What they don't tell you financially about OKRs

Defining an OKR is not a simple exercise. It involves a relentless search to gain maximum alignment with the corporate strategy and the different business units that work in the system. Making OKRs is a commitment to reducing the complexity of the system with maximum simplicity: setting objectives and key results that are connected to each other.

OKRs can be as complex as you choose. This complexity tends to lie in the design, the planning of the work, the complexity of its monitoring at multiple levels, as well as the way in which you interrelate and share information about your progress; the way in which you learn and how you complete your cycle. Managing complex environments, financially in a company, will be related to the man-hours and budget that you invest in it.

Talking about budgets and investments in the decision to adopt OKRs is something you should consider and that we sometimes forget when adopting new work models. Obviously, it is not just about adopting for the sake of adopting, but also the expected benefit must be greater than the investment in having them. Basic rule of business. Making OKRs is one of them.

Let's do a simple calculation exercise. Let's imagine that we have a technology operations team with 9 members called Prometeo. The hourly cost of this team is $54 USD. From this, we can make the following estimates for a quarterly exercise:

• Initial OKR learning: 4 hours.

• OKR design: 6 hours.

• Work planning to meet OKRs: 8 hours.

• OKR and BAU tracking: 12 hours.

• Retrospectives and implementation of improvement actions: 5 hours.

• Quaterly Business Review (QBR): 12 hours.

We can quickly conclude that a new OKR team, with a standard dedication, can consume 47 hours on average per quarter, with an investment cost of $2,538 USD . If we remove the initial training and take it to the 4 quarters of the year, it would make a total of $9,504 USD annually for a team that does OKRs. Now imagine this amount multiplied by the number of teams your organization has.

Are we really aware that the Prometeo team needs the benefit of doing OKRs to exceed $9,504 USD plus the ROI percentage that the company seeks to guarantee? Many people and teams do not analyze these costs and only work on OKRs for the sake of it. "That's the detail, young man," said our friend Cantinflas.

Obviously, not all teams are capable of guaranteeing this investment in the medium or long term. Now I can repeat what I have been constantly sharing in my talks: OKRs are not for everyone (nor should they be).

To adopt OKRs, each team must ensure that the cost generated must have an expected return, otherwise it is not an investment, it is an expense. If you cannot guarantee that at the team level, then do not go down to that level of operational adoption, stay at the tactical level. There is no science, the numbers speak for themselves.

The key is efficiency

OKR is not an agile method, it is a work model closer to efficiency, closer to Lean. It is not unusual for its predecessors to come from that line, such as Hoshin Kanri. And yes, the key, as you may have noticed, is that the estimated work times are as short as possible, without compromising operational quality.

Making them efficient does not mean making them fast. We must ensure a balance between the time spent and the results obtained. As we work in repetitive cycles, it is common for times to decrease as we better understand the work contexts.

Tips

1. In your initial training and learning, look for workshop-type learning models rather than lecture-based ones. OKRs are a trial-and-error model. A 2-hour session may be more than enough.

2. When designing, set timeboxes or maximum work times. You can use a ratio of 20% of the estimated time for your objectives and 80% to choose your key results. With what you have, once your timebox is finished, start.

3. Plan for the quarter, but at a high level. You can also set a timebox for this. Focus a lot on dependencies and risks. Schedule them.

4. Double follow-up. Business follow-up (OKR progress), maximum 1 hour every month or month and a half. Operational follow-up (of your various plans), at least 30 minutes weekly. In the follow-up spaces, do not solve problems; try to do it in another meeting.

5. Dedicate time to improving. Retrospectives are essential. They will allow you to reinforce the model and look for improvement actions. It is not a catharsis, it is a moment to reflect. Set a timebox and move forward from there. Do not waste time choosing the dynamics of the shift, seek to know what they did well (to maintain), what they can improve (to change) and how we can improve.

6. QBR is a necessary exercise to have a view of the entire system. It seeks to make this exercise visible, with very limited participation and by value chains (we will talk about this in another post). The key is the capacity for coordination and synchronized work schedules. A good QBR must work like a Swiss watch.

Conclusion

OKRs are not for everyone. We must also look at them from a financial perspective. Being a collective exercise and involving the entire team, costs rise. It is clearly possible to make the investment profitable through many factors, but it is the team's duty to be clear about this. The key is to be efficient.