Just because you're an agile team doesn't mean you need to stick exclusively to the agile methodology and nothing else. Part of being agile is using all of the tools at your disposal. OKRs provide clarity for teams, especially as agile teams grow into larger businesses. They ensure everyone is on the same page about what the business hopes to achieve and how they can get there with clear metrics.
Learn more about OKRs, the drawbacks and benefits of OKRs for agile teams, and how agile teams can successfully adopt OKRs.
OKRs stands for Objectives and Key Results. It’s a goal setting and management framework that revolutionized Intel in the 1970s and Google in the 1990s. It’s where a team sets an ambitious goal (objective) and then tracks and measures their progress by meeting the key results that will get them there. It’s an effective method that organizations and businesses can use to set a strategy and hold teams accountable for the results.
Very simply, say you’re a kid running a lemonade stand in your neighborhood. Your objective is to make $100 in sales by the end of the month, and you only have four weekends to do so. A key result that will help reach your objective is making $25 in sales the first weekend. Once the weekend passes, you can analyze whether or not you were successful and determine how you can improve next time.
If you want to hear from the inventor himself, here’s Andy Grove defining OKRs.
Andy Grove is considered the father of management science. Grove, a Hungarian immigrant who escaped both the Nazis and then the Soviets, immigrated to the United States in 1956. He became Intel’s first hire when the company was founded in 1968. Grove quickly ascended the corporate ladder thanks to his management strategy—OKRs. Under Grove’s leadership, Intel increased their annual revenue from $1.9 billion to more than $26 billion.
Grove says, “the objective is the direction.” It’s where you want your project or business to go. A key result is a step in that direction, a metric of success. Grove says: “the key result has to be measurable.” Did you accomplish what you set out to do or not?
SMART is an acronym designed to help teams and organizations create clear, attainable goals. SMART was created by Peter Drucker, who has been described as “the founder of modern management” thanks to the framework he created called Management By Objectives (MBO)—the framework Andy Grove based his OKRs on.
SMART is similar to OKRs as they’re both different ways for teams and organizations to structure and measure their goals in a practical, inclusive, and transparent way.
Specific ➡️ Keep your goals specific, simple, and targeted in order to plan more effectively.
Measurable ➡️ Determine how you will know if you’re making progress or lagging behind. What are the key results and metrics that will help you reach your goal?
Achievable ➡️ Keep your goals grounded and your head out of the clouds. What can you practically accomplish in your selected time frame?
Relevant ➡️ Your goals must support your long-term aims and brand values. How do they serve the project and the future hopes for the business?
Time bound ➡️ Come up with a date that all of this needs to be accomplished by. Make it practical but ambitious to maintain efficiency and motivation. How will you prioritize the tasks?
Many of the principles of SMART Goals can be applied to setting strong OKRs. The key results you’re aiming for need to be specific, measurable, achievable, relevant, and time bound. Without metrics around what you hope to accomplish, you’ll never know when you’ve met your key results or if you’re on track to meet company objectives.
Agile is a bit of an umbrella term for a way of working that emphasizes collaboration, flexibility, and regular iteration over adherence to a rigid plan designed by a single project manager. The agile methodology is non-linear. It prioritizes teamwork over hierarchy. Agile teams are always open to new information. Plans are designed to be adaptable with a focus on bringing the customer inside the process to deliver consistent value, as opposed to keeping them in the dark until the project, for better or worse, is completed.
Think of agile as the antithesis of an assembly line—a linear, sequential process where each step is completed in the same order and in the same way in perpetuity.
The end product always remains the same, exactly the way the original designer intended, without any insight from the customer along the way.
Agile teams iterate regularly so that they always have something to show the customer or stakeholders. This way, the customer has more say about what they feel is working and what isn’t. The team then takes these insights into account for the next iteration. Value is delivered to the customer with a consistency that’s rarely, if ever, achieved by traditional project management.
Although it’s true that OKRs revolutionized large organizations like Intel and Google, scaling with OKRs is an aspect agile teams can struggle with. This is partially due to the fact that scaling with agile comes with its own share of difficulties. It’s challenging to take the principles and consistent results of agile and apply them to multiple teams at different levels of a large organization. How do you keep everyone aligned on the same priorities the larger an organization becomes and the more diversified and independent their teams get?
OKRs can help with this by outlining a clear direction and defined goal for the organization at large. That said, focus must be placed on making the work environment as trusting as possible and the overall strategy abundantly clear and precise. If the strategy is muddy and imprecise, independent teams won’t be aligned.
This may seem obvious, as key results are designed to be measurable, but sometimes teams can struggle with being specific enough about how they will measure a key result. A 5% increase in sales is certainly a measurement, but it won’t provide the true value of OKRs if you don’t put the measurement in a precise context.
Determine the specific measurement. 5% of what, exactly? 5% more than last year’s revenue? 5% more than the last quarter? What’s the timeline look like to achieve this? If you’re not crystal clear about what success means, it will be impossible to know when you’ve achieved those results.
The objective has to be specific. Making your objective broad, like raising your total revenue by 5%, lacks definition because there are so many ways to increase your revenue. Are you releasing a new product or offering a new service? Is every team going to work on a different aspect of this?
Make your objective clear to visualize, and make it something that your teams can work on together. Instead, you could choose to raise your revenue by 1% in a specific customer demographic, increase sales of an under-performing product by 1%, or boost traffic to a part of your website that isn’t generating enough clicks. The centralized objective will help different teams align on meeting the key result.
Stakeholders and customers play a vital role in the agile process. Keeping them in the dark about your OKRs is a no go—and very unagile of you! 😤
Being transparent with stakeholders about your objectives and key results will establish confidence that the team knows where they’re going and how to evaluate success. It also ensures stakeholders are on the same page as the team. They will know what you’re trying to accomplish, understand the process, and be able to offer insight that will contribute to your objective.
With OKRs, agile teams can focus on one key objective. Too many objectives, or unclear objectives, divides attention and clouds priorities. OKRs are visible to everyone, so the entire organization from the top down understands exactly what’s being accomplished, why, when, and how to measure success. Plus, the clearer the objective, the better agile teams can collaborate to tackle it.
The agile process has a lot of moving parts, so having a clear strategy and direction every team member can easily point to helps achieve and maintain organizational alignment. OKRs mean agile teams within an organization can work independently of one another while still moving toward the same goal, but only if that direction is made perfectly clear right from the beginning.
If an entire business is aligned on OKRs, decisions are easier to make. When it comes time to choose what to prioritize and which backlog items should be addressed next, you can recall your OKRs to ensure you are choosing the tasks that will make the most impact. Teams can make decisions more effectively and with more efficiency when OKRs are clearly defined and understood across the team or multiple business teams.
Accountability is essential to agile teams and the agile methodology as a whole, as agile is all about collaboration and teamwork. If part of your team isn’t accountable for their performance, the whole team suffers, and productivity grinds to a halt. OKRs hold teams and individual members accountable for business outcomes.
Success can’t be achieved without being measured. How else will you know what success looks like? OKRs can help agile teams understand when they’re on the right track and when they’re not by quantifying the incremental achievements that will bring them closer to accomplishing their ultimate objective.
✔️ Ensure your OKRs have specific measurements around what success looks like. You may think you’ve set measurable OKRs, but make sure you’re crystal clear on the timeline for success. A measurement isn’t of any use if you don’t have precise context around how you will obtain those metrics.
✔️ No matter how big your business is or how many teams you have working on different projects, they need to all align on business objectives. Ensure the OKRs you set out to achieve are understood across all departments and that everyone understands their own individual responsibility when it comes to meeting those goals.
✔️ Teams are more motivated to work towards a specific goal. Ensure you don’t have bland or broad objectives that don’t carry much meaning. Instead of a blanket X% increase in sales, consider how you can make that objective more dynamic and meaningful to the team. A better objective might be to increase sales by X% for a low performing area of your business or for a specific product you want to focus on.
✔️ Don’t keep your stakeholders in the dark. It’s up to you to ensure they understand your process, how you work, and what your OKRs mean. Otherwise, they won’t be able to understand your decision making process, and they won’t be able to offer constructive feedback that meaningfully contributes to your objective.
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