12 Transformation - OKR Change Difficulties and Solutions #

Hello, I’m Liuliu.

Through the previous lessons, you may have noticed that OKR, as a new goal management method, has its own values and management practices. The introduction of such cultural characteristics into any organization will bring about change.

However, people are naturally resistant to change, especially under the influence of the existing culture within the organization, which makes them more resistant to new ideas and methods. Therefore, OKR transformation is bound to face resistance and challenges.

At the same time, we can also see that excellent organizations still adhere to “long-termism” and are committed to the evolution and upgrading of their culture. For example, Alibaba and Tencent both released Culture 3.0 in 2019, while JD.com also made adjustments to its cultural values in the same year. The purpose is to ensure that the organization’s culture can adapt to the current environment in a timely manner and continue to achieve success. Therefore, we need to be determined in the transformation of OKR, bid farewell to outdated management models, master scientific methods, and effectively manage the transformation of OKR implementation.

So, what difficulties will we encounter in implementing OKR? And what approaches can we use to solve these difficulties and facilitate a smooth transformation of OKR?

This is the question I will help you address in this lesson. Let’s first look at the overall framework for promoting OKR transformation.

Top-level Design for OKR Transformation #

Firstly, we can abstract an organization as a system, which includes people and interactions within that system.

So when a change, such as OKR transformation, enters this organizational system, it will bring adjustments to these three parts and also face challenges in their implementation. These difficulties include:

• How to implement OKR in an organizational form?
• How to make it easier for people to adopt OKR behaviors?
• How to effectively spread OKR?

In other words, we can start from the three dimensions of the organizational system, people, and interactions, to implement comprehensive improvements, introduce good methods, solve the above challenges, reduce the “resistance” to OKR transformation, and facilitate its successful implementation.

Based on this top-level design framework for OKR transformation, let’s first look at the basic logic of doing things in an organizational system.

How to Implement OKR in an Organizational Form #

When doing anything in a formal organization, we return to goals and corresponding responsibilities. What does this mean?

Many of us like to gather in communities like Douban, WeChat groups, and Little Red Book, which are informal organizations formed based on emotions, interests, and hobbies. In informal organizations, there is no pressure or efficiency to speak of. People can chat about anything, come and go as they please.

But formal organizations are different. They exist to achieve goals, and to achieve goals, many roles are designed to assume the responsibilities for achieving them, which are then assigned to specific individuals through division of labor.

(Definition of the OKR Master role within JD.com, for reference)

Let’s take an example. When I was promoting OKR implementation in a department at JD.com, I first defined a role called “OKR Master” and assigned the responsibility for implementing OKR to this role. Then, I found people to take on this responsibility within the department based on different business lines. In total, I found over 20 team leaders to handle the division of labor.

Next, I and these more than 20 OKR Masters formed an OKR Transformation Team. By setting work objectives for the transformation team, we led over 200 people in the department through the process of OKR transformation. Here, I’ll share with you the key measurable indicators from the transformation team’s phase objectives (shown below) as references for core metrics during OKR transformation.

• OKR Coverage
• OKR NPS
• Level of OKR Implementation Process Management

The level of OKR implementation process management refers to the cultural monitoring methods of OKR mentioned in Lesson 11 on how to cultivate OKR culture. Here, I will focus on OKR coverage and OKR NPS.

The purpose of setting the OKR coverage indicator is to ensure that the OKR process covers all business lines, so that the formulation and process management of work objectives for all business lines are based on OKR. In addition, coverage also includes enabling each person to use OKR to define their performance objectives, that is, letting everyone apply the writing methodology based on objectives and key results to define their own OKRs.

(Example of the OKR NPS survey questionnaire and partial results, for reference)

NPS (Net Promoter Score) was originally used to measure the likelihood of users recommending a certain product or service to others. It can reflect users’ satisfaction and preference towards a product or service. OKR, as a new goal management method, can truly help organizations solve problems and be effective. It is crucial to hear from individuals who have been using this method for a long time. Just like when a product successfully solves users’ pain points, they will be very satisfied and willing to recommend it. If OKR is truly valuable, the teams using this method will become more accepting and satisfied over time, and they will be willing to recommend it to others. Therefore, the purpose of OKR NPS is to collect feedback from users of OKR, both positive and negative, and this data can be collected on a monthly or quarterly basis.

With OKR coverage, it ensures that everyone in the organization can use OKR. Then, through OKR NPS, problems encountered during the usage process can be collected for continuous identification and improvement. Finally, by combining the level of process management capabilities achieved through OKR, the OKR culture can be shaped and established, thus promoting the adoption of OKR in all aspects.

Therefore, when promoting OKR transformation, it is necessary to establish an OKR transformation team, define roles and responsibilities, and set the team’s goals. This approach is about promoting OKR within the organization as a collective effort, in order to improve the efficiency and success rate of implementing OKR.

Once the transformation team is established, the biggest challenge in pushing OKR forward according to plan is still related to the individuals within the organization. In this regard, what methods can be used to reduce resistance to OKR transformation?

How to make it easier for people to adopt OKR #

When it comes to individual behavior, there is a famous formula from Professor B.J. Fogg at Stanford University: B=MAT.

B: Behavior M: Motivation A: Ability T: Trigger

This means that individual behavior is influenced by a combination of motivation, ability, and triggers. Therefore, in an organization, we need to address these three variables in order to encourage individuals to adopt OKR more easily.

In terms of motivation, the most important factor is incentives. As I have shared with you in Lesson 10, incentive mechanisms and designs within the organization can be aligned with OKR to motivate individuals and teams to use OKR. In addition to incentives and introducing the transformation, it is important to highlight the problems that can be solved by adopting OKR or the future crises that can be addressed through the transformation. These problems and a sense of urgency need to be effectively communicated from top to bottom in order to increase the willingness of individuals within the organization to embrace change.

When launching the Big Boss transformation at JD.com, the company’s founder, Liu Qiangdong, said: “…due to the complexity of multi-business formats, multiple scenarios, fragmentation, decentralization, and the need to satisfy extremely personalized customer demands, we must have a management system and methodology that can adapt to our business. In order to prepare for the future, we need the organization to lead the way, the methodology to lead the way, and find an organizational management method that suits the future form of the enterprise and its business. This is why we need to be the Big Boss… This is the background for the emergence of the Big Boss…”

The Big Boss methodology mentioned in the JD.com Big Boss transformation system refers to the OKR methodology. With the will of the founder from top to bottom to initiate organizational change, it can better inspire all employees of the company to make changes.

In terms of ability, it is essential for individuals to have a comprehensive understanding of OKR theory and practical methods, which are provided in a highly systematic manner in this column. Furthermore, learning within the organization is not about how much people learn, but how much they apply. Therefore, in addition to delivering effective training, our focus should always be on the application. According to the “learning pyramid” (which divides learning methods into listening, reading, live demonstrations, discussions, practice, and teaching others), the deeper a person’s understanding of a certain subject, the better they can explain it or teach it to others.

Based on this, in JD.com, I have had teams that are practicing OKR summarize and share their own case studies. This not only demonstrates how OKR is being used but also reveals the depth of their understanding of OKR. Based on the level of their OKR implementation, specific coaching is provided to enable individuals within the organization to have the capability to accurately apply OKR.

In terms of triggers, the long-term adoption of OKR by individuals depends on management processes and mechanisms. I have provided detailed explanations on this topic in Lesson 11 regarding the establishment and consolidation of OKR culture. In addition to this, in an organization, accountability and authority are highly valued. The higher the position of a person within the organizational structure, the more authority and influence they have. Therefore, when triggering individuals to embrace change, it is necessary to involve and gain support from senior leaders. By utilizing their influence, senior leaders can guide and encourage the acceptance and use of OKR among the members of the organization.

In JD.com, to gain support for OKR transformation from senior leaders, I personally collaborated with HR to report multiple times to department VPs, gaining their recognition and influencing HR to persuade department VPs to support the implementation of OKR. During subsequent strategy meetings, top leaders expressed their commitment to using OKR to break down strategies and manage project processes. OKR was also integrated into performance evaluations and project reviews. By applying these approaches in different contexts and leveraging the influence of senior leaders, individuals within the organization will feel a greater pressure to embrace OKR transformation. With the support of top leaders, the promotion of OKR will be much smoother. Therefore, by focusing on the variables of motivation, ability, and trigger, and utilizing good practices, we can stimulate people’s motivation to use OKRs more effectively, enhance their ability to apply OKRs, and continuously trigger their thinking and habits in using OKRs. This can make it easier for groups within the organization to generate behaviors that apply OKRs and facilitate the success of OKR transformation.

Having addressed the behavioral dimension, the next question to consider is how to effectively spread and propagate OKRs within an organization.

How to spread OKRs more effectively? #

In 2020, Shenzhen Economic Special Zone celebrated its 40th anniversary. During the celebration, President Xi Jinping mentioned that “Shenzhen has completed a journey that would normally take hundreds of years for other international metropolises.” This highlights that Shenzhen, as a pioneer in China’s economic reform and opening-up, has achieved remarkable success.

What we can learn from this is that 40 years ago, the country initiated the reform and opening-up by using Shenzhen as a pilot, summarizing the experience of constructing economic special zones, and then promoting the reform and opening-up more widely. This was followed by replicating models such as the Suzhou-Nantong model, the township enterprise model, and the Pearl River Delta model.

Therefore, in order to avoid the risks brought about by a “one-size-fits-all” approach, we need to start with pilot projects, summarize the successful experiences from these pilots, and then scale up. Similarly, in promoting OKR transformation within an organization, we should follow this approach. But how should we choose the pilot for OKR transformation?

(Diffusion of Innovation model by Everett Rogers)

According to the Diffusion of Innovation model by Everett Rogers, shown in the above figure, when a change is introduced to a group, there will be notable differences in the attitudes of individuals towards embracing the change. They can generally be categorized into innovators, early adopters, early majority, late majority, and laggards.

Due to the existence of these five types of individuals within a group, the rate of diffusion of a change within the group will vary. Therefore, in order to reduce resistance to change, we should not start with laggards or the late majority to promote OKRs, as it would be difficult and would lead to failure in terms of cost and efficiency. Instead, we should focus on finding and activating innovators and early adopters within the organization. These individuals can serve as pilots for OKR transformation, and then we can summarize the successful experiences from these pilots, unite them, and promote these successful experiences to other groups. This will accelerate the effective diffusion of OKR transformation across the entire organization.

(Personal training, sharing successful experience of implementing OKRs in different departments)

Starting from the middle of 2019, JD.com chose interested and passionate departments, such as JD Retail Frontline 3C Business Unit and JD Central Platform Ecosystem Department, to pilot OKRs. After half a year of pilot practice, OKRs were then widely implemented in more departments in 2020. As a forerunner in implementing OKRs within my department, I shared the practical methodologies and experiences of successfully implementing OKRs at JD.com with other departments. This allowed us to scale up the OKR transformation at JD.com.

Here, I would like to remind you that every organization has different cultures, goal-setting cycles, personnel levels, and industry backgrounds. Therefore, we should not blindly copy the methods of other companies in implementing OKRs. Instead, we should base our OKR implementation on the actual situation of our own pilot team, refer to the OKR methodologies and elements in this column, and summarize our own experiences in implementing OKRs that are suitable for our organization. Only then can we effectively promote OKR transformation within our organization. Moreover, it is crucial to ensure the success of OKRs in the pilot team. If even the pilot fails, it will be almost impossible to implement OKRs comprehensively within the organization.

Summary #

The above are the three key directions for our OKR transformation. In terms of the timeline, let me summarize them for you: first, we need to establish an OKR transformation team within the organization. This team will lead the OKR pilot and operate it for a certain period of time. Based on the pilot’s findings, we need to summarize the organizational problems solved by OKRs and the value they bring. We can then set the work objectives for the OKR transformation team and promote the OKR methodology throughout the company.