For the third in my series of “Courting OKRs Controversy” articles I’ve chosen a topic that at first glance may appear to have an obvious answer, especially if you’re a true believer in the methodology. Before revealing that answer let me introduce the question: Is it factual to suggest that every type of organization, regardless of culture or size, will be a good fit for OKRs? Will any enterprise be able to apply the framework successfully, and generate significant benefits from an implementation?

You probably guessed it, the obvious answer is yes. I would wager that most pundits and practitioners alike would agree OKRs can be implemented anywhere and produce substantial improvements in focus, alignment, and engagement. I suggest this because at its core, OKRs represent a goal setting system, and goal setting works. It works, people – just ask researchers Locke & Latham who performed over 400 studies and reviewed hundreds more, with their results consistently demonstrating the efficacy of goal setting.

But this wouldn’t be a courting OKRs controversy article if we didn’t adopt a bit of a “Debbie Downer” attitude and tune our antenna to the dark side of this question to at least stir some debate. Sure, goal setting is powerful, but for those of us in the OKRs trenches does it really work – every time, everywhere? Let’s look at the three lenses I introduced above (organization type, culture, and size) and discuss when OKRs may or may not perform as hoped.

Organization type

The OKRs framework has its roots in the technology industry, from the pioneering days of Andy Grove at Intel to Google’s use of the system from its inception through its meteoric growth trajectory. For many, OKRs are synonymous with technology firms and their focus on agility, innovation, and quick learning cycles. Digital marketing and software firms are also associated with the system.

What these firm types have in common (but they’re certainly not the exclusive representatives) is a relatively rapid rate of change which necessitates an emphasis on ambitious goal setting over shorter cadences. OKRs, with their (typically) quarterly cadence of setting, analyzing, and learning are perfectly suited for these environments.

Conversely, industries with slower rates of change, or highly regulated industries may struggle with the rapid cadence of OKRs. Utilities, traditional banking companies, healthcare, and pharmaceutical companies are prime examples. I’ve had clients in all of the aforementioned sectors over the years and while we often witnessed improvements, it’s difficult to suggest that every implementation was a home run in terms of outcomes. What matters most in bringing OKRs to these types of organizations are your expectations. For stable and regulated industries, OKRs should be tailored to focus on continuous improvement, efficiency gains, and strategic compliance goals. The key is not the rapid iteration but the clarity and alignment on what matters most. OKRs encourage transparency and focus, which are universally beneficial, regardless of the pace of industry change.

Culture

If you’ve been in the consulting game as long as I have, you’re bound to have a trove of stories that illustrate virtually any point you’ll ever want to emphasize. So it is on the topic of culture and OKRs. Several years ago I was invited by the CEO of an organization (type, size, and location are irrelevant to this discussion), to meet with him and plan the implementation of OKRs. Within five minutes of our conversation I’d learned all I needed to know and spent the next thirty minutes strategizing a hasty retreat. This CEO was the embodiment of the old “command and control” management style. Every piece of data that flowed through the organization went through his office and it was he and he alone who decided who would receive any pertinent information needed for strategic and operational decision-making. Transparency? Forget it. Collaboration? No thank you. Likelihood of OKRs success? Zero.

OKR success hinges upon a culture that values transparency, collaboration, and fosters a sense of inquiry and learning. Without those traits in place it will be exceedingly difficult to wring the most value out of an OKRs engagement. The framework thrives on the open exchange of ideas, the willingness of team members to share successes and failures alike, and the continuous pursuit of experimentation, innovation, and improvement. In environments where information is siloed, where failure is met with punishment rather than seen as an opportunity for growth, or where collaboration is limited, OKRs are likely to falter, as I’m sure the CEO I mentioned above learned for himself when he attempted to self-implement OKRs.

Size

Based on my experience, the size of an organization does not decisively influence the success of an OKRs program. I’ve seen the framework effectively implemented in a wide range of organizations, from startups with fewer than a dozen employees to mammoth multinational corporations spanning the globe, and everything in between.

However, there are both opportunities and challenges that present themselves based on the size of the organization implementing OKRs. I’ve outlined several below.

Small organizations

Opportunities:

1. Flexibility and agility: Smaller firms often have fewer layers of bureaucracy, allowing for quicker adjustments to objectives and key results based on feedback and changing market conditions.
2. Direct leadership support and commitment: Leaders often directly shepherd the OKRs program, driving enhanced buy-in and support.
3. Cross-functional collaboration: With smaller teams, there is often more opportunity for collaboration across departments, fostering a shared sense of ownership and alignment toward common goals.

Challenges:

1. Overambitious targets: Small companies can fall prey to setting unrealistic or overly ambitious objectives which can demotivate teams and lead to burnout, especially in resource-constrained environments.
2. Micromanagement: In some cases, founders or senior leaders in small organizations may micromanage an OKRs implementation, stifling creativity and innovation among teams.
3. Resource constraints: While OKRs are generally resource light in terms of financial commitments required (you can implement “on a shoestring” if desired), they do necessitate human resources in the form of an OKRs champion who will guide the program logistically and philosophically. Many small firms are reluctant to commit the necessary human resources required to set the system on a solid foundation.

Large organizations

Opportunities

1. Resources: This is the opposite of the final challenge noted above. With greater financial resources, enterprise organizations can allocate budgets and resources more effectively to both run the program and support the achievement of ambitious OKRs. I’ve worked with large organizations that have entire teams dedicated to the success of the OKRs implementation.

2. Data-driven decision-making: Large organizations often have access to extensive data sets and analytics tools that, when combined with the insights gleaned from OKRs, can enable better decision-making and outcomes. This is particularly the case as we see the rise of AI in the goal-setting process.
3. Ability to pilot and experiment with OKRs: With the luxury of diverse departments and teams, large enterprises can run pilot programs to test and refine the OKR methodology in different contexts before committing to a full-scale rollout. This allows for learning and adaptation, ensuring a more successful implementation should they decide to adopt the framework company-wide.

Challenges

1. Bureaucracy and inertia: In what will come as a surprise to absolute no one, large organizations can suffer from stifling bureaucracy. The resulting inertia can hinder agility and innovation, making it difficult for teams to adapt OKRs in response to changing environmental conditions.
2. Resistance to change: Related to the above, large companies can become calcified in their routines making it difficult to accept and adopt any new execution framework, OKRs included..
3. Going too fast too soon: In their zeal to implement OKRs, some large firms may attempt to roll the program out enterprise-wide before the ink on their company-level OKRs is even dry. There is often a “get it done yesterday” mentality pervading large companies, and without proper guidance, and in some cases restraint, the OKRs program can quickly become unwieldy, confusing, and out of control.

In the end, I would suggest that with the right expectations, leadership commitment, and necessary customization, OKRs can be a transformative tool for any organization, regardless of industry, culture, or size. If you keep your eyes on the prizes of focus, alignment, and engagement while implementing the system in a way that respects and leverages the unique characteristics of your organization, success will be yours.