Agile Organizational Development with OKRs

Thursday, 26. September 2019

A guest article by Dr. Alexander Koch
 

It is so easy to say: The organizational structure has to fit the strategy: Structure follows Strategy. That is true at its core, but also very demanding in times of ever faster changing conditions. How can the established stable forms of organization of many family-owned companies meet those new requirements?

New Approaches for the Evolution of Organizations


There are plenty of reasons for changing organizational structures: strategic implications (building new business models, establishing a local presence in international markets, etc.), operational reasons (process optimization, etc.) and situational reasons (succession, etc.). (Re-)organization projects and a lot of effort for change management is supposed to help. However, this approach usually turns into an attempt to jump from one stable state to the next.

The linear organization with pyramidal, hierarchical structures is still the leading organizational structure. However, it will no longer suffice in the future, since the amount of a company’s tasks, that do not have to be done repetitiously, but rather erratically, dynamically, spontaneously and without much preparation, is strongly increasing today and will continue to do so. In this future, new but stable organizational conditions are not the right way to go.

New Approaches for the Evolution of OrganizationsThere is no date of minimum durability for organizations. The idea that a long period of stability and calmness is a requirement for success after a completed organizational change (as is the case in many companies) is outdated. Organizations are, in the original sense of the word, tools to accomplish something. They are always means to an end, never the end itself. This in turn means that if the end changes, the means have to change as well.

It is not the big shot that counts, but gathering experience in quick incremental steps by applying a trial and error mentality. The 80:20 principle should therefore also be applied in organizational development. Not all situations and their outcomes are predictable, perfection down to the last detail is out of place today. On the contrary: This way of thinking usually leads to a considerable amount of wasted resources throughout the organization, as companies leave so many potentials for success untapped.

So What Matters Instead?


Development of a clear common goal

  1. Only if the desired result is clear and shared by the team, everyone moves in the same direction. The team is joining forces instead of working against each other. If the goal is not clear to or not shared by everyone involved, it would be pure coincidence if everyone was working toward it with the highest motivation and thus effectively making a difference. More likely the participants will think and act in different directions (towards their interpretation of the goal) and thereby waste valuable resources.

Minimum Viable Product as an implementation principle in organizational development and "cutting the elephant into small slices"

  1. Do not approach everything at once, but achieve the big goal in many small steps. Allow experiments to happen and then get quick feedback from those involved, without working towards the one big shot for long periods of time.

Emergence instead of perfection

  1. Don't just think about the best final solution, don't plan everything completely, but rely on emergence inside the team: think together, "challenge" and inspire each other, plan the next step and implement it in a safe space.

Creating free space

  1. Create space for the teams to meet each other. Creating space simply means creating open spaces inside the company as well as free time during everyday work, where meetings between teams can take place either planned or spontaneously (no fixed agenda, but a fixed time period).

Creative "Post it sticking" instead of complex project management

  1. Use the walls in all accessible spaces and collect ideas, actions and initiatives with Kanban boards or other tools and track them. This creates transparency and requires commitment by everyone involved.

Short, effective stand-ups instead of long meetings

  1. It is better to call frequent (but short) meetings with the team, e. g. weekly (with team members participating remotely if necessary), instead of long meetings in large groups. Exchange information on the status of open topics as well as the achievement of objectives and agree on what will be done in the next phase.
We repeatedly experience one statement as very true, even if it sounds strange at a first glance: the culture follows the structure.

When the framework for collaboration gets changed in a pro-active and visible way, a different working mentality, a distinct openness and a high level of confidence and trust in the employees' own problem-solving abilities emerges. An approach like this creates new and attractive perspectives for certain types of employees. They enter their learning and development zone. Other types of employees however might feel irritated and insecure, which makes them fall into their personal panic zone. In the future, family businesses will have to accept this ambivalence even more and leverage it to their advantage in order to meet the requirements of future customers and create competitive advantages.

Objectives & Key Results ("OKRs") in Organizational Development

Objectives & Key Results ("OKRs") in Organizational DevelopmentWith OKRs we have recently experienced a mindset and methodology that is designed as a continuous process to ensure that people work better and more effectively in teams to facilitate measurable progress inside the organization. The point of orientation is always the commonly agreed goal.

The following figure shows an example of a pragmatic way to use the elements of the OKR-concept in organizational development – in contrast to classical project management.

The project in this example relates to the revision of the entire organizational and leadership model of a company with a focus on the upper three management levels. The logic itself is equally suitable for many other organizational issues.

Agile Approach to Organizational Development


Agile Approach to Organizational Development
A Short Look at the Essential Steps/Components:

  1. 1. Common goal, vision
    Define and verbalize the common goal for the organizational change and, if necessary, develop supplementary "guard rails": Where do we want to go? What is better / different after a completed organizational change?
  2. 2. Design Organizational Model
    Analyze the current status, develop a (rough) organizational and management model (central vs. decentralized tasks, definition of high-level functions etc.).
  3. 3. Design Governance
    Adopt a governance structure with clear tasks, roles, meeting structures and decision-making rights.
  4. 4. Detail Design
    Define an organizational blueprint with detailed explanations of tasks, competencies, responsibilities and core principles.

OKR-specific Elements:

        1. 5. 12-month-goals
          Set overall goals for a period of 12 months: What do we want to achieve together?
        2. 6. Planning and execution of sprints
          Before the start of the sprints (every 3 months): development of intermediate goals, key results, KPIs if necessary, if useful: development of action plans and active communication, then carry out measures (as a team).
        3. 7. Stand-up-meetings
          During the sprint (every 1 - 4 weeks): Discuss progress together, resolve conflicts and agree on further steps.
        4. 8. Review & Retrospective
          Conduct regular (monthly) reviews and retrospectives. A review requires the objective review of the things that have and those that have not been achieved. It is not about coming to terms with the past, but about providing a basis for learning, planning and agreeing on the next steps together.

          The retrospective is the most effective component in dealing with OKRs: here – ideally without a power imbalance between the participants – the question how well the collaboration between team members has worked during the last period is openly discussed. The aim is to identify what the social structure inside the teams can learn about the individual team members’ experiences and actively improve in the next period. This is what sets the further development of culture in motion. The retrospective is even more important when it comes to changes in organization, leadership and cooperation.

Conclusion


Organizations usually do not want to change on their own. Organizations usually do not want to change on their own. Nor do they simply allow themselves to be changed to a desired state from the outside. We experience the opposite way too often: An organization unconsciously optimizes itself in such a way that changes that affect the status quo and the power structure of the management levels are avoided.

As a result, every change initiative is essentially reduced to redefining or reinterpreting new concepts in such a way that they actually reflect the status quo: "We're actually already doing that...". Craig Larman (a Canadian computer scientist, author and consultant for organizational development), who formulated these exact phenomena in Larman's Law, agrees.

If, however, the management team openly an clearly commits to continuously working on creating better versions of the organization in small steps, then it can be possible to gradually change the mindset of everyone involved. This creates a culture of organizational change in which changes are not experienced as exceptions and threats. Only then can quick adaptability and long-term objectives be reconciled with strategic foresight.

The right answers are usually already in the system anyway, i.e. inside the minds of the people who are part of the organization. In this sense, the team, not the individual, will be more and more responsible in the future.


Checklist – Are You Ready for OKR?

 

  • 1. Do you have a formulated and communicated long-term corporate mission statement and a strategy derived from it?

  • 2. Do you already work well and intensively with key figures in your company today?

  • 3. Do you have the commitment of the (entire) management team to work with OKRs?

  • 4. Are you ready for active communication as well as critical and controversial discussions?

  • 5. Do you welcome the idea that the extended management circle and your employees are actively involved in the implementation of the strategy?

  • 6. Are you able to guarantee a high degree of transparency and do you even want to?

  • 7. Are you prepared to invest resources and time in the introduction and implementation of the OKR methodology?

  • 8. Do you have someone in your team who would be a good OKR champion?



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About the Author

Dr. Alexander KochDr. Alexander Koch is a partner of Weissman & Cie. GmbH & Co. KG, a business consultancy specializing in family businesses. He offers consulting mainly in the field of strategy and organization development.

Please find further information on www.weissman.de.