OKR, a vehicle of value

Objectives and key results represent a way of working that is trending in Latin America and that is linking quite well with processes of acceleration and organizational transformation in the region. This trend was accentuated mainly by the pandemic and the VICA (volatile, uncertain, complex and ambiguous) context.

Among the most accurate definitions of what OKRs are, we can mention that of John Doerr in his book Measure What Matters, in which he proposes conceptualizing it as a collaborative work protocol.

It is important to note that OKRs are not a logical set of steps or processes, commonly called a method, nor are they a standardized set of concepts, practices and criteria to address a particular problem, which we normally call a framework. OKRs are a collaborative work protocol. Protocol in the sense of representing a set of formal rules that govern behavior. It is also collaborative, in the sense of involving a large number of people in its definition (team, leaders and various stakeholders).

OKRs are made up of objectives and key results. Objectives represent the goal to be achieved on a time scale and key results are the way in which we will monitor the proximity of the objectives to be met.

These key results are usually made up of an indicator and a numerical target. It is important to understand that key results are only hypotheses that we propose that do not necessarily represent all the key success factors of an objective, but only those that are within the control of the team that designs them.

There are factors that may be beyond the team's control (external or uncontrolled) that could impact the final result and, despite having met the key results, the objective may not be met. Based on these external events, we develop our risk plan.

To differentiate OKRs from KPIs, I'll share an example with you. Imagine that I want to go to the supermarket to stock up on food for the next 15 days, this is my goal. As a good shopper, I make my shopping list. In that sense, I managed to discover that if I buy at least 85% of the list of products I'm carrying, I could meet my goal, this is what we'll call a key result.

When I arrived at the supermarket, I was surprised to find that I had overlooked a few factors that had affected my objective: I couldn't find some of the products I was looking for. They weren't in stock. In addition, some prices had gone up and I spent so much time in the book section that I almost ran out of time to shop and had to hurry up.

When I paid for my purchases, I was surprised to find that I didn't have enough cash and had to use my card. Yes, I am a rather careless buyer. These factors: Stock, product price, time available for purchases and cash available, are some indicators that, in the context of OKRs, we call KPIs.

KPIs are key performance indicators that accompany OKRs by providing us with more information that allows us to achieve our objectives. They are not based on KPIs, but on OKRs. OKRs are mostly deployed over a period of time, while KPIs are usually more permanent.

A key result could even be a milestone, such as “all essential items on my list purchased,” as opposed to a KPI, which will always be an indicator, such as “number of essential items” or “budget for essential items.” As you may have noticed, OKRs always look toward a future goal, and KPIs are a present-day snapshot of certain historical indicators.

It is very common to think that OKRs represent the strategy, but this is not the case. The strategy is defined by the vision, mission and priorities of the business. OKRs connect the strategy (what we want to achieve) with the operation (what we will do), based on a bridge that guarantees alignment, focus and prioritization of key business objectives and a sense of organizational urgency in short periods.

OKRs can become your best ally in managing teams, areas, departments, directorates or organizations. However, it is key to understand that on their own they do not generate a great impact, which is why it is essential to frame them around a governance, operational, structural and cultural model in accordance with the needs of the business.

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Examples of OKRs

Country: Ecuador

Sector: Telecommunications

Level: Human Talent Management

Aim:

• Workers with memorable experience.

Key Results:

• 73% NPS Company.

• 80% average satisfaction in the employee's journey.

• 35% Staff turnover rate.

• 31% decrease in worker complaints.

• + 12% Organizational Climate.

Country: Argentina

Sector: Banking

Level: Transformation Management

Aim:

• World class transformation service.

Key Results:

• 82% satisfaction with the Transformation team's service.

• + 23% NPS Agile bank culture.

• + 5% Operational efficiency.

• - 15% Lead Time of Transformation Management processes.

OKRs can become your best ally in managing teams, areas, departments, directorates or organizations. However, it is key to understand that on their own they do not generate a great impact, which is why it is essential to frame them around a governance, operational, structural and cultural model in accordance with the needs of the business.