OKRs have been gaining momentum during the last decade. According to a report published by Fitbots, 87% of the surveyed companies had embraced OKRs between 2017 and 2020. The multitude of success stories have rendered OKRs very popular in the performance management space as validated by the growing market for OKR software.
According to a press release by Coherent Market Insights Private Limited (2022) the global OKR software market was valued at USD 555.1 Million in 2017 and is expected to increase to USD 1592.3 million by 2026, registering a CAGR of 14.10% over the forecast period 2018-2026. According to a report released by Verified Market Research (2022) the OKR software market valued at USD 923.31 Million in 2022 is projected to reach USD 2588.90 million by 2030, growing at a CAGR of 13.68% from 2023 to 2030. This increase in the market for OKR software is a clear indication of the growing popularity of OKRs; more and more companies ranging from start-ups to growth organizations and mature players are keen to adopt OKRs.
OKRs are known to shift the focus of the organization from output (result derived when an activity has been completed and may contribute to the outcome) to outcome (the metric that truly defines the effectiveness of the output) and in the process encourages the employees to undertake aspirational goals (beyond their regular KPIs) and keep them (goals and performance) transparent with the intention of aiding engagement and collaboration across hierarchies, departments and functions. OKRs are also meant to drive outcomes at a considerably faster pace requiring high levels of accountability, focus and ownership.
When an organization seeks OKR adoption from its employees, essentially, they are asking their employees to embrace:
- ambitiousness – high-risk appetite pursuing aspirational goals
- focus – on objectives that matter
- transparency – a system where goals and progress are open to all
- ownership – driven by well-articulated KRs
- alignment – OKR is the North Star guiding all efforts towards the same direction
- accountability – driven by periodic cadence
- collaboration – across levels, departments and functions to improve efficiency and
- innovation – creativity, experimentation and in general taking risks to address existing problems or meet evolving market needs.
But the reality is that people are placed in an uncomfortable position that risks exposure to criticism, failure and in general vulnerable. Organizations should be aware of the pressures being placed on their employees when introducing OKRs and accordingly strive to create the right cultural norms that will enable OKR adoption.
Successful adoption of OKRs will require a good understanding of their underlying principles and how they are aligned with the way an organization operates, as characterised by how the people interact, make decisions and work together. The way people work together is shaped by the organization’s values, beliefs and norms all of which are collectively known as an organization’s culture. In summary, an organization’s culture determines the actual working of the organization and is, therefore, the foundation for the successful adoption of all people practices including OKRs.
For example:-
- an organization that is used to a top-down culture will need to consider the impact of the transition to a bi-directional communication style.
- an organization which shies from open and candid communication/feedback will need to consider the impact of a two-fold transition – a) transparent performance metrics and b) open discussions about performances.
- an organization that considers 100% achievement as success will need to alter their mindset to embrace that 70% achievement is a significant needle movement in the right direction especially when it comes to stretch goals.
- an organization that is used to siloed working style will need to consider the impact of collaborative working which is often expected to cross the boundaries of functions, departments and hierarchies.
It is therefore important for organizations to take a close look at their prevailing culture before deciding to embark on the OKR journey; OKR journeys often have to be preceded with workshops that will transition working styles and mindsets to make it more conducive for the model to be adopted by the users.
In Summary:
OKRs by themselves are a powerful tool. Organizations aiming to bring about 10x thinking and path-breaking outcomes can consider adopting OKRs in addition to existing performance management systems.
Human beings are designed to resist changes; we draw comfort and feel secure in time-tested practices. In that sense, OKR which is different from conventional performance models is bound to be met with scepticism if not resistance. This coupled with a lack of cultural alignment can further complicate OKR adoption at the leadership level and as a cascading effect at grass root level also.
If OKRs are implemented within a supportive culture, it can lead to quicker acceptance, enhancing competitiveness and results. Conversely, implementing OKRs in an unsupportive environment may have a negative effect. An Organization’s culture serves as a reference point for attitudes and approaches to work, influencing how OKRs are understood and embraced, ultimately determining the extent to which organizations can truly benefit and maximize their potential value.
