The Trouble with OKRs – part 2

 

Does the OKR approach to strategy deployment reflect the 'top-down' mentality of Big Tech? Does OKR reflect the debilitating phenomenon called ‘Software Brain’, and its core premise - Life is just a series of loops & databases…?

Strategy is a Messy Human Thing

As with many fallacies, ‘Software Brain’ contains a significant element of truth. Life is indeed a ‘series of loops & databases’. Study & understand these loops & databased and you acquire a superpower, which used wisely can greatly reduce human suffering.  But life is much more than this.

But if you try to flatten life in this way you may end up becoming hated, no? Life also comprises messy, unpredictable, thorny, comical things like human beings, their memories, emotions, ideas & intuitions; their dreams, aspirations, religious beliefs and shared conscious & unconscious minds; the cycles & rhythms of nature including human nature, animals & the forces of physics, chemistry, biology, the pure ideas of philosophy and mathematics.

Aristotle described the two Worlds of Necessity and Contingency. Software brain seeks to flatten the world to match algorithms, loops and databases, which is a paltry & incomplete reflection of one of Aristotle’s worlds. Does OKR do the same?

The Essence of Strategy Deployment & Execution

Strategy deployment entails engaging the genius of the organization.  The Leader’s most important job is developing a questioning culture, one in which healthy push-back is encouraged.  “Here’s our Aspiration & Winning Logic.  What do you think? Help us understand what we’re missing; give us fresh perspectives and your ideas on how to get better.”

To be sure, I’ve encountered OKR companies with questioning cultures wherein healthy dissent in encouraged, but they’re a minority.  More common is the superficial, unimaginative Aspiration & Winning Logic, mechanically pushed down with little reflection, testing or validation. People tune out – (‘Here’s one more dumb thing I have to do…’). Do they sense that their humanity is being flattened into loops and databases?

The W-V model attributed to the great Shoji Shiba is a fine example of a healthy Strategy Deployment system. Hypotheses continually bounce back and forth between management levels.  “Here’s what we think? Are we on the right track? If so, please translate our shared thinking into tactics for your team, department or site.”

Most importantly, this back & forth between and among management levels continues into & throughout the strategy execution cycle.

Key Attributes of World Class Strategy Systems

When I’m asked by a Board or Senior Team to ‘assess our strategy & management system’, a key step is to walk the value stream backwards, starting with the customer, and moving upstream one step at a time till you get to raw material suppliers. A parallel step entails walking the customer journey backstream, starting with the top of the proverbial funnel.

In my value stream walks, I ask questions like:

·       Are problems visible (even to an outsider like me)?

·       What do people talk about in their huddles (from senior leaders to the front-line)?

·       What’s the organization’s attitude to problems? Are problems hidden, a sign of failure? Or are they, to quote W. Edwards Deming, ‘the process speaking to us’?

·       Do teams have a standard approach to problem solving?

·       How good is the data? Is it complete, end to end, and of high quality?

·       Does the team develop ‘Your Own Data’ (YODA) as required? Or do they passively wait for corporate data?

These are all messy questions that engage both hemispheres of the brain and both of Aristotle’s worlds. Does your OKR process foster a healthy, pushback culture that can sustain & engage? Or does it flatten corporate life?

Best wishes,

Pascal Dennis         E: pascal.dennis@leansystems.org

 

How Good is Your Management System?

 

What’s the purpose of a ‘management system’? What are its key elements? What are common failure modes?  How do you know if you have a good one?

My job the past few decades has been to help our partners meet their business goals by developing strong people & management systems. My personal mission is to teach leaders Ambidexterity – the ability to both

a) Protect the core with OpEx/Lean, and

2) Ignite new Growth using the methods of Silicon Valley & Singapore.

Your management system enables both and is analogous to the wire harnesses that enable high performance airplanes & automobiles. I’ve written at length about the questions above. In this piece I’d like to describe the tell-tale attribute of a great management system.

Key Attributes of World Class Management Systems

World class management systems make problems visible.

By ‘problem’ I mean the difference between

·       What Should Be Happening, and

·       What is Actually Happening

Each of these must at least define purpose, process & key metrics. By ‘visible’ I mean obvious to all team members.  ‘Everybody knows’, to paraphrase Leonard Cohen.

In practice this means that problems are painfully clear at team boards at every level - from the Senior Leader Obeya to front line team boards & huddle sessions. When I’m asked by a Board or Senior Team to ‘assess our management system’, a key step is to walk the value stream backwards, starting with the customer, and moving upstream one step at a time. A parallel step entails walking the customer journey backstream, starting with the top of the proverbial funnel.

In my value stream walks, I ask questions like:

·       Are problems visible (even to an outsider like me)?

·       What do people talk about in their huddles? Are problems understood & addressed in a clear & decisive way?

·       What’s the organization’s attitude to problems? Are problems hidden, a sign of failure? Or are they, to quote W. Edwards Deming, ‘the process speaking to us’?

·       Do teams have a standard approach to problem solving?

·       How good is the data? Is it complete, end to end, and of high quality?

·       Does the team develop ‘Your Own Data’ (YODA) as required? Or do they passively wait for corporate data?

Here are your key checkpoints:

·       The visibility of problems, and

·       Quality of problem solving (the focus of upcoming articles)

I vividly remember an engagement with a large multinational consumer goods company.  They were good, capable people and their company had enjoyed strong growth for several years. They’d invested in teaching their team members root cause problem solving. I spent a few weeks walking the most important value streams from the customer all the way upstream. I attended team huddles and walked the shop floor.

I presented my findings to the COO & senior management team:

·       Everything looks good on the surface – purpose strategies seem cogent, data seems to be flow, workplace fundamentals look okay on the surface (e.g., 5S, standardized work, visual management), and morale is fairly good.

·       But there's flashing RED light – team boards at all levels are always Green; the critical third wall of the Obeya (Blockers) is usually empty.

‘But we’ve given everybody problem solving training,’ the team responded. ‘

There's flashing RED light,’ I repeated, and added the my old sensei' motto, ‘No problem, is a big problem.’

My report fell on deaf ears.

Six months later there were major outbreaks of food poisoning related to their products. Several customers became ill, and the company’s brand suffered serious damage. A number of senior leaders resigned.

The visibility of problems and quality of problem solving are your early warning system, and a key to de-risking your enterprise.  You want to assess your management system?  Start there.

Best wishes,

Pascal Dennis         E: pascal.dennis@leansystems.org

The Trouble With OKRs

 Despite their popularity, OKRs frequently fail to deliver business results. What’s going on?

I grew up professionally in the ‘90’s on a steady diet of the Toyota Production System (TPS). Our compass through the churning, treacherous waters of continuous expansion & new model launches was business system called ‘Hoshin Kanri’ or Strategy Deployment. I’ve written about it extensively & have lived many annual strategy planning & execution cycles with many fine companies. As my practice has evolved towards disruptive Innovation and industries like Banking, Insurance & Tech, I’ve seen more & more OKRs.

Here are some common failure modes I’ve observed:

·     Company winning logic is unclear, and/or poorly communicated - (‘Huh…?’)       

·       Rigid top-down directives with little validation from ‘subordinate’ levels – (‘Here’s another dumb thing they want us to do…’)

·       Teams create objectives disconnected from company ‘winning logic’ – (‘Let’s just do what we’ve always done…’)
·       Key results are disconnected from business outcomes – (‘What is ‘value’, anyhow?’)
·       Departments set goals in silos, few shared measures of success – (‘Let’s just focus on our corner’)
·       Objectives are either too abstract to guide action or too specific to inspire innovation – (‘Looks like AI wrote these things…’)
·       OKRs are invisible, hindering alignment - (‘Can anybody tell me what we’re trying to achieve?’)
·       Organizations try to do too much at once, diluting focus and impact – (‘Keep pressing buttons, something’s bound to happen.’)

The root causes of these failures include the absence of a) a comprehensive system (‘everything is connected to everything else’), and b) a set of mental models (‘how we think determines what we see’). OKRs are also prone to AI-sloppification & all the attendant waste & hassle.

Let me illustrate with the simple image above. Strategy development & deployment continuously cycles between the World of Thought & the World of Experience. Leaders live in the former, Team Members in the latter. Validating a proposed objective and winning logic entails multiple rounds of what I learned as ‘Catchball’ – essentially a series of meetings during which team members challenge, massage, tweak and ultimately validate the Leader’s objective and winning logic. Catchball continues at the front-line level where Team Leaders validate their team’s objectives and winning logic. Catchball concludes with a shared understanding of what we’re trying to achieve, what metrics represent Value, and what critical few activities each team will focus on.

Catchball is a messy, intensely human process & only sticks if a) your management system continually nudges people in the right direction, and b) your core mental models support it.  The key underlying question is ‘What do you think?’ – a simple question and the tip of a proverbial iceberg. Here are some of the underlying mental models:

• I know I’m prone to inherent cognitive biases – (illustrated in the work of Kahneman & Tversky and others).
• I accept that I am out of touch with what’s actually happening at the front line. Engaging team members is my reality check
• The senior team & I are prone to groupthink. That’s why we build management walks into our routines.
• Often team members understand the problem much better than I do.
• A strategic plan is worthless unless team members accept it.
• Our team members are really smart. Give them a challenge & they do incredible things.

Here’s you challenge: the only way to internalize all this is to experience it, which materially changes you. Talk is cheap, and AI slop is worth less than zero.

Best wishes,

Pascal Dennis         E: pascal.dennis@leansystems.org