In this blog we consider the insights that portfolio management can take from an increasingly popular approach to strategy execution - Objectives & Key Results (OKRs).
Whilst OKR’s originated with Andy Grove at Intel, the approach was further developed at Google by John Doerr[1] where it has been credited with delivering 10× growth. Other notable organizations that have adopted OKRs include: Netflix, LinkedIn, Disney, Samsung and Twitter (now X).
But what are OKRs? At its core, the OKR approach comprises:
- An objective – which should be significant, concrete, action-oriented, and ideally inspirational.
- Three to five key results for each objective - the tangible success criteria used to measure progress towards achievement of the objective.
- Initiatives - or activities identified to help deliver the key results and so achieve the objectives.
Digging a little deeper, Doerr identifies four OKR ‘superpowers’:
- Focus and commit to priorities - no more than five objectives at any one time, so you focus on the areas that have the greatest impact on performance;
- Align and connect for teamwork - with goal transparency to promote cross-organizational collaboration and manage dependencies;
- Track for accountability - using a combination of quantitative and qualitative measures; and
- Stretch for amazing - OKRs should be challenging.
There are close parallels here with the approach advocated in Managing Portfolios with:
- A focused portfolio of initiatives with a clear view of the problem to be solved / opportunity to be exploited (Principle 4 – Set up to Succeed by starting with the end in mind).
- Two-way traceability from portfolio objectives to initiatives and from initiatives to portfolio objectives, via a portfolio-specific benefit categorization framework.
- Active management of constrained resources, project dependencies and benefits realization to optimize the contribution to portfolio objectives in practice.
Both OKRs and Managing Portfolios also emphasize the central importance of:
- Prioritization (Practice 4) – so we focus on the initiatives with the greatest strategic impact.
- Transparency (Key Success Characteristic 6) to facilitate collaboration and effective dependency management – as Doerr says, ‘unacknowledged dependencies remain the number one cause of project slippage’.
- Data-led tracking of progress - including end and intermediate benefits, as well as stakeholder sentiment.
In the next Managing Portfolios Insight we will be examining the need for robust scrutiny of investment proposals taking into account the advice of Shakespeare, Daniel Kahneman and Andy Grove.
Interested in our Managing Portfolios Certification? click HERE to learn more!
