Technological progress is enabling us to network globally faster and faster as well as to access a never-ending flood of information. As a result, the complexity of our working world is growing – exponentially . The restructuring of many internal methods and processes is necessary to survive in increasingly turbulent markets. Also in project management a rethinking has to take place. Management consultant and project manager Dr. Stefan Hagen wrote in an earlier article:
“[…] with a PM philosophy of the 20th century, we will not be able to meet the challenges of the 21st century.”
But why not? Projects (in the following also referred to as initiatives) are supposed to develop solutions for complex problems. If we consider the increasing volatility of the markets and the resulting changing problems and demands on initiatives, it quickly becomes clear that mechanical-hierarchical methods, processes and organizational forms cannot achieve this. Instead, teams must adapt their goals spontaneously and flexibly to changing conditions. Only in this way can initiatives change and organizations remain competitive. The transition to more agile forms of collaboration initially appears to be a difficult challenge to overcome and creates great uncertainty among employees and managers. Especially in this initial phase of organizational development, it is essential to provide teams with resources to give them orientation.
OKRs as a solution approach
At this point Objectives and Key Results (OKRs) come into play – a strategic model for agility, continuous organizational development and critical thinking. It enables teams not only to organize themselves, but also to collaborate with other teams across silos in order to create measurable value for the customer. Objectives define the goal (Where do we want to go?), Key Results how to quantify the achievement of goals (How do we measure our progress?). (Learn more about the OKR method here)
Project management practices take place at all organizational levels. To illustrate OKRs in this article, we will remain at a team level and use the Marketing department as an example. In technical fields (e.g. software development) the process is more complex.
1) OKRs have a direct, positive influence on individual performance and satisfaction.
OKRs contain the components of the “Golden Circle” described by bestselling author and management consultant Simon Sinek. This consists (from the inside out) of “Why”, “How” and “What”. According to Sinek, it is essential that a team not only understands what it should do, but also why they do it. (You can find the complete lecture of Simon Sinek here). A team should know why it works together and what goal it wants to achieve. OKRs help to make visions and goals transparent by defining not only the “what” and the “how” (through Key Results), but most importantly the “why” (through Objectives). Through increased understanding of the purpose of initiatives, teams work more motivated and focused. According to results from the MIT (Massachusetts Institute of Technology), two other factors also improve employee performance and satisfaction: Autonomy and Mastery. For example, OKRs help employees understand initiatives as more than just a set of tasks given to them by their managers. Instead, they are actively involved in setting goals, are free to make decisions and can take responsibility. This increases the team members’ sense of autonomy, as it gives them the sense of achieving Key Results in line with the customer interests. OKRs also enable people to recognize their own competencies and use them in a target-oriented way (also cross-functionally across teams) (Mastery). (Read more about it here).
2) OKRs are the foundation of a meaningful organization and help structuring initiatives.
OKRs are about teams collaboratively developing goals for joint initiatives. This process reveals where teams tend to be loose groups rather than value-adding units. OKRs are therefore a diagnostic tool for dysfunctional processes and structures and enable a more effective, often interdisciplinary composition of teams. This makes them catalysts for innovation, employee development and cultural change. They enable a project organization in which teams not only organize themselves within functional silos, but also create cross-functional initiatives in a value creation-oriented way.
3) OKRs promote transparency and predictability of initiatives.
OKRs make different types of dependencies visible. It is often the case that several teams work towards the same goal. The achievement of objectives depends on all teams. There are also dependencies in the daily work. For example, if a team can only start working after another team has done some preparatory work. In the Workpath software, team members can see exactly who is working on an OKR. This makes responsibilities clearer and facilitates collaboration and communication. The target dependencies can be mapped in the graph.
This kind of representation makes transparent which initiatives contribute to which goal, which teams work together on a goal, which existing teams are not meaningful and what new teams have to be formed.
However, OKRs not only define qualitative objectives, i.e. goals that are to be achieved through an initiative, but also Key Results that make it quantitatively measurable whether the objectives have been achieved. In this way, managers, project managers and their teams can ensure at shorter intervals that an initiative runs strategically in the right direction, has a clear result and benefits the customer. If this is not the case, the teams can react and adapt their work. In the long term, resources are saved in the ongoing process and manpower is used to add value. This is essential for the success of initiatives in fluctuating market environments.
Differentiation and interfaces of OKRs and Scrum
However, OKRs are not a PM tool, but rather an addition to it, an interface between project and strategy. For example, they represent a sensible extension to the agile project and task management method Scrum. Scrum deals with the planning of daily tasks. However, it should not be understood as a mere listing of to-do’s. Rather, it is a list that describes what needs to be done to achieve a certain goal. In addition to interdependencies, risk and urgency, the goal to be prioritized is the value (outcome) for the organization (e.g. cost reduction, sales increase, user increase). OKRs help teams to make the outcome of their work transparent. Based on the Objectives and Key Results, task packages can be derived and prioritized with a focus on the company goals. By completing the tasks, the Key Results can ideally be continuously updated and lead to the achievement of the objective. If this is not the case, it is a valuable indication that a team is not yet deriving the right tasks from the OKRs. However, it is perfectly normal that in every sprint there are tasks that need to be completed without directly contributing to the achievement of a Key Result (link to article: strategic vs. operational OKRs).
The following example illustrates how exactly these two methods can interact and be integrated:
A large publishing house wants to launch a new business magazine on the market. A project team was put together for this purpose. This team uses both Scrum and OKRs. The overall Objective is: “By reading our magazine the reader feels informed about all current economic topics on a high level”. The team defined this after the announcement of the organizational goals, an initial draft, several iterations and alignment with other goals. In addition, the team members defined Key Results, the achievement of which brings the team closer to the goal. A Key Result of the team is: “We have reached 1000 readers with our articles”. A second Key Result could be: “We achieved an average reading time of 40%.” After the kick-off, the quarter begins. Meanwhile, weekly “Check-Ins” take place in which the team talks about the Key Results and their progress. Scrum, on the other hand, usually plans in two-week sprint cycles. A sprint goal can be defined at the beginning of each sprint. In this case, the sprint goal of the first sprint is: “We create well-researched, up-to-date and interesting content around topic x for the reader. On the so-called Scrum Board, which can be created both digitally and physically, there are 4 columns in theory: “Product Backlog”, “Sprint Backlog”, “In Progress” and “Done”. The product (backlog) contains all the tasks that need to be processed. Each of them pays for a Key Result. A task for the above mentioned Key Result could be for example: “Write an article about OKRs and Project Management”. In the bi-weekly sprint planning meetings, teams determine which tasks from the product backlog they want to process in the following two weeks. These are then moved to the “Sprint Backlog” column. As soon as a task is in progress, the responsible team member moves the task to the column “In Progress”. In practice, this column is usually divided into several steps. For example, there may be another column in which tasks are stored that require feedback from another team member. When a task is finally completed, it is moved to the “Done” column.
At the end of each sprint there is a Sprint Review Meeting. There, the team discusses which tasks they have completed and what difficulties they have encountered. Tasks for the new sprint are then derived – ideally taking into account the lessons learned from the previous cycle and always with the aim of optimising added value. The subsequent Sprint Retrospective is an opportunity for teams to question their own work, the tools and processes they use and to develop a plan for how they can achieve improvements in the next Sprint. This is followed by another Sprint Planning Meeting in which the Sprint Goal and the tasks to be processed for the next Sprint are defined.
This rhythm is repeated throughout the quarter. In the weekly check-ins, the focus is one level higher, on the Key Results. These higher-frequency meetings make it possible for the team not to lose sight of the overall goals. If no Key Result updates can be made despite completed tasks from the sprint, the team can adjust its work. OKRs thus contribute to the agilisation of project management – a big advantage in a constantly changing working world.
The challenge of implementing OKRs
However, the implementation of OKRs also poses many challenges. For example, organizations often underestimate how much time it takes. Initially, the organization has to invest time and effort to learn the new processes. It can take up to 1-2 years for OKRs to function smoothly in the organization. Creating realistic expectations in this respect is very important to prevent frustration. Another challenge is to integrate OKRs with existing processes, for example with Project Management tools such as Scrum. Only if interfaces and interrelationships are precisely explained and understood can the methods be effectively implemented. (You can find out more about pitfalls in the implementation of OKRs here)
The advantages of OKRs in PM summarized
- Defining the “Why” with an Objective increases the probability of success of an initiative: teams work more motivated and focused, and target groups are addressed more effectively.
- OKRs promote collaboration and communication within and between teams through regular check-ins and increased transparency.
- OKRs uncover dysfunctional processes and structures and enable better project planning, resource allocation and cross-functional composition of value-added teams.
Markets are changing extremely fast these days. The ability to act agilely and adapt to new circumstances therefore plays a central role in the success of an initiative. Agility does not mean being fast, but being able to change direction quickly. The combination of OKRs and Project Management tools can do just that. OKRs answer the question of how to create value across all teams (What value do we want to create? What do we want to achieve?). The contents of the work packages defined with Scrum should be derived from the Objectives defined with OKRs and can help to implement the set target states and defined tasks efficiently and quickly. The integration of OKRs into project management creates the basis for mastering the challenges of agile and volatile markets of the 21st century. The introduction of this new method for many employees requires trust and patience. However, it is a decisive step in tomorrow’s economy to successfully implement initiatives and to survive as a competitive company and attractive employer.