Today, Strategy Execution is a continuous and iterative process to be able to respond quickly to the accelerating pace of change. The concept of agility is moving from software to other processes and it is a highly effective way to drive strategy execution.
Have you ever tried to integrate OKRs with the Lean Hoshin Kanri method? Common goal is the alignment by cascading objectives, key results and initiatives throughout the organization to the departments and teams. It is essential to communicate the strategy effectively, to make all strategic goals transparent to everyone, and to ensure that meaning and essence of strategy reaches down to the last level of employees in the organization. When employees can see how their individual objectives align with the company goals and how their work contributes to the overall success, is a top driver of individual and team performance.
Adapting to dynamic circumstances – make course adjustments quickly to achieve the desired end outcomes. Strategy development and execution cycles are changing to shorter cycles – from 3-5 years to 1 year on company level and to quarter/month on team and employee level.
About OKRs (Objectives and Key Results)
Objectives and key results (OKRs) is a structured framework for goal setting and tracking measurable outcomes. OKRs can work at any level and connect company, team, and personal goals. For each objective one or more concrete, measurable key results are defined. Each objective should have one or more initiatives, which aggregate the actions to take and drive progress on the key results.
OKRs is not only a management method to run a company with 20-50 employees. It also works very well (and self-organzied) at much bigger enterprises like Alphabet with 88,000 employees and AB inBev with 200.000 employees.
About Lean Hoshin Kanri (or Policy Deployment)
Hoshin Kanri is an essential and structured Lean management method for ensuring that the vision and strategic goals are communicated throughout the organization and then put into action. Hoshin Kanri: “Align company goals (Strategy) with the plans of middle management (Tactics) and work performed by employees (Operations) to ensure that everyone is pulling in the same direction at the same time.”, see https://www.leanproduction.com/hoshin-kanri.html.
The most powerful way of implementing Hoshin Kanri is by using the Hoshin Planning Matrix (or X-Matrix). The X-Matrix connects the four quadrants of growth and builds correlations between the elements of the matrix: 1. Strategic Objectives (South), 2. Annual Ojectives (West), 3. Improvement Priorities (North), 4. Success Indicators (East).
How to integrate both approaches
Have a shorter, iterative strategy development and execution cycle (on the order of monthly). Establish agile strategy process with “just enough” planning to launch initiatives early.
Start with the X-Matrix on company level. The south quadrant contains the 1 year Objective, the west quadrant contains the Objectives of one quarter, the north quadrant contains the 1 year Initiatives, and the east quadrant contains the Key Results. Build correlations between the elements of the matrix. A correlation between the Initiatives and the owner of the Initative is automatically shown in the matrix.
Align the organization by cascading the X-Matrix of the company down through all levels of the company – to divisions, departments, and teams. Set up accountability so that every objective, initiative and key result has an owner. Communicate the plan to ensure that the strategy and goals are well understood by everyone.
Take action and transform plans and goals into results. Now it is up to you to integrate OKRs with Hoshin Kanri and get the core loop spinning.
Many thanks to John Doerr for providing “The Sand Hill Unicorns: Fantasy Football” OKR example in his book “Measure What Matters”.