Agile is based on the scientific theory of emergence, which describes that a complex system becomes better, when its parts are becoming better only, when they are combined. Practically speaking, a team performs as an individual because, we can use the strength of each individual for improved team performance. This changes how we will set goals. As an Agile organization, goals should emerge from the teams because our goals will be better in terms of what we want to achieve, but also better to achieve in general as it already takes individual strengths into account. We would call that emergent goal settings.
Such emergent goals do not take the view of Shareholders or customers into account, as every team theoretically would just set up the goal they like and the goal they might need or business requires them. Enter Objective & Key Result: These so-called OKRs are a great way to combine emergent goal settings with important business initiatives on the board or investor level. The Objectives in an OKR-Settings are usually based on the higher strategy level and therefore mostly coming from the top management. They are inspiring town hall topics, which should motivate the people to be reminded on why they chose the company and do what they are doing every day.
Key Results are measurable goals to achieve in a certain timeframe (usually within a quarter). Those key results are then emergent from the teams and are their way to express how they feel to address and achieve their objective. Intel and Google introduced OKRs a long time ago and base their foundation on their implementation of those OKRs. Not only help OKRs to follow the strategy of an organization as set by shareholders and customers, but also make usage of emergent goal settings. In the end, this leads to inclusive strategy settings, as the team and organization as a whole can influence the strategy by deciding what results they want to pursue to achieve the organizational objectives.
Besides combining business-driven strategy and emergent goal settings, if set up and followed up correctly, OKRs additionally can help to provide alignment in company performance management. As Agile sees organizations as systems (better complex adaptive systems), it values the team performance over individual performance. OKRs will not tell you, how an individual works better or performs better. But that it is not relevant, as it brings the company forward. Individual performance management is decreasing alignment organizationally.
The key to check on organizational alignment with OKRs is in the cadence: Through, for example, weekly team checks on the performance towards the key results, the organization has an overview constantly on the performance towards achieving the longer-term Objectives. Measures to improve the performance in an aligned way are therefore built into the OKR setup. The organization as a whole receives weekly feedback on the Key Result Performance and quarterly feedback on the Objective performance. Both indicators can give overall feedback on the organizational performance on a much more regular basis than yearly strategy meetings. This reduces the feedback cycles towards customers and shareholders besides being constantly aligned.
The best part: As the key results come from the team, over time, they will become more empowered to actually achieve their goals, which they set by themselves.
- August 26, 2021
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