Corporate Management

Okr, a compass for corporate strategy implementation

When a company shares its strategy with employees to keep them united and participating in the company's objectives, it must then take care to act in a manner consistent with the stated values

29 February 2024

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Companies tend to publish their vision and mission to mark their identity in the market and to outline their short- and medium-term goals.

While these statements may certainly appeal to customers and stakeholders, their primary value is primarily internal: they serve to orient and motivate one's employees. Alignment and motivation of employees should, in fact, be the main priorities of top management, rather than following the classic command and control approach of the last century.

The risk of organisational hypocrisy

However, when a company shares its strategy with its employees to keep them united and participating in the company's objectives, it must then take care to act in a manner consistent with the stated values. The risk of incurring so-called 'organisational hypocrisy', as well described by Prof. Nils Brunsson, is really high and brings with it dangerous side effects. Indeed, employees tend to lose motivation and trust, with all that this entails, if they feel that what is promoted is not really practised and valued by the organisation.

Assuming, therefore, that we really want to carry out the stated vision, as it is written, without having to read it 'between the hypocritical lines', what is the tool that could help us turn words into a successful algorithm? Is it possible to 'codify' the corporate strategy, in a process that focuses exclusively on its 'execution', objective after objective?

The OKR approach

A framework that could help us in this regard is called OKR (Objectives Key Results), conceived by former Intel CEO Andy Grove and well described in the best-seller 'Measure What Matters' by John Doerr. This framework immediately differed, in a substantial way, from the MBO (Management by Objectives), which is based on a hierarchical approach and linked to staff remuneration. But what exactly are OKRs, today adopted by world-famous companies such as Google, Facebook, Netflix and LinkedIn (to name but a few)?

So as not to risk forgetting anything, I borrow the definition from the book 'OKR performance' (Ayros editore, 144 pp.) by Francesco Frugiele and Matteo Sola, the first to disseminate this framework in Italy: 'In summary, effective OKRs have the following characteristics they are quarterly, to activate a real capacity for strategic execution and effective feedback loops; they are few, to focus the company on what really matters; they are extremely understandable, to convey the strategy to everyone; they contain objectives without numbers, inspiring and explaining why, so that people understand the reasons for strategic choices and take action to make their own contribution; they also contain key numerical results, simple, relevant and truly measurable, to make the system effectively objective, useful and understandable."

The scope, you will have realised, is performance management, but with a substantial difference to the business process we are all already familiar with: with OKRs you measure the performance of the company, not of the employees.

I try to explain myself better. Imagine a scenario oftotal transparency, in which the goals of every individual in the company are made public and freely available for all to see. Imagine a scenario oftotal alignment, in which the corporate strategy, which you find hanging on the walls of your reception area, is codified in clear and measurable objectives, so that everyone can identify with them and pursue them day after day. Imagine, finally, a scenario of total involvement, in which goal setting is the result of a two-way dialogue between managers and employees, thanks to the conversational and participatory nature of the process. Here, all these benefits will produce an important sense of purpose for employees, helping them to focus on achieving their goals and thus increasing their motivation and commitment.

Furthermore, it is crucial to clarify that OKRs never focus on monitoring individual performance, nor on awarding salary bonuses linked to the achievement of targets. This means that there is no risk of the so-called 'sandbagging effect', in which employees deliberately aim for the bottom line in order to avoid missing targets and losing possible company bonuses.

Sounds very promising, doesn't it? So why not take advantage of this powerful tool instead of leaving it to Silicon Valley companies alone? Why should we give up effective execution of our strategy? Perhaps because the idea of adopting a policy of radical transparency with employees, finally treating them as adults and making them an integral part of business decisions, is still culturally too distant from us, despite the benefits in terms of margins and turnover that such an approach has proven to bring.

* Business manager

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