Knowing the difference between strategy and OKR is inevitably part of the process when you’re growing your business. Many professionals confuse the two terms to mean the same thing; however, this couldn’t be farther from the truth. Understanding the meaning of these two terms can help you set yourself up for success because they’re useful tools in improving the way your business works.
In this article, we’ll discuss the differences between strategy and OKR:
What Is Strategy?
Before we can differentiate strategy from OKR, we need to define the two terms. According to Steven Bungay, author of The Art of Action, strategy is “essentially an intent, rather than a plan.” For Robert Kaplan and David Norton, “Strategy is a set of hypotheses about cause and effect.” Given this, strategy is defined as the executive team’s objective for where they want the company to head towards.
When you have a strategy, you also need to have strategy statements. These statements are derived from the executive team’s own ideas. They provide company teams with the mission’s objectives, so they should be compelling enough to convince the teams to follow this particular path for the business.
Laying down a strategy statement will enable you to formulate key results, which are your means of measuring the success of your strategy. For example, your strategy statement could be “become a top-five retailer of pet food and appliances in Australia.” Your key results should look something like “over 10 per cent of Australian households own at least 3 of our products.”
What is an OKR?
The term OKR stands for Objectives and Key Results. It’s a collaborative methodology, which teams use for goal-setting. OKRs are how they’re able to track their progress and create alignment with the declared strategy.
As it says in the name, OKRs are created with an objective and at least three to five supporting key results. The Objective is what the teams should achieve. In other words, it’s the strategy that the executive team has identified. Meanwhile, the key results are the benchmarks for success. They’re measurable and verifiable data to help teams identify how successful their work is.
At the end of a project’s designated period, teams can check whether they’ve ticked off the key results in the list. Objectives are meant to be long-lived, and they can be set for a year or even longer. What matters is that the key results are constantly changing as the project progresses.
The Relationship between Strategy and OKR
Now that you know the definitions of the two terms, it’ll be easier to understand the relationship between strategy and OKR. As mentioned earlier, these two terms do not mean the same thing. However, they are related because OKRs are part of what makes a strategy successful.
Strategies are only meant to be hypotheses for what the business should aim to achieve. They’re not meant to be the final say in the matter. OKRs are the teams’ way of verifying if the executive team’s hypothesis is a viable one. As the work progresses, the methodology can expose gaps in the strategy, which the executive team mightn’t have foreseen.
If this happens, the executive team needs to remain agile and adjust to the evidence that OKRs reveal. If it’s clear that they should tweak the strategy, they need to be willing to make that change in order to get to a more accurate strategy. In this way, companies will be able to secure definite successes.
Conclusion
Growing your business requires being flexible in your planning. Knowing the difference between strategy and OKR can help you become a better leader, creating more opportunities for your employees to contribute to the company’s success. Try to remember that your business is more likely to succeed if you master your leadership skills and the practice of strategic agility.
SKILLFIRE aims to help businesses create incredible customer outcomes by uplifting their leadership capability. If you’re looking to,grow your business and drive radical value for your customers and business, the OKR (Objectives and Key Results) framework is a powerful team-based approach to setting goals.
Contact us today to nail your first OKR cycle in only 8 weeks. Start to finish.