Dansk
Let's start by looking at what OKR and KPI mean.
OKR stands for ObjectiveKey Results, while KPI stands for Key Performance Indicator.
OKR is the latest development in ways to measure and assess a company's performance. OKR is said to be more focused, transparent, agile and to create alignment so that everyone in the company is working in the same direction to achieve key goals. We believe that reputation is a platitude, as a measurement method alone does not determine success, but is a subset of an overall sharp strategy.
The metrics we use, whatever their name, are used to communicate clearly to everyone and to create a common metric to measure progress on the common journey towards the goal.
Transparency is about creating a link between the strategy and the measurement methods used. Agility, in turn, must tie both the strategy and the metrics together. And focus is created by working through the foundations of the strategy to make the necessary choices - and thus focus on the right things.
If we use only measurement points without an underlying strategy, they are just measurement points (control), but if we have a clear strategy, they are a guide to whether we are moving in the desired direction.
But let's look at OKR's history:
Strategy and measurement methods must be linked. If we need to measure anything, it is to ensure that the company's strategy is executed and put into practice.
I think we all know those targets where management can't answer why we should measure and what those targets are used for. Therefore, it is crucial that there is consistency with the strategy.
Once the strategy has been mapped out, it is clear in which direction the company should develop, what has been abandoned, which activities should be launched and when and by whom.
Operational targets are also being worked on by some - here we just have to be aware that targets in themselves are not motivating for many - they have to make sense and they usually do only if they are linked to the strategy.
Whether we're working with OKR or KPI, it's all about focusing on what's most important to your business, and you can only know that if you link the metrics to your strategy.
If OKR is used, the measurements are divided into 2 parts. The Operational Objectives, which ensure that the company exploits the business opportunities that lie in developing and selling existing products and services right now. And the Strategic Objectives, which ensure that the company remains competitive and relevant in the future.
When used, KPIs often act as a compass, helping and guiding the company to understand whether it is moving in the right direction towards achieving strategic objectives. A distinction is often made between high-level and low-level KPIs. High-level often focuses on the overall performance of the company, while low-level is much more often more specific to, for example, a given activity.
At MakeMyStrategy™, we don't care if a theory or model is called one thing or another. Based on our years of experience, we translate and synthesise it all and apply strategic objectives that are based on the strategy. Let's give an example:
Company X has a vision to always deliver excellent and no-nonsense solutions for Danish and international companies' digital businesses.
Keywords that elaborate on the vision:
Always: Reliability, same solution, core value, DNA thing, our standard
Excellent: quality, outstanding, really good, best, supreme (not distinguished), holistic approach (see the task in a larger perspective), business understanding
No-nonsense: Straight to the point, straight-out-of-the-box, straightforward, to understand, not packaged, straight to use
International: foreign companies with digital business that want to enter Denmark and Europe
To achieve this goal, they have carried out a thorough analysis of their current strategic situation, clarified their future aspirations and defined a series of activities to be launched. They have divided the different activities into tracks, all leading towards the goal. And for each of these tracks they have defined a number of strategic measurement points (call them what you will😊) See the demo case below:
Hole in one
Gert Ekberg Westergaard Jensen
Managing Director and Partner