Objectives and Key Results (OKRs) is a framework used widely by leading businesses.
A powerful tool, OKRs help steer organisations by concrete and specific objectives – usually on a quarterly basis.
According to the 2021 Australian retail outlook by Inside Retail and KPMG, almost 70 per cent of businesses have seen their revenue increase from ecommerce, with another 70 per cent boosting investments into digital business.
Some 60 per cent have fast-tracked their ecommerce initiatives in response to COVID-19. Yet over 50 per cent state that only 25 per cent or less of their revenue comes from online.
This is due to a gap between digital ambitions and executional realities. Retailers have been underinvesting in their online business during the pandemic as they’ve been comparing online revenue to physical retail revenue.
COVID has also accelerated ecommerce, moving consumer demand to digital at a faster pace. Now, an entire industry must catch-up but is still struggling to do so due to lack of strategy and executional firepower.
Many companies have adopted OKRs but where many have failed only a few have succeeded.
Often, OKRs develop a life of their own and can fall at the first hurdle; if overloaded with details and used to measure and manage every action in the business, they can lead to a lack of interest amongst employees.
Whilst OKRs are there to help track progress, creating them can be challenging. A transparent methodology to track the progress is necessary, ensuring one doesn’t confuse the process with to-do lists or employee performance reviews.
It’s important to remember that OKRs are there to help you – not the other way around. Keep it simple and pragmatic; don’t worry too much about the shape, form, colors or formats. If writing OKRs on a piece of paper works best for you, then do it.
Next, focus is the key. The fewer the elements, the higher the ability to concentrate on performance and decision making.
What many companies struggle with is creating less objectives. A rough rule of thumb is to create five objectives and five key results; each on a company level, per department and per team.
Then, be specific and clear. Avoid using confusing language and conflicting messages. Don’t make it too complex or too over-engineered.
Whilst key results are always a priority, transparency and progress tracking are equally as important. Set regular check-ins and avoid the twice-quarter trap where OKRs are done at the beginning of a quarter and then only seen again at the end of the quarter.
And remember, OKRs are meant to be ambitious so be gentle on yourself.
Don’t aim for perfection; encourage your team to be comfortable with a 70 per cent target achievement and remember that progress beats perfection. It’s totally fine to carry OKRs into the next quarter.
Lastly, do not link OKRs to incentives. They need to feel like a stretch so if they’re linked to financial compensation and incentives then staff might go for the easy OKRs.
But do make an exception and offer a once-off bonus if employees have shown outstanding performance on a specific OKR.
Strategy first, OKR second
OKRs are commonly used by companies of all sizes and at all stages of growth. They help facilitate dialogue between managers and employees on the front line of the business. Businesses, from the smallest startups to the largest companies have utilised OKRs, with Google being one of them.
It’s important to remember that one first needs a strategy in place before implementing OKRs. Strategies are fed into the OKRs process, which help translate strategies into action.
We have worked with companies that quickly and ruthlessly execute strategies successfully. The benefit of fast execution is being able to identify things that don’t work early, learn quickly and improve faster than your competition.
Say you want to lose some weight which would be the overarching strategy, then OKR will be the tool that maps a fitness regime.
A company that is unclear on what it wants to achieve will need a precise strategy to lead the business forward.
COVID has taken everyone by surprise and businesses had to improvise. Some did better than others but many have rushed to solve operational issues without having fixed a clear strategy.
A lack of executional firepower means that those who have a clear strategy often lack the ability to execute it due to lack of know-how and manpower.
Jan Becker is executive director for ecommerce at TMX.