I’ve worked in 3 businesses that all used OKRs as their alignment and goal setting system over the past 10 years.
I’ve also coached and consulted with dozens of clients, most of whom also use OKRs, or very occasionally, a competing Management By Objectives framework, the 4 Disciplines of Execution.
In addition I’ve spoken to hundreds of founders, executives and GTM leaders about their approach to strategy, execution, goal setting, alignment and performance.
In almost every circumstance, they haven’t worked.
To be more specific, they haven’t helped with alignment, underpinned performance or sharpened strategy.
If anything, the results produced at these businesses have often been despite the implementation of OKRs, which have acted as a drag on their operational effectiveness, eating up precious time from the working week and causing confusion amongst employees.
These are a collection of genuine quotes from founders and leaders who’ve worked with OKRs at scaleups:
- “OKRs really broke the culture”
- “OKRs are a pile of turd”
- “OKRs are like sleeping pills”
- “OKRs are lethal for most startups”
- “OKRs don’t work”
- “I personally don’t work with / recommend OKRs anymore”
I believe there’s a better way. A system that’s more holistic, and far more fit-for-purpose in high growth environments where there are more unknowns than knowns.
But before we get into that, let’s take a deeper dive into the myriad problems you’ve no doubt encountered with OKRs.
Time consuming
One of the biggest problems with OKRs is that they take way too long to form.
The OKR setting process often kicks off mid-way through a quarter, and then absorbs multiple hours of everyone’s time from the executive team to individual contributors, over the next several weeks.
Even then, most people don’t have finalised OKRs until a couple of weeks into a new quarter.
By my reckoning, OKR planning or reviews can be competing for people’s attention between 25- 50% of a scaleup’s entire operating cadence in any given year. That’s a lot of distraction.
Imagine what you could achieve if you freed up hundreds to thousands of hours across your organisation so people could focus on actually executing in their jobs. And how much happier they’d be too!
Perhaps one of the most comical and frustrating reasons that they take so long to form, is the semantic wrangling that takes place between groups of people over what counts as an ‘objective’ versus what a ‘key result’ should be. It’s one of the ultimate examples of form over substance.
False confidence
Much of the time consumed in setting OKRs is due to ‘analysis by paralysis’ with team leaders and individuals trying to set a number they’re highly confident they’ll hit.
This means they’re looking to be at >90% levels of confidence before agreeing to the OKR, and therefore they spend hours trying to divine the future from looking at existing data (they’re trying to somehow bring into focus a tiny object on the horizon by looking intently at the rearview mirror).
Another downside to this approach is that the executive team will likely start the quarter with a high level of false confidence. Because of how much planning (or sandbagging, depending on your point of view) has taken place, they correlate this to the team’s likelihood to execute against the plan.
However within weeks (sometimes days), new objectives or priorities emerge; unforeseen dependencies crop up; data is found to be incorrect or incomplete or based on shaky assumptions; the market shifts etc…a scale-up is an incredibly dynamic organism, which often renders all that over engineered planning obsolete.
As Mike Tyson famously said ‘Everyone has a plan until they get punched in the face’.
This isn’t to say I’m against planning (far from it), it’s just the focus of efforts are misplaced in spending so much time setting OKRs versus considering how teams can continuously improve the business and strengthen the strategic direction through gathering real-time market feedback (more on this below).
Misalignment
All too often, OKRs are not directly tied to the broader strategy of the business and are formed almost as a separate entity, occasionally even competing with what others might consider to be the strategic intent of the business.
Rarely is an explicit understanding of the businesses’ strategy a prerequisite for setting OKRs.
A common issue with OKRs in this respect is that they’re very focussed on quantitative outcomes (value of pipeline, number of MQLs, feature releases) without calibrating this to the qualitative aspects outlines in the strategy (is the pipeline with a defined ICP, are the MQLs aligned to the right persona, do the feature releases strengthen or weaken the channel strategy).
This can cause a corrosive misalignment between strategic focus and execution for the sake of hitting numbers, but there are many other common issues that OKRs throw up when it comes to misalignment.
The most obvious is that, because most teams plan their OKRs in silos, every team is working on their own Key Results, without any real consideration for how actions may impact the wider strategy.
This can lead to situations where teams are working at explicit cross-purposes to one another, or they plan results that require resources from other teams that aren’t available due to their key results.
In larger organisations, with multiple layers of management, you may also observe a ‘Chinese Whisper effect’. The ideal scenario is to cascade OKRs so they all neatly tier up…but in reality each team slightly alters the nature of their approach to the OKR above them, to better suit their needs/goals, which compounds throughout the organisation.
The original intent gets lost, and instead teams set themselves a KR they can argue at least vaguely related to a higher-up OKR, which they know they can hit.
No plan
Another common complaint is that OKRs are disconnected from team capacity, so that certain teams can become bottlenecks to the progress of other’s OKRs, and as such not long into a new OKR cadence, some will be redrawn or dropped altogether due to the capacity constraints.
OKRs are also typically detached from inputs, in that rarely do teams or individuals have the ability to figure out how they may achieve their set goals. This isn’t too surprising, given most OKR cadences take several weeks per quarter already, there’s clearly no time to do even more homework! Yet it also means that many OKRs are without real substance, and teams quickly realise that what they committed to do is not feasible.
It’s the equivalent of using binoculars to identify a lush nirvana in the distance as your destination, but neglecting to notice the path there will require you to have the right skills and equipment to cross a crocodile infested river and bridgeless ravine.
As the famous quote by Antoine de Saint-Exupéry goes, “A goal without a plan is just a wish.”
Demotivating
It gets worse.
The basic structure of OKRs render them to be particularly demotivating – or irrelevant – depending on how individuals view them.
OKRs are very specifically not supposed to consider Business As Usual (BAU) work. Yet this is what the vast majority of people have to focus on in order to push the business forward. Not to mention earn their bonus or be considered for promotion.
It’s a recipe for distraction and split focus.
If you or your team don’t feel incorporated into an OKR, you’ll feel on the fringes of what’s important to the organisation (which is demotivating), or as usually happens, everyone ends up fighting to have an OKR (who wants to feel like they’re not involved in what the company deems important?)…only to sacrifice it in favour of their more pressing workload, making it irrelevant after all.
In these circumstances, where the OKR is essentially BAU but expressed in the OKR format, you have a business with up to a dozen ‘OKRs’ split by functional lines, completely missing the original points of them, and giving nobody clear direction on what are the most important strategic priorities.
One surefire way to feel demotivated is to not feel in control of the end results…and yet this is a common occurrence for those working with OKRs, where the measurement of success is all too often subjective or impossible to track due to the constraints of their business intelligence.
Even where objective measures exist (remember, this is meant to be outside of BAU, where established KPIs and performance dashboard should be in place), feedback loops aren’t tight enough. The quarterly cycle of OKRs – and their ‘moonshot’ nature – means that in many cases you don’t know if you’re going to hit them until the very end of the period, and the weekly review cadence is dominated by BAU.
I’ve also seen situations where teams almost immediately start from behind (because of the difficulty of setting a stretchy but realistic absolute goal) and only start to track further behind the pace as BAU competes for their attention. And of course, if you’re falling behind, a negative cycle kicks in and demotivation alongside it…or the OKR just gets junked/changed.
Lastly – on the theme of demotivation – if you don’t hit your OKRs, there’s rarely a good way of understanding why, because there was a total disregard for the inputs that would lead to the right outcomes. This means those inputs are unlikely to be tracked, and it’s therefore difficult to see what could/could not be adjusted in the next period.
It’s therefore difficult to dig in deep on the causes of missing the target. Was it a lack of effort? Or that the wrong activities and inputs were priorities? Maybe both.
Instead, the failure to hit the OKR is usually explained away as the objectives or key results not being the right ones in the first place. If we only had more data on which to base them! And we’re back to the analysis by paralysis issue.
Inflexible
They say a week is a long time in politics…and in a startup it’s even longer. Many folks have said that startups work in dog years i.e. one year in startup land is like seven in a ‘normal’ company.
Which makes a quarterly cadence roughly akin to 2 years.
Whilst I’m not suggesting that you try to compress your time horizons to be shorter than 90 days, OKRs set on a quarterly basis are snapshots in time, and often don’t work well with the dynamics of a startup, because they’re often outdated by the time they’re ‘officially’ launched (a couple of weeks into the new quarter).
Tooling
This issue is wider than OKRs, but the tooling available to scaleups is pulling them apart!
There are no holistic tools that provide a simple (not simplistic) and systematic approach for aligning strategy to execution, or cross-functional teams to one another, supporting a culture of high performance and continuous growth.
Most tools are now incredibly powerful…but as such they’re frequently too complicated. And in trying to be ‘all things to all people’ as they seek their own revenue growth, they don’t provide an opinionated framework to help scaleups take a structured approach to their growth.
They act like the ultimate ‘laissez faire’ partner, shrugging that whatever a business chooses to do with their technology is ok with them, regardless of the consequences.
What happens is that a scaleup either uses 5% of the functionality (whilst paying for 100% of it), or…even worse…they let their team loose and eagerly try to adopt every feature, with large swaths of the app (and the data in it) mothballed and untouched within a few months because the effort to maintain such a diffuse tool is too much.
Like modern day housework appliances which once promised to relieve us from the drudgery of housework…only to drive up standards and actually create more work, so the upkeep of all these different tools creates even more work and overhead for already stretched teams.
Far from building or supporting a culture of execution, they create distractions and steal away productivity (whilst costing you a pretty penny in annual licence fees!).
OKRs aren’t working…
Taken all together, it’s no surprise that the process of setting and trying to work to OKRs leaves almost everyone in a scaleup feeling misaligned, unempowered & confused more often than not.
But there is a better way.
Introducing the SAFER Growth System
Standing for: Strategy – Alignment – Feedback – Execution – Results…it’s a more holistic, fully integrated and dynamic approach to running a business where there are two unequivocal truths:
- Growth is an imperative
- The future is uncertain.
To navigate these twin challenges takes more than pure will power or individual smarts. It requires a systematic approach to continuous improvement and uncovering insights.
If you’re ready to move past all the issues with OKRs and discover a better way, you can learn more here.