De-risking strategy with OKRs

There's many a slip 'twixt the cup and the lip

There's a temptation to believe that our strategic plans will lead us directly to a future where our organisation’s vision has been realised and our key objectives have been met. After all, we’ve thought deeply about our purpose and vision, diligently analysed our external environment and internal strengths and weaknesses, and set clear, long-term goals that align with our mission and vision. We’ve even broken down our goals into smaller, measurable objectives with specific strategies to achieve them. Once we’ve communicated the plan to all the key stakeholders, we can smoothly move to implementation. What could go wrong? Well, as we all know, plenty can go wrong.

The problem with strategic plans is that they're not really plans at all - they’re better thought of as statements of intent based on assumptions about a constantly changing future. It’s not easy to anticipate and manage all the internal factors that can impact our plans. Then we have to deal with the multiple uncontrollable external factors that can derail our plans - geo-political events, black swan events, competitors’ actions, changes in government policy etc.

But don’t despair. Strategic plans are essential documents - they provide organisations with direction and focus, guide resource allocation, help build competitive advantage, and foster communication and alignment of activities towards important goals. The trick is to recognise strategic plans for what they are (statements of intent based on uncertain assumptions) and adopt an agile approach to their implementation that involves iteration and learning. Here are some tactics to consider.

1. Use sequential multi-stage implementation. For those familiar with game theory, sequential multi-stage games allow players to make decisions in one stage, and these decisions can influence the options and payoffs available in subsequent stages. Ie, try something, consider the outcome, and then adjust your approach based on what you’ve learned.

2. Try to make decisions that are reversible. Sometimes, such as when you’re committing capital expenditures, it’s hard to reverse a decision that doesn’t succeed. But where possible, building in reversibility helps de-risk decisions made under uncertainty.

3. Don’t bet the farm. When you're in a rapidly changing and uncertain environment it’s not just risky, it’s highly imprudent to place winner-takes-all bets on the future. If you can, place more, smaller bets that spread your risk. Or if you can only make one bet, dip your toe in the water and test the temperature before diving in. And then closely monitor results to rapidly take advantage of winning bets and wind down the losing bets.

4. Adopt short time frames for implementing and reviewing initiatives. Underpinning the tactics in 1 to 3 above, adopt a relatively short cadence for reviewing and adjusting your implementation initiatives.

To sum up, strategic plans are essential for setting direction, but they can struggle to adapt to a constantly changing environment. This is where OKRs come in.

OKRs break down long-term goals into measurable, time-bound objectives with clear success metrics. This allows for frequent review and adjustments, making strategies more agile and adaptable.