can only be achieved with effort and also a portion of luck. Forget that!

Of course you can pursue ambitious goals but it is much better to concentrate exclusively on the effect of the goals. The only question you need to seriously ask yourself when forming OKR is: What impact do I want to achieve and how can I validate this impact using real data? Everything else then follows.

Bonus myth: OKR are a framework or a method

In OKR, many look at the method, ceremonies or iterations for goal development. But the core of the core of OKR is different.

In agile work, the term agile mindset is often used. There are even whole books on this topic. And this is where I start: OKR are actually a mindset. Objectives & Key Results are the mindset of thinking in effects.

Consistent thinking in effects helps you to make good decisions. Because on the one hand, your decisions are based on measurable hypotheses and on the other hand, as a timebox, they are also given a clear point for validation. You limit the risks and at the same time become flexible and open to results.

And when I write about the mindset of impact orientation, I do not only recommend that organisations or teams deal with OKR. I recommend it to you personally. Because the beginning of success lies in the perception of the world. In thinking!

Feel free to contact me for more information.

Notes:

André Claassen has published some more articles here at the t2informatik Blog:

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