There has been a rapid increase in the interest around bringing together outcomes (via OKRs), financial and portfolio planning (via PPM systems) and execution tracking (from EAP and DevOps systems). However, in a typical enterprise, these functions are all set up, planned and tracked in different systems; how then, can we get a unified view of how (and if) our projects are moving the needle on the business outcomes? Complicating this view is the fact that achieving a business outcome is not a direct result of project execution success; what data then needs to flow through the system, so that stakeholders have visibility into progress, and adjust and allocate resources accordingly? In a recent webinar we hosted, Avinash Rao, VP – Product Management at Digite talked about why and how modern businesses have to align their OKRs to PPM and execution systems and create optionality. This article summarizes the ideas he shared and we hope you enjoy and learn from this reading.
Years ago, the Waterfall model was seen as the most effective and efficient way to complete projects. In Waterfall, goals, and objectives are clearly defined at the beginning of the year. Teams would then stick to these goals until the end of the year. This is how projects and teams were traditionally managed and it was appropriate for the time.
Over the years, markets have shifted to become much more dynamic. This disruption was brought by many factors, one of which is how quickly information is spread. The internet at its current scale is something that did not exist years ago and has given rise to different contexts and more competition.
With trends and market demand shifting seemingly at the snap of a finger, today’s markets are more volatile than before and organizations have to adapt. Now, we’re seeing more businesses adopt Agile and DevOps methodologies, even outside of IT. We’re now also seeing frameworks like Scrum, Kanban, and Scrumban being widely used and adopted. Markets have evolved, and the way we work is evolving with it.
In this article, we will discuss three new age concepts that can help your business thrive in today’s market: Objectives and Key Results (OKRs), Project Portfolio Planning (PPM), and Agile execution systems. Before we go any further, let’s first understand what these are.
What is OKR?
You may be familiar with the concept of Managed by Objectives (MBO). It is a traditional strategic planning framework that companies use to set their goals for the year.
In a sense, OKR is a structured, quantitative evolution of this idea. Objective and Key Results or OKR is a goal-setting framework that identifies the main Objective and the Key Results needed to achieve it. It is a framework that breaks down an overarching goal into smaller, specific results.
MBO emphasizes the objective, but it is not always made clear as to how the organization can meet this objective. In a typical business review, managers will mention that they have delivered all kinds of results. Some examples are hiring people, pitching prospects, and meeting committed delivery times. While these results are important and were achieved, they don’t guarantee that certain goals will be met. In fact, it’s possible that none of those mentioned directly relate to growth and profitability prediction. This is the classic difference between activities and outcomes and business reviews have often focused on (and even rewarded) activities rather than business results!
OKR fixes this by communicating both the Objective and the Key Results necessary to ensure that everyone is aware of what they should be aiming for. Here is how most businesses decide what their OKRs are:
The main objective must be something that is tangible, measurable, and singular. This is a long-term goal that you aim to achieve in a year or even longer. An example of an objective is to triple your company’s annual revenue in a certain number of years.
To achieve your objective, you need to identify and meet key results. These are specific, time-bound, and verifiable metrics that must be fulfilled to achieve the objective. These results are usually bound to a shorter time span, such as a quarter or even a month. A Key Result that could be targeted for the Objective above would be to increase the number of product sales in a given period.
Additionally, OKR cycles are much quicker, usually being a quarter or shorter in comparison to MBO’s annual cycles. Thus OKR has become the preferred goal-setting framework for businesses in rapidly changing markets.
Once the OKRs have been decided, these must be broken down even further into realistic and feasible tasks. This is the function of PPM systems.
What is PPM?
Project Portfolio Management, or PPM, is the process of optimizing costs for projects within a portfolio. This is usually done by a portfolio manager.
The concept of portfolio management is hardly a new idea. However, how it is being done is completely different from traditional portfolio management. When markets were more predictable, it was more obvious which projects were worth investing more resources in. Today’s organizations do not have that luxury.
Modern businesses have to take an entirely different approach to portfolio management. Today, we have to spread our resources evenly among a set of projects, and then decide which ones are worth investing more in.
Today’s PPM systems create optionality which is essential in today’s markets and lacking in traditional business models. This allows organizations to react to market changes instead of trying to predict them and risk valuable resources.
Let us look at advertising agencies for example. Previously, there was only print, radio, and television to allocate resources towards. Depending on the target market, agencies already had an idea of which would be the most effective. However, there is now social media, affiliate marketing, influencer marketing, on-the-ground activations, and more. Because there are so many options, agencies can invest in all of them, and get a clearer picture of which they should be focusing on.
PPM systems must also break down Key Results into deliverables, or demands. Some Key Results require demands that are not feasible in terms of cost, schedule, or scope. Those that are, however, are then handed over to the execution teams as a backlog of priorities to be delivered.
Once the backlog of prioritized items has been delivered to the execution teams, they must then deliver those requirements within a given period of time. To keep up with the rapidly changing markets of today, these executions have to be Agile.
Agile execution teams have four elements to them:
Break down silos
In traditional business models, production team members would be shifted from one project to another. If businesses were to follow that model today, there would be many unnecessary costs involved.
Today, project teams work together and are funded for longer periods of time. Instead of different teams working on separate projects, teams are kept together but the backlog of work is constantly changing.
Traditional business models are based on predicting where the market will go. As we’ve established, this can no longer apply to certain markets.
Now more than ever, businesses need to have a strong emphasis on speed. Iteration is the essence of Agile, thus it requires fast feedback loops. These allow production teams to know what the customer wants to see instead of trying to predict and potentially miss.
Execution teams aren’t just in charge of executing the backlog given by the PPM systems. Some demands, even if initially approved, may have to be dropped midway through the execution process. This is because they may seem feasible in theory but not during implementation.
Prioritize items of value
Today, OKRs and PPM systems focus on giving execution teams a backlog of tasks with prioritized value.
Some demands, even if initially approved, may have to be dropped midway through the execution process. This is because they may seem feasible in theory but not during implementation.
Inspect and adapt
In turn, execution teams provide insight to PPM systems about on-the-ground realities. This then advises which key results and priorities need to be changed.
How are OKR, PPM, and Execution mapped out?
Traditional business models have an annual cycle. This was appropriate when industries were more predictable and trends were more obvious. However, today’s volatile markets demand fast cycles so organizations can react to on-the-ground realities.
Modern business models have faster cycles making them more appropriate for complex markets. To illustrate this idea, let us see how OKR, PPM, and Execution are mapped in practice:
The flow of information begins with the OKR. Before any work can be done, the overall objective must be set first. Once the Objective has been decided, this will then create a set of Key Results that need to be achieved.
PPM breaks down these Key Results into a set of demands. These demands are smaller projects or tasks that can be completed to achieve the corresponding Results. In the PPM system, we can then decide the funding to be allocated to these demands; also the time period at which we evaluate progress and decide on further funding.
Once the approved demands are decided, they are then handed to the execution teams to be delivered. The execution team then informs the PPM system of their schedule adherence and costs incurred. This in turn also informs whether the key results are to be updated for the next cycle. Once that is finished, the cycle then repeats, usually every quarter.
The present and future of project management lie in creating optionality and the collaboration between OKR, PPM, and execution systems. Through proper integration of these systems, businesses can respond to sudden market changes quickly and effectively.