Two Reasons Why OKRs Are So Hard In Legacy Enterprises

At some point, organizations only want to hear good news. That could spell bad news not only for their OKR implementations, but the future of the company.

It all started with a yellow status on a dashboard.

Across my years as an IT consultant, I was paid for my management and execution expertise across all aspects of Agile software delivery. The people who hired me expected full transparency, and wanted to know about any potentially problematic issues as soon as I saw them. I had even gained credit from one CEO for my habit of raising “pink” flags, which, if ignored, could grow into far more serious (and costly) problems. Now, for the first time, in what seemed an innocuous situation, I was being discouraged from raising awareness of a potential challenge.

“This wouldn’t land well. Change that yellow to a green.”

Large organizations love green dashboards

Perhaps it’s a cultural thing. Be nice, don’t rock the boat.

But at some point, when companies move from being a Day One to a Day Two organization, processes get put into place that people begin following on auto-pilot:

First, it means moving away from a client-centric focus to an internal focus.

Next, it leads to a culture of ignoring the signs of looming disaster.

Ford Motors “just didn’t do red”

Ford Motors was on the brink of collapse, but you wouldn’t know it from their status reports.

When the Ford board brought Alan Mulally in to turn the struggling automaker around, he initiated a series of all-hands meetings to go through every aspect of the business. One by one, his executive leadership team shared their status reports, which all consistently showed green, and they said everything was fine. Mulally eventually ran out of patience. “Can somebody tell me, please, if we’re all green, why we’re losing $17 billion dollars a year.” And of course, no one said anything.

Finally, one brave executive raised their hand and shared three red statuses, asking for help with a blocking manufacturing issue. The assembled executives recoiled, startled. But Mulally applauded the report. Finally, another executive raised their hand, was not only aware of the issue, but a potential fix, and offered to help.

“This was a very hard culture shift for Ford people, because they just didn’t do red. You never talked about problems, because it was seen as a sign of weakness. And Alan Mulally turned that around, and made it into a sign of strength.”

The beginning of Ford’s turnaround

Ford was only able to improve when they accepted and shared reality transparently.

From then on, it finally became OK not to be OK, and that started Mulally’s famous Ford Motors turnaround, with Ford being the only automaker of the Detroit Three to avoid bankruptcy.

Transparency was the key…

It all started with transparency, and being willing to ask for help.

OKRs only thrive in a culture of transparency

This is crucial to an effective OKR implementation because setting a high bar, experimenting, occasionally innovating, and, yes, occasionally failing, are all intentionally baked Into the OKRs process.

When teams collaborate effectively towards stretch outcome goals, they’re forced to go through rapid cycles of hypothesis creation, assumption testing, and constant iteration. If they’re doing it right, this uncertain process of Continuous Discovery almost guarantees their dashboards won’t always be green. The leadership required to lead teams in these kinds of complex environments is vastly different.

Effective leaders don’t tell their teams what to do, but create an environment of safety and support, encouraging their teams through the uncertain situations that arise when teams work towards delivering measurable outcomes via new client experiences using untested technologies, interfaces, and user flows.

A healthy mix of OKR statuses — as viewed in the WorkBoard dashboard.

Servant Leadership removes obstacles and supports

If those teams are supported and continuously encouraged to aim higher than they’ve previously done, they’ll by necessity be encouraged to seek out their end users to better understand their unmet needs, and try new, innovative solutions to deliver on those needs.

It’s precisely through the effort of stretching, failing, learning, and iterating that they’ll uncover better ways of moving the outcomes laid out in their Key Results. From an OKR perspective, this is great, and to be expected. Because built into the OKR cadence is the opportunity to Reflect and Reset at the end of the cycle. To retrospect, take those learnings, and use them to get better next cycle.

Without transparency into the continuous cycle of hypothesis creation, experimentation, failure, retrospection, and learning that take place, OKRs won’t have an environment to provide value.

OKRs and the 70% Win Rate

The other central OKR success factor is accepting that in the healthiest environments with a thriving OKR implementation, the highest-performing OKR-driven teams only succeed from 50–80% of the time.

Teams that consistently crush their OKR goals 100% of the time are “sandbagging,” not setting ambitious enough “stretch” goals that cause them to dig down and achieve more than they thought possible at the start of the cycle.

Closely linked to the Green Dashboard phenomenon, this is another aspect that I found out doesn’t play well in the large legacy Enterprise- setting goals teams may not achieve.

Bringing OKRs to a Legacy Organization

I first came into contact with Objectives and Key Results at the AGILE2019 conference in Washington DC.

Unsafe to set unachievable goals

As one usually does, I came back from the conference all excited to try OKRs out with one of my teams.

We were consistently delivering in predictable feature delivery cycles, and had started to gain awareness across our organization for our execution. Yet as soon as I explained how OKRs were focused on setting aspirational “stretch” goals our team might only have a 5/10 chance of making, team leadership immediately pushed back, concerned that anything less than 100% consistent on-time reliable feature delivery would not be viewed well by our stakeholders.

We had to go back to our problem-focused roadmap and avoid OKRs.

The Two Prerequisites for Objectives and Key Results

And then it hit me — without the safety of the two fundamental OKR prerequisites –

  1. Full transparency
  2. Ambitious, stretch goal-setting

Not only would any OKR implementation be ineffective, at best, but it could mean far worse for organizational viability in the long-term.

Being addicted to good news now spells bad news for the future

When organizations develop a need to only see green dashboards, and demand their teams only set goals they know they can crush 100% of the time, this lays out the surest and most effective path towards speeding up organizational mediocrity, irrelevance, and obsolescence.

Why?

The truth is, every single company’s

  • Customers
  • Market
  • Technology

Never stand still, and are all in fact continuously changing and evolving at an increasingly rapid rate.

Transparency and ambitious goal-setting are the route to survival

If leadership, management, and teams aren’t consistently setting ambitious stretch goals to improve their products, offerings, and services to their customers, surprising and delighting them by fulfilling their unmet needs in new and innovative ways, those customers will rapidly churn and find another business that can.

Sometimes things will go well– and sometimes, they won’t, as teams iterate through Continuous Discovery to improve their products and services.

OKRs aren’t a magic bullet, but they can, simply, quickly & effectively, align vertically and horizontally across the organization and get their teams to innovate to keep them relevant for the long-term.

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