Learn how to emerge as a winner from the upheaval through successful employee management in times of crisis. On the occasion of the publication of my new book, “Toolbox Objectives and Key Results: Transparent and Agile Strategy Implementation with OKR”, a trade journalist conducted the following interview with me, which was published in several trade journals.
Manage crises and change situations agilely
To manage not only the current Corona crisis, companies sometimes need different management tools than in normal times. In her new book, strategy consultant Dr. Daniela Kudernatsch recommends, among other things, the OKR method.
Dr. Kudernatsch, your new book on the topic of Agile Strategy Implementation with OKR was published in mid-March. Your work could hardly have appeared at a more inopportune time.
Because at the moment everybody is only talking about Corona and nobody is interested in the topics “Agile Strategy Implementation” and “OKR”.
You are right in the sense that our OKR Manager training is currently meeting with a rather low response because the top performers in the companies are currently busy with more important and more urgent things than further training.
Such as securing their companies’ supply chains and liquidity.
Yes. However, the situation is different with regard to the topic of agile strategy development and implementation. Here the interest and the need are very large.
Companies don’t know: What’s tomorrow?
Because in a crisis situation such as the current one, no manager knows what the future holds and what impacts his company, to put it drastically, can still expect. Therefore, companies can only drive on sight, so to speak. This means that a high level of agility is required in them right now. In addition, since the general conditions are currently changing almost daily – at least it seems that way – companies do not know at present which tactical and strategic approach is really target-oriented. Ultimately, they can only develop hypotheses and possible scenarios based on them, and then check on a daily basis to what extent the assumptions behind them are correct, in order to subsequently realign their approach.
The market reshapes itself in the crisis
So, as the agility disciples would say, you need to be incremental and iterative.
Yes, in such crisis situations, I would even say market upheaval situations, companies often have no choice but to launch trial balloons based on the overriding goal of “We want to master the crisis or even emerge stronger from it”, then regularly check whether the path taken brings them closer to their goal and, if necessary, correct the course.
You just used the term market disruption. Why?
An old consultant saying is “In times of crisis, the market regroups”. This will also happen in the wake of the Corona crisis. In it, the paradigms of entrepreneurial action will change to some extent and, as with every crisis, there will be winners as well as losers in the associated change process.
OKR is not a new magic bullet – even in crisis leadership
And OKR is the new magic bullet that ensures companies are winners?
The management method “Objectives and Key Results”, OKR for short, is neither new nor a magic bullet, although the American companies Google, Oracle and Twitter, among others, have been working successfully with it for over 20 years. However, it is a proven method for strategy implementation, especially at the operational level. It was developed about 35 years ago by Andy Grove, a former Intel manager, on the basis of “Management by Objectives” to implement such ambitious corporate strategies as “We want to become the market leader worldwide”.
Something that probably few companies are currently dreaming of.
Certainly. But OKR is also a smart tool for managing crisis situations.
In what way?
Two of Grove’s requirements for the management system he designed were: It must be simple, flexible, and involve employees in strategy development and implementation. And as the central key to this he considered the two questions: “Where do I want to go?” (Objectives) and “How do I measure whether I have achieved my goal?” (Key Results). Accordingly, the OKR method is easy to understand and ultimately to handle.
Targets are agreed on a short-cycle basis
Frankly, it doesn’t sound revolutionary to me.
Neither is the method. A decisive difference to “Management by Objectives”, for example, is that the objectives and key results are not agreed on an annual basis, but in a much more short-cycle manner: for example, every three months. In times of crisis such as the current one, this can also be four or just two weeks.
Which presumably meets the need of companies when they don’t know what’s going to happen anyway.
Yes, because by agreeing and reviewing the degree of target achievement on a short-cycle basis, companies become very agile and development processes can be managed effectively.
That sounds logical. But how does the work with the OKR method actually work?
Based on the strategy or the top corporate goals, top management sets five goals or objectives, for example for the coming quarter. These are operationalized by a maximum of four metrics, or Key Results, to measure progress at the end of the agreed period. The “objectives” describe the “what” to be achieved. So you’re calling the shots. The “key results”, on the other hand, describe “how” the goal is to be achieved – in measurable results that provide information about progress and can be used to reflect on the end of the quarter, for example: Were the Key Results achieved? When working with this method, managers and their employees must therefore define exactly what they intend to do and tackle in the coming quarter. This ensures the desired prioritization and prevents bogging down.
Avoid waste through clear agreements
Which is probably important in times of crisis, when resources of time and money are often scarce anyway.
Yes. Once the objectives and key results have been defined at the top level of the company, they are broken down to the next level, for example to the divisions. This is not done in a purely top-down process in the OKR method. Rather, a rule of thumb is that about 60 percent of the goals come from the top and about 40 percent are defined bottom-up. This means that the next level can also define its own goals, which it is convinced will serve to achieve the higher-level goal. This process culminates in a kind of negotiation between the upper and lower levels, in which an agreement is reached on the objectives and key results to be achieved in the coming quarter, for example.
And how is the necessary cross-divisional coordination achieved?
All agreed objectives and key results are published across departments and hierarchies – also to prevent conflicting objectives. In addition, cross-functional and cross-hierarchical alignment of OKRs ensures that all activities in the organization are aligned with the same and most important goals.
Which in turn prevents a waste of resources.
Right. However, when introducing the OKR method, companies should never forget: Defining the objectives and key results alone does not empower employees to achieve them in sometimes new ways. Therefore, working with the OKR method requires a leadership culture in which managers see themselves as enablers or coaches of their employees.
Which probably sometimes makes a company-wide introduction of the OKR method more difficult?
Yes, often an introduction is only recommended in selected areas. In addition, the
Employees are given tools such as the PDCA cycle or the A3 report with which they can practice solving problems systematically and independently.
Combine OKR with established tools
That sounds coherent. But do you think many companies are open to adopting a new management method in the current economic climate?
Why not, they need a toolkit to manage the crisis. In addition, the OKR method has the merit of being easily linked to such management systems as the balanced scorecard and management by objectives, which are more concerned with achieving medium and long-term goals. Moreover, as already mentioned, companies do not have to introduce the method throughout their entire organisation straight away. My recommendation would not only be for the current situation: Introduce the method first only in the areas that have to act very agile in everyday operations, because the framework conditions of their trade change quickly.
What areas might these be in the current economic climate?
This depends on the company’s business segment and its market situation. But this can also be controlling, procurement or sales.
Dr. Kudernatsch, thank you for the interview.