The path to digitalization - How OKRs support change

It is almost impossible to find a company that has not yet been confronted with the ever-present topic of digitalization. From individual companies to large concerns or from personnel management to complex industrial facilities—every person and process is crying out for digitalization. These changes, however, can also bring challenges to organizations. Tools are needed to change analog processes to digital ones as quickly, comfortably and successfully as possible. Objectives and Key Results can be one of those tools.

In this article, we will discuss the challenges change management faces when it comes to digitalization and how OKRs can help.

Content

  1. Digitalization as a change process
  2. How can OKRs support the change process?
  3. Examples digitalization with OKR
  4. Summary: OKR as a digitalization tool

Digitalization as a change process

While “digitization” refers to the basic transformation of analog media, such as print articles, tapes and photographs, into digital signals for computers, smartphones and other devices, “digitalization” is the next step and refers to the use of digital data to transform elaborate, machine-based processes into fast, digital solutions.

Digitization and digitalization are the great changes of the 21st century. From the way people shop and how they communicate with one another to various types of media entertainment or working methods, these concepts are unstoppable. That means the question isn’t whether or not someone chooses the path of digitalization, it is a question of when someone wants to make that change.

Companies are particularly challenged to make this change.

The challenges of digitalization

Digital changes to work life mean that company leadership is faced with completely new challenges.

Customers, in particular, are quickly moving to the forefront. Through social media, influencers, product reviews and plenty of other channels, people are engaging with products and services long before they are engaging with the companies or providers themselves. That means it is important for companies to make contact with customers early on in order to better understand their needs and wants as well as aligning their own services and products accordingly.

The job market itself is also changing. Thanks to digitalization, employees have more opportunities when it comes to laying out their workspace and work days. Young, well-educated professionals also have a basic understanding of digital tools, media and networks, making them more attractive for employers. The already chronic shortage of skilled workers combined with the popularity of digitally-raised young professionals has turned the market into a candidate-driven one, in which companies are vying for the best employees. Only those who position themselves digitally and are attractive for candidates can win the battle.

When it comes to daily work routines, employees are placing increased value on the ability to independently create their own structures. The tech company Jabra, for example, published a global report stating that 57 percent of employees prefer a hybrid working model, while 28 percent would opt for working completely remotely if they had the choice. That means the respective companies would need to be set up digitally⁠—with laptops, headsets, webcam, digital conferencing systems and much more⁠—to make that a reality for team members.

Requirements for a successful change process

It is clear that such a process of change does not happen overnight and would require much more than just one person in charge and a few suggestions from the executive floor. A fundamental understanding of today’s societal and economic situation and the associated importance of change management is essential. Over the last century, people were buying products. Now they are buying experiences, tailor-made services, values and plenty of other things that go far beyond the traditional product. That is why it is so important to understand one’s customers and adjust the company accordingly.

Corporate management plays a central role here. Only with support from top management can and will the desired goal be achieved. This means that approval for investing time and financial resources is the first challenge change managers will face, whether it relates to digitalization or another topic.

Once leadership is on board, the next challenge awaits: the employees. It does not matter what position a certain employee has or what branch they are working in. New workflows and processes change everyday work life immensely. It is essential that employees understand these changes and are given the chance to actively take part in structuring them. That means explaining why the changes are necessary should be done at the start. This gets employees on board right away and actively involves them in focusing on the advantages of realignment. It also lets them know that the changes will not be easy at first.

How can OKRs support the change process?

Clearly-defined goals and the path to achieve them are essential for successful change management. This is exactly where OKRs come in. Objectives build the value propositions for internal and external customers. The Key Results measure whether or not the respective value proposition has been kept. 

A big advantage when using OKRs for change management is, among others, the ability to measure results as well as working in iterations instead of following a predetermined, standard plan. Every company is different and requires its own defined, measurable goals. Working with OKRs allows each team member to transparently see their effect on organizational goals and recognize the value they have created.

Additional advantages include, for example, that the goal-setting framework uses short cycles, meaning adjustments can be made as quickly as possible, the entire company's agility increases, and changes can be integrated into the normal business process more quickly.

To ensure problems or challenges are recorded, regularly-scheduled meetings are conducted within and across teams. Overlaps and dependencies are also discussed to help promote work efficiency.

If you would like to learn more about the fundamental functions of OKRs, you can read more here.

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Examples of OKRs and digitalization

Now that we have discussed OKRs and company change processes in general, it is time to touch on the digitalization process, how OKRs can help and what the advantages are, for example, when internal business processes are to be digitalized.

OKRs can help when it comes to prioritizing tasks and approaching the digitalization process in a structured and sustainable manner by setting clear goals.

Example 1: Digitizing internal and external processes

Let’s assume that, even after many years, a company still conducts most of its internal and external business on physical paper, whether it be employer payroll, invoices for deliveries and customers, or daily time tracking. However, the organization's management has now decided to take a strong stance on sustainability, meaning the digitization of such internal processes would be a suitable approach. But processes that have been in place for years are rarely abandoned to pursue new, unknown paths without resistance. This is where OKRs as a goal-setting framework can help. By incorporating OKRs, goals that are related to digitizing paper-based documents and processes can be formulated in a clear and transparent way, showing all team members exactly what the changes will bring.

Here’s a concrete example:

Objective: Our organization (customer) is sustainable and efficient (target state) through digitized processes and documents (added value).

KR1: Our costs for office materials have decreased by 10 percent. (Organization is efficient)

KR2: Our ecological footprint has decreased by 20 percent. (Organization is sustainable)

These types of definitions can help show the entire organization the effects the changes are meant to have and, then, initiatives can be formulated that clarify what needs to be done to reach the defined goals.

Regular Check-ins are conducted to reflect on and discuss tasks the teams are currently working on. Questions on possible obstacles and problems or even goals that have already been reached can also be discussed.

how to derive and track the okr cycle

Example 2: Introducing an online shop

A local company is dealing with falling sales. To ensure the company’s continued existence, an online shop will be created so products can also be sold online. With help from OKRs, the digital transformation from a brick-and-mortar business to an online shop can be done efficiently and sustainable through the clear definition and communication of the respective goals, metrics and measures.

Below is an example of what an OKR approach to the introduction of an online shop could look like:

Objective: Our visitors (customer) can use our new online shop (target state) to comfortably and easily make purchases from home (added value).

KR1: Our online sales make up 10 percent of our total revenue. (Customers are ordering from home)

KR2: Customers rate the new online platform (on average) with 4 out of 5 stars. (Customers can order online comfortably and easily)

With these definitions, initiatives that need to be accomplished can be developed quickly and easily, helping to achieve the desired goals and ensure the company’s continued existence.

Summary: OKR as a digitalization tool

All in all, it is safe to say that OKRs can make the introduction of new tools or the digitization and digitalization of existing processes easier for all team members. New conditions can also be better integrated into the company in the long term. Digital transformation takes place at all levels. OKRs can help prioritize goals, define measurable values for the respective goals, and develop suitable initiatives to make the change process measurable and efficient.