The logistics world is becoming increasingly complex and both trends and customer needs are changing daily. These days, agility, flexibility and cross-team alignment for all team members are essential for sustainable success. Logistics companies must take this into account, especially when executing their strategy. It is important that all employees are familiar with the overarching strategy and forecasted goals in order to find the right path themselves. These are the circumstances for which OKRs can be a valuable tool. Wondering if your logistics company should also consider them? In this article, we will show you five signs that indicate your team is ready for OKRs.
OKR: A short definition
OKR stands for Objectives and Key Results. It is a goal-setting framework allowing for results-oriented work. The Objectives visualize the value propositions for internal and external customers, while the Key Results measure whether the respective value propositions have been achieved. If you would like to read more detailed information, you can find it here.
Sign 1: Your strategies are just words
One indication that the introduction of OKRs into your company is worthwhile is when your company strategy is seen solely in a qualitative light. In many cases, strategies and goals are determined by a handful of executives and sent out as a presentation across all departments. As a result, all teams are equally aligned to it. However, a new strategic direction does not have the same impact for every team member. Based on this method of communication, employees do not know what it means for their day-to-day work.
In such cases, OKRs are helpful because they can be applied both at the organizational level and for lower-level departments, and the strategy can be broken down into measurable outcomes. In this way, all team members are aware of the impact their work has on the overall strategy.
Sign 2: Your strategy and execution are separate
The second sign that OKRs could be helpful for your business falls along the same lines. For instance, when strategy development and execution take place separately. In this case, the strategy is defined at the management level, everything is done at the execution level to reach the defined goal, and the final analysis indicates whether the steps taken ultimately led to the goal. This approach, however, makes it impossible to properly measure how or whether the actions taken actually contributed to the strategy.
A central information platform for all departments along the supply chain is necessary so management can adjust targeted strategies if they are at risk of not being reached. It also enables teams at the execution level to get a more precise overview of what exactly they still need to do in order to accomplish their strategic goals.#
Sign 3: You are measuring the wrong results
The measurement of execution results can also be a clear indication that OKRs need to be integrated. Determining budget consumption, measuring the percentage of completion or calculating efficiency during execution are all important factors in the creation process, but they are all purely output oriented. The actual added value for the customer falls by the wayside. This, however, is precisely the outcome that should be measured. It can offer truly important insights regarding an indication of future impact, such as key financial figures.
If you introduce OKRs into your team, you can define the Objectives and Key Results specifically based on the outcome for internal and external customers.
You can read more about the differences between output and outcome here.
Sign 4: You need too much time to execute your strategy
In the fast-paced world of logistics we find ourselves in, time is an important factor when it comes to success or failure. Strategies and their execution must adapt to constantly-changing market activity. That makes agility essential. It also means that strategy development and execution have to run in sync with one another. In many cases, however, the execution level is faster at delivering results than the strategy definition is at setting new goals. This leads to a standstill of the entire supply chain. In this regard, an “organizational heartbeat” in which both parts of the organization—strategy and execution—beat at the same frequency needs to be created.
Since OKRs are reviewed and adjusted quarterly, they can quickly and easily be adapted based on current circumstances. Such short-term goals also help to place focus solely on the most important aspects that promise sustainable success.
You can read more about the relationship between strategy and OKRs here.
Sign 5: You are not thinking outside of the box
Another sign indicating your company’s need for OKRs is the lack of flexibility within the organization. A lot of times, a certain silo mentality still takes reign over working cross-departmentally towards an overall goal. Each employee is part of an overarching value stream in which all employees are connected. The work of one person influences the work of another. That means a common path must be laid out, showing each team member exactly what needs to be done and whom the work affects. This is how synergy is created.
OKRs can be a suitable tool for this, as they help make the goals of each individual team transparent and promote team coordination. In addition, employees are able to recognize exactly which other teams influence each respective goal. In Workpath, this can be done using the Stakeholder function.
You can learn more about organizational alignment in our Workpath article.
Recognizing the signs
If you recognize one or more of the points mentioned above and are asking yourself if it is too late to use OKRs at your company, the answer is: No, it is not too late. In fact, understanding that your organization needs tools like OKRs to help align all your teams along the supply chain to one goal and act in an agile manner is a step in the right direction. In today’s fast-paced and complex logistics world, the skills and expertise of all team members is of utmost importance. Commitment from management is an essential building block for this. Simply ask yourself the following questions:
- Does my team need a common, results-oriented goal it can work towards?
- Would it be easier to reach this goal if my team and I had support from other teams within the company?
- Should all teams within my company be able to measure the progress of their goals?
If you answered “Yes” to all of these questions, OKRs are the right tool for you.