With the arrival of the end of the year also comes the time when companies (whether small, medium or large) draw up their strategic plans for the following year. As a result of this strategic planning, the possible projects that the company has in mind are designed so that it can achieve the proposed goals. However, what we see time and time again is that companies don't necessarily make the correct link between Strategy-Indicator-Project and, as a result, when they divide up their priority initiatives for the respective teams for the following year, they end up disconnected from the direction the company wants to take for its next cycle. One way to address (and improve) this whole sequence is to use OKR and techniques such as SMART together, so that projects can then be selected.
To start talking about how OKRs can help on this front, it's important to give a quick explanation of what they are. This acronym refers to Objectives and Key Results (a method developed by Andrew Grove and later used by John Doerr, in which the company's entire Strategic Vision is determined by a simple combination of the Objective (where we want to get to) and its corresponding Key Results (how I will actually measure what I have achieved). Example: Imagine a company where, in the strategic planning, it has been defined that, in the coming year, the main objective is to consolidate its position as a major seller in the e-commerce space.
Objective:
Consolidate position in the online market.
Its Key Results (KR) would be the way in which we would measure the objective. Generally, we define two to five KR for each objective.
KR:
- 30% growth in e-commerce sales.
- Have at least 50% of sales made through digital channels
As this is not a specific text on OKR, I won't go into detail about all the benefits that this model can bring, but I will focus on what is the real link between the strategic vision that this method brings and the consequent creation of project themes.
Working as a Master Black Belt Consultant, I have the opportunity to experience many Operational Excellence projects up close. In short, we can say that these projects can serve to:
- Finding waste and quick wins (KAIZEN)
- Substantially improve an existing process (DMAIC)
- Design a new process, product or service in an innovative way(Design Thinking For Lean Six Sigma)
Generally, once Operational Excellence projects have their themes and indicators defined, they set about implementing them. What is sometimes curious is that, regardless of the project's success, management often believes that the project should not be prioritized in the Executive Board's discussions because it does not have a relevant theme. Which makes me wonder: how is it that we set up a team to work with great dedication on a theme, using a structured method, in which a result is delivered, and this is not a priority? This could be linked precisely to the disconnection of this theme, from the outset, with the company's Strategic Planning.
Let's use the same example we were talking about when we defined the OKR. When this analysis is carried out, it becomes clear that the main indicator that should be raised in senior management's view is the number of sales made by digital means. If the Operational Excellence (OE) projects end up focusing on a different topic, it is natural that this topic will take a back seat. That's why the question here is: how can we come up with an OE theme linked to this challenge?
We could think of the theme "Increasing online sales". This would be directly linked to the aforementioned OKR. But how do we know if this is a good topic? A tool already widely used in Operational Excellence is SMART, an acronym for Strategic, Measurable, Applicable, Relevant, Timely: Strategic, Measurable, Applicable, Relevant, Timely .
When we submit the theme to the SMART tool, we realize that it can be refined so that it is not a project that we call "Boiling the Ocean":
Strategic: This project is strategic because it is linked to the company's main objective.
Measurable: When analyzing the database, do we have enough data and measurement capacity to be able to measure the project result effectively?
Applicable: We need to check that we have the resources available for this project. Who are the people needed to deal with this issue? Are they available? Marketing, Sales, Logistics...?
Relevant: What financial return would this project give? Are we looking at a considerable purpose?
Timely: Will the actions proposed by this project last longer? Will the results be tangible within the next year?
With the SMART analysis done, we can effectively assess which methodology we will use to develop the project, but you can see that the focus is not on this point. The main question is: with this theme, surely the company's guidelines for prioritizing and helping the project team would be different if the theme were, for example, increasing sales in physical stores.
OKR and SMART are not antagonistic. In fact, as I've shown, they're not even similar, as they deal with different phases that range from the strategic vision to the tactical vision. What we need to understand is that the existence of one method or tool does not imply the obsolescence of another. As long as you are willing and understand how to use them together.
This article has been republished in partnership with Setec Consulting Group - Read the original here.