How VSM can help you steer clear of these six OKR mistakes

How VSM Can Help You Steer Clear of These Six OKR Mistakes

In ConnectALL, OKR, Value Stream Management by Soumya Menon

In 2020, when a majority of the workforce switched to remote working, organizations of all sizes across the globe turned to Objective Key Results (OKR) to figure out how to stay aligned while responding to rapid change in the business environment. 

OKRs, as you may know already, are a great way to attain audacious goals. This is because setting OKRs forces individuals, teams, and companies to articulate their goals in a time-bound and measurable fashion. By setting an Objective (a broad mission statement) and several Key Results (shorter, measurable assignments) great strides can be made in a quick and organized manner. 

And while crafting OKRs is a part of the process, writing them well is an indication of anyone’s ability to succeed at them. The goal-setting framework is an incredibly empowering tool for staying focused on desired outcomes or results without micromanaging. The caveat though is to avoid the common pitfalls. And that’s where Value Stream Management (VSM) comes in.

How Value Stream Management can help streamline OKRs

Like with any management method, implementing OKRs must be done in the right way to be effective. When done properly, OKRs have the power to clarify focus, align organization, and tap into the creative power of every member of your team. 

Lean practices like VSM can help accelerate OKR implementation as the two complement each other to help organizations, especially the ones that are in a scaled-agile environment. The major tenets of VSM can be used to increase things like waste elimination and end-to-end improvement.

By using the strengths of VSM, organizations can achieve the larger goal of business outcomes, improve agility and velocity, become more predictable by delivering value, and focus on what matters. 

[Also read Three Simple Strategies to Create Effective OKRs for Software Delivery Value Streams]

OKRs and VSM go hand-in-hand in their overarching goal: figuring out what really matters and getting that done in a time-bound, efficient manner so that it all improves performance. VSM allows you to connect everything in the value stream together and enables you to harness metrics and gain alignment on OKRs — which ties it all back to business outcomes. 

For development teams, it’s not about the number of story points; for IT operations teams, it’s not about service level objectives (SLOs). Rather, for these teams and the business, it’s about metrics like sales per hour. Through OKRs, people across the organization will better understand how they contribute to top-level objectives.

Here are the top six OKR mistakes that are so common that anybody can fall prey to it

ACTFS, a mid-sized financial services organization with over 600 employees, was one among many companies that made the attempt to work with OKRs for the first time in 2020.

The organization was at a point where transparency and alignment between their departments was key for the growth of the company. Executing a proven business model in an innovative and agile culture challenged the organization. To avoid silos, operational blindness and intransparency getting in their way of success, the C-level executives decided to implement a OKR framework. The goal was to increase transparency and foster efficient and result-oriented conversations while creating a holistic understanding of the company’s goals and their relevance for each employee.

However, after a year of implementation, the company did not witness the kind of transformation that they were magically expecting out of their OKR initiative. ACTFS made a set of mistakes that every organization makes when they get started with OKRs. 

1. Setting too many, too few, low value or disproportionate Objectives and Results

OKR is not a laundry list of everything you do. It is a representation of your top priorities. ACTFS made two mistakes — too many objectives such that the key priorities got lost, and only one key result was linked to each objective. This overwhelms team members and comes in the way of organizational priorities being sacrosanct.

2. Focusing on a top-down approach

OKRs do not cascade. ACTFS set OKRs coming from their senior leadership and expected their teams to implement them. Top-down OKRs often limit creativity and autonomy leading to decreased motivation and negatively impact the performance overall. Brainstorming in silos is anti-OKR. Trusting your team and helping them understand how they can contribute is key.

3. Confusing tasks with key results

A Key Result is not something that you do. It is the successful outcome of what you did. ACTFS looked at OKRs as to-do lists and a task checklist. It is important to understand that daily tasks can be many and are generally a way to achieve the objectives and key results.

4. Setting and forgetting

ACTFS treated OKRs as a new year resolution without setting a tracking process for the progress. OKR has to be part of the culture of your organization and has to be tracked at a regular cadence — either weekly, monthly or quarterly. Setting OKRs is only half the battle. You should be up-to-date with the progress of your key results. If not, you won’t know how your team is doing when it comes to completing OKRs.

5. Using OKR for performance evaluation or compensation

OKR is not an employee evaluation tool; OKR is a management tool. ACTFS managers committed the mistake of using OKRs as a performance evaluation tool to gauge how well their team members have been able to achieve what is expected out of them. Since performance evaluation is often linked to compensation and benefits, employees will push conversations towards setting lower objectives, which defeats the purpose.

6. Setting non-measurable Key Results

Every Key Result has to be measurable. ACTFS struggled with setting outcomes that are measurable, which rendered the objectives as flawed. One of the most common OKR mistakes is not having a measurable figure attached to the key results to gauge whether or not the objective has been achieved.

[Find out How to monitor business goals with value stream management]

Other common mistakes made by orgs while setting OKRs and how a VSM solution can help you avoid them

Creating OKRs in silos: Teams have to talk to each other when setting OKRs, otherwise achieving alignment will be impossible.

  • A VSM solution eliminates silos by streamlining the data and making it available to everyone. When OKRs are being developed, the VSM data can be used to set the metrics.

Focusing on short-term goals: OKRs need to be forward looking and ambitious. Focusing on short-term goals as objectives will compromise their purpose and impact. 

  • A VSM solution provides insights on the current state.  By creating an agreed upon baseline, teams are free to create ambitious goals based on measurable data.

Replicating industry practices blindly: Taking inspiration from industry practices, for example Google, is a good idea. However, replicating them without customized context is self-defeating and the results will be skewed. 

  • Data within a VSM solution provides the context necessary to establish and measure results.

Lack of communication about OKRs: Unless everyone is on the same page, it is very difficult to move the needle in the right direction consistently.

  • One of the central tenets of a VSM solution is communication. A VSM platform provides the insights, exposing value added, value wasted and countless other metrics that can be used to inform, guide and change OKRs.

Creating too high or too low objectives: While it is important to have objectives that are ambitious, having unrealistic and unachievable ones can demotivate employees instead of challenging them. Even targeting the low hanging fruits may not be challenging or stimulating enough, leading to sandbagging and underutilization of resources.

  • A VSM platform with a common data model provides insights into past and current performances and thus can be used as a basis for setting OKRs grounded into the attainable rather than just wishful thinking.

Setting unrealistic expectations: Seeking instant results within weeks or months can lead to frustration and pushes leaders to give up too quickly.

  • The data supplied by a VSM platform is agnostic to any goals. Data is data. So if used properly at the outset of creating the objectives, the ongoing results will provide insights into where the issue are located in the value stream that are preventing the OKRs from being reached.

Inability to offer adequate resources: Failure to provide teams with the right resources leads to an inability to meet the expectations, causing frustration and demotivation.

  • A VSM platform exposes areas of failure, whether those are due to a lack of resources is up to humans to make that decision, but the data will shine a light on the weak areas and can arm the management team with the necessary information to make the right decisions.

Missing the opportunity to reinvent: Failing to reinvent if and when needed can lead to potential loss of revenue and market share.

  • OKRs are destinations; plans offer a map to arrive there. A VSM solution provides the data and insights as markers along the journey. It’s up to people to adjust plans along the way to get to the finish line. 

Quick Tips to get OKRs right and what good OKRs should be

  • Set no more than 3-5 objectives per department or team per quarter. Similarly, start with 2-4 key results for each objective. 
  • Stop cascading and start aligning. Adopt a balanced approach of top-down and bottom-up when it comes to setting OKRs. Employees need to be seen as organizational assets who have a fair understanding of business needs and priorities — augmenting engagement and making it a collaborative process. 
  • Differentiate priority objectives from tasks and smaller milestones that come along the way of achieving the objective. Listing down initiatives to be taken for each key result can eliminate the confusion.
  • Set a cadence to track progress. Have a weekly, monthly and a quarterly tracker to gauge the progress made on each OKR. Have regular conversations on the results achieved. It is a good idea to break the ultimate results into smaller percent size portions which can be aimed to be achieved and tracked on a regular basis. 
  • Use the OKR framework as a management tool to encourage employees to push their boundaries. OKRs need to be aspirational for employees to put their thinking hats on and innovate, rather than a goal to achieve to reach the next promotion level.
  • Adopt the SMART (Specific, Measurable, Achievable, Realistic, and Timely) goals framework to ensure that the OKRs are very specific and can be measured in a time-bound manner. For instance, instead of simply saying increase customer NPS, make it specific as increase customer NPS to nine in five months. You should be able to quantify your OKRs by a number or percentage ranging from 0 to 100% or 0 to 1.0.
  • Define and redefine OKRs quarterly or annually (short- and long-term). Doing so will help hold your teams more accountable. This allows you to assess their performance, give feedback, and suggest adjustments they need to make for improvement.

Want to know how a VSM solution can help you get OKRs right the very first time and achieve your ambitious objectives? Contact us and schedule a one-to-one consultation with our experts.