04 OKR - Rules to Follow for Generating OKRs at All Levels #

Hello, I am Teacher Liu Liu.

In the previous lesson, I introduced the application of OKRs to help us better manage and formulate organizational strategic goals. Through the structured breakdown of OKRs, we can address the growth issues required by the strategy. So, once an organizational strategy is determined, how do we align and break it down at each level to help implement the organizational strategy? At this point, we need to understand the rules for generating OKRs at different levels within the organization.

Mastering the rules for generating and aligning OKRs at different levels in the organization is beneficial for us to establish OKRs that support the organizational strategy and provide value to the organization. Otherwise, the organization will not be able to work together from top to bottom, and implementing the strategy will be challenging. Next, I will help you grasp these rules by sharing some firsthand examples.

The relationship between company, department, and individual OKRs #

In 2019, I helped host a strategic meeting for the JD Platform Ecology Department. At the meeting, the vice president of the department and various second-level department heads had a very productive discussion, resulting in several strategic directions for the department, as follows:

O1: Building self-operated ecology O2: Building store value O3: Creating platform value proposition O4: Diversifying platform governance O5: Enhancing platform infrastructure capabilities O6: Empowering merchants to improve efficiency O7: Enhancing organizational collaboration capabilities O8: Promoting merchant growth

Through the consensus reached at the strategic meeting, we identified 8 strategic directions for the department, which translated into 8 dimensions of OKRs. Additionally, during the meeting, the department vice president also mentioned JD Retail’s four key winning battles, as follows:

O1: Market penetration O2: Omni-channel O3: Platform ecology O4: Big and medium-sized platforms

The four key winning battles of JD Retail are JD Retail’s four strategic directions, which correspond to the 4 strategic dimensions at the company level. The platform ecology direction specifically refers to our department’s business. The vice president also emphasized that as the department responsible for implementing the group’s strategy, the Platform Ecology Department will play a more important role in JD’s future development.

Finally, as a member of the JD Platform Ecology Department, I hope to help the department achieve agile and OKR transformation in order to improve organizational efficiency. So, let’s take a look at my personal 3 work directions for 2019:

O1: Enhancing the influence of JD’s agility O2: Improving R&D efficiency O3: Implementing the OKR method

So far, I have presented you with 3 sets of OKR examples. These examples include not only strategic directions at the company level, but also strategic goals at the department level, as well as individual work directions. In order to better illustrate their relationship, I have drawn a diagram for you.

A company has at least three levels of OKRs due to the existence of organizational structure and hierarchy. If we relate it to the above case, the company-level OKRs correspond to JD Retail’s four “must-win battles,” the department-level OKRs correspond to the eight strategic directions of the Platform Ecology Department, and the individual-level OKRs correspond to my own three work directions. This can be represented by the diagram below.

Furthermore, these three levels of OKRs influence and support each other. Sharp-eyed folks may have noticed that JD Retail’s four “must-win battles” include the business directions of the platform ecology. In other words, the strategic directions set at the company level influence the strategic formulation at the department level, and the goal of “enhancing organizational collaboration,” which is one of the eight directions in the Platform Ecology Department, is closely related to the three work directions I set for myself. Other directions of the Platform Ecology Department are claimed and specified by other responsible individuals, and as for the specific content within each objective that contains multiple key results (KR), it only requires continuous communication and consensus.

The above diagram presents a systematic alignment and control of OKR formulation across different levels, which ensures the rigid landing of strategic goals within the organization. This is the generation and correlation pattern that we need to grasp for company-level, department-level, and individual-level OKRs.

Since both personal and departmental goals have to carry the company’s strategy, why do I see that some departmental work objectives at JD seem to have no connection with the four “must-win battles” of the company? What’s going on here?

Why are some departmental objectives not aligned with the strategy?

Apart from leading departmental strategy meetings, I also collaborated with HR in a workshop to formulate OKRs. During the workshop, I led the HR team within the Platform Ecology Department to generate their work directions:

O1: Attract high-level talent O2: Enhance employees’ professional and general competencies O3: Establish and propagate culture O4: Establish organizational mechanisms

After the workshop, I found it surprising that the HR department’s work directions did not align with the aforementioned company-level and department-level strategic directions. Why is that?

We all know that the most important aspect of a business organization is to have a core business capability positioning and determine its strategy based on this core business capability, selecting the direction of business growth. However, the realization of a business goal within an organization ultimately depends on people. Therefore, continuous improvement of personnel capabilities in the organization and the continuous development of culture that affects human behavior are also crucial for the long-term development of the organization. In domestic organizations today, these responsibilities are assigned to the HR department, which is known as the CHO system in JD (a department in charge of human resources development within the organization, including performance, compensation, employee benefits, training, etc.).

In other words, the strategic goals of JD Retail that I mentioned earlier are the company-level business growth OKRs, which are usually focused on and determined by the company CEO. The OKRs of the HR team are non-business-oriented growth OKRs and belong to the strategic goals of the CHO system, which are usually focused on and determined by the company CHO. However, in terms of priority, the business-oriented OKRs of a company are definitely more important because the successful execution of business-oriented OKRs leads to revenue for the company, and with revenue, the organization can afford the cost of building its capabilities. But both aspects are indispensable.

Let’s remember the OKR example of Baidu’s Li Yanhong mentioned in the previous lesson. Baidu’s three strategic directions include not only two business-oriented OKRs related to mobile ecology and AI business models but also non-business-oriented OKRs for enhancing organizational capabilities. The same principle applies. So, another rule generated by OKR is that the types of OKRs in an organization not only include business-oriented ones, but also non-business-oriented ones. However, regardless of the type of OKR, it ultimately relies on people to execute. So, what aspects are involved in generating personal OKRs?

Rules for Generating Personal OKRs

The formulation of personal OKRs can come from three sources: alignment with superiors, self-drive, and external support. To help you better understand these rules, I will continue to use personal examples to illustrate.

In the table above, my superior’s OKRs contain 4 objectives (O). I have provided a detailed description for O1, which is further broken down into 4 key results (KR). Now, let’s take a look at my OKRs:

My OKRs consist of 3 objectives, each further broken down into 2 key results. From both my superior’s OKRs and my own OKRs, we can draw the following conclusions about the generation of personal OKRs:

1. Personal OKRs partially derive from the breakdown of superior’s OKRs. In this case, my O1 and O2 align with KR1 (Agile maturity) and KR2 (OKRs coverage) of my superior’s O1. From top to bottom, my personal O1 and O2 are further broken down into KR that support the accomplishment of these objectives.

2. Personal OKRs partially derive from the self-drive of individual job responsibilities. As mentioned in my O3, the enhancement of Agile influence is not present in my superior’s OKRs. Therefore, the shaping of Agile influence in my personal O3 is based on my own capabilities and the development of the organization—fully driven by my desire to create performance value for the organization.

3. Personal OKRs partially rely on external support. There are many departments within JD.com that seek my assistance in training them on Agile and OKR methodologies, which corresponds to the direction of empowering other departments and enhancing their capabilities mentioned in my O3. Such OKRs belong to the category of external support.

These are the rules for generating personal OKRs. When individuals set their OKRs in their work, it is important to note the alignment and breakdown from top to bottom as well as the horizontal support. Furthermore, individuals should be able to create additional performance value for the organization through their own self-drive. By establishing individual OKRs driven by individuals, the concept of encouraging OKRs, challenges, and self-drive can be effectively implemented.

Summary #

Today, I shared my firsthand experience in the process of OKR generation and revealed the rules for generating OKRs at different levels within an organization. By now, I believe you have understood the connection between personal OKRs and the goals of leaders and the company.

To summarize, here are three important conclusions:

• OKRs at different levels within an organization influence and support each other. If each level operates independently, OKRs will not effectively help the organization to achieve its strategic goals.
• Strategic goals can be categorized as business-oriented and non-business-oriented, and the generation of OKRs corresponds to both types. In an organization, it is important to not only focus on the formulation and execution of business-oriented OKRs but also on the OKRs related to organizational development and capacity building.
• Personal OKRs are generated from three sources: alignment and breakdown with superior’s OKRs, self-drive based on individual job responsibilities, and external support.

So, how does your organization ensure the alignment and execution of strategic goals from top to bottom? What methods do you use to set personal goals? Does your organization prioritize organizational capacity building when formulating strategic directions? Feel free to share your experiences in the comment section and engage in a discussion with me. Let’s explore whether the rules generated by OKRs can solve your problems.

Now that you have grasped the rules for generating OKRs, are you eager to start writing your own? Don’t worry, there are many points to consider when writing OKRs. I believe that after the next lesson, you will have a breakthrough in writing OKRs. In the next lesson, I will discuss how to write good OKRs.