OKR is first and foremost an alignment tool. But alignment can only happen when teams have structured conversations with each other to set priorities and solve interdependencies.
Creating OKRs in isolation, without talking to others, is a widespread mistake. It usually prevents the team from achieving their OKRs by:
- Setting OKRs that are not feasible, since they are not a priority for the necessary groups;
- Defining OKRs that are overly optimistic due to the time needed by a third party to deliver a required action (the other party will either take too long or will start it too late to move the needle during the quarter).
To avoid this mistake, OKR uses three different alignment mechanisms: Transparency, Shared OKRs, and 360º Alignment.
OKRs are visible to all company levels — everyone has access to everyone else’s OKRs and current results. If you have a top-secret Key Result, it may be kept private, but the vast majority of your OKRs should be public.
Transparency increases alignment since if one area of the business is not aligned with the others, it can be quickly noticed by the other teams and fixed.
Shared OKRs are the most effective tool to create alignment between multiple teams or functions. In a shared OKR, two or more teams share the same OKR, but each team has different initiatives.
Instead of splitting a single goal among teams and have them set separate OKRs – which can lead to teams losing sight of the real objective – a single shared OKR is created among the teams.
The shared OKR creates a virtual team that meets regularly to sync progress and track results and initiatives for the duration of the shared OKR
For example, imagine that a product team wants to launch a new product and needs that the platform team develops new features while the business development team signs content deals with partners.
Objective: Successfully launch Acme product
- Reach 500,000 Daily Active Users of the free version;
- Achieve 5% conversion rate from free to paid users;
- Achieve a Net Promoter Score of 35%;
- Less than 5 critical or blocker bugs reported;
- Achieve at least 40% revenue share with 5 of the target content partners.
Instead of having 3 different goals that could be individually achieved without generating the desired business result, this single OKR is shared between teams. Each team has different initiatives, but they all share the same OKR – the same definition of success.
For the duration of this OKR, all three areas that will meet regularly to track progress.
One of the problems of the cascading model is that it is focused on vertical alignment – making sure your goals are aligned with your boss’s goals and with her boss’s goals – which can create silos.
OKR focuses on 360º Alignment – top, down, and sideways – eliminating silos and addressing interdependencies.
Teams can solve interdependencies by having structured conversations with each other to create 360º alignment. If a team needs something from another, they can discuss it and set shared OKRs priorities or even delay the initiative for the next quarter.