What are Agile OKRs?

by Gill Arnott | May 24, 2021

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When used correctly, OKRs and the Agile manifesto are a powerful combination; enabling organisations to create value-driven teams, transforming how they work. However, problems can arise when:

  • Organisations struggle to fit the OKR framework and Agile together
  • Or organisations using Agile ignore adopting OKRs as they appear to see them as redundant!

So, what are Agile OKRs, and more importantly how do they fit? Nothing stands still, certainly not for very long! 

What is the Agile manifesto?

Do you expect to be smooth sailing or are you prepared to change course based on the environment in which you operate?

As discussed by Julian Birkinshaw in his 2018 article on agile as a management practice, technological innovations enable organisations to make better decisions both by making access to information easier and by inspiring new approaches to management.

Developed as an alternative to the waterfall methodology, Agile emerged in the 90s as a software development methodology that sought to replace the sequential, cascading approach to project management inherent in a waterfall.

The success of agile in the software development space has been based on the more frequent releases of new features, improved quality and speed to market while having a positive impact on the motivation and productivity of development teams (which are often called squads).

In the last two decades, the agile approach has been more widely adopted as a management practice that goes beyond software development practices and is instead used for driving innovation across an entire organisation. 

What are the benefits of the Agile approach?

Typically, organisations tend to be well aligned to compete in mainstream markets through cost efficiency and incremental innovation over a long period of time. In order to seize new opportunities and enter new markets, organisations need to develop ambidextrous capabilities such that they continue exploiting mainstream markets while responding rapidly to new opportunities.

The main reason why we’re seeing an upward trend in agile adoption is because: 

  • It provides organisations with a more responsive approach to pursuing their business goals in a VUCA (Volatility, uncertainty, complexity and ambiguity) world 
  • Encourages a shift away from risk-averse working
  • It emphasises the importance of learning from and adapting to the changes in the marketplace

How do the Agile values work with OKRs?

There are natural synergies between agile values and OKRs. In fact, we like to think of OKRs as enablers of agile. Clearly defined and transparently communicated business goals that are designed around outcomes instead of actions empower teams to self-organise and stay focused on the right things.

1. Moving away from command and control style of management towards a model of employee empowerment

A key principle of agile is that it shifts the power away from the leadership team and puts it in the hands of the teams who are doing the work. The leadership sets the direction for the organisation by identifying strategic, 12-month OKRs which act as the north star for the rest of the organisation. 

The teams are then asked to define (typically) quarterly OKRs that need to align into and support the annual OKRs. Knowing how their work contributes to the overall goals of the organisation is a key driver of employee engagement.

2. Increasing transparency and frequency of conversations that look at progress towards goals

An important element of the agile development process is the scrum framework. This is designed to help teams tackle complex problems in creative and adaptive ways. Progress towards the goals is driven by frequent and transparent communication between team members with the aim of surfacing problems early and designing solutions collaboratively. 

Similarly, one of the key strengths of OKRs lies in transparent goal-setting across the organisation and frequent check-ins of those working on OKRs. At There Be Giants, we’re big fans of the test-learn-adapt principle. Both agile methodology and OKRs rely heavily on frequent discussions, early flagging of issues and course correction. 

3. Breaking down silos between functions and leveraging cross-functional teams

Agile teams are typically assembled around a specific customer-related activity and comprise dedicated team members from the functional teams. The team has the overall responsibility for the success of the product –  the success criteria are product success instead of the use of the functional best practice.

OKRs are a natural complement to such cross-functional team formation. Teams define their own OKRs to drive innovation, change, and organisational growth initiatives. These initiatives typically span multiple functions within an organisation making the cross-functional team an ideal formation to respond to the business needs.

4. Relentless focus on outcomes 

The Agile development process is all about being customer-centric and delivering value to the customer, OKRs are a goal-setting framework that shifts the thinking from activities and tasks to outcomes. Ensuring that the goals are set with a clear outcome in mind means that everyone in the organisation benefits from increased focus, transparency, and alignment.

The principles of agile work no longer apply to software development only. Organisations use agile to navigate dynamic, highly uncertain environments in which they operate in a flexible, customer-centric fashion. The pace of business is such that the days of long planning and development cycles are typically no longer optimal for rapidly responding to the changes in the marketplace. Agile working enabled by OKRs allows organisations to focus on outcomes, stay nimble, and emphasise the importance of learning.

Want to chat OKRs, and how you can implement them with your agile way of working? Book a call with the team here.