Fast Flexibility is a Recession Advantage

Deidre Paknad  ::  Strategy & Execution

Last week, I was talking with the president of a business unit in a Fortune 200 company about his need to tighten the focus of the organization as a result of macro-economic conditions and the challenges he faced to do so. It was one of many such conversations lately and the challenges are consistent.

While this executive was clear on what the organization should focus on, where people are focused and what is competing for attention is far from clear. He needed to know:

  • What doesn’t contribute to the new tighter strategy but is consuming resources?
  • What value is that work creating, and should we forgo it?

The reason these questions are remarkably hard to answer is because there is no common source of truth on what value and outcomes thousands of teams across the organization are driving. It’s the opposite of agility – and in current economic conditions, it’s a form of enterprise and executive fragility.

The org structure and who manages outcomes vs outputs

In most organizations, work is managed as activity and milestones — not by its objective or measurable value. And that activity is captured in dozens of trackers and tools across hundreds of teams. Getting visibility takes weeks or months, and when you do get the data on work in flight, it’s hard to understand or objectively weigh the relative value of activity.

“What do winning companies do to prepare for recessions? They surgically restructure costs before the downturn, trimming the fat and preserving the muscle. They put their financial house in order, diligently managing liquidity and the balance sheet. They play offense by selectively reinvesting for competitive outperformance.”
Bain - The New Recession Playbook

It’s even more difficult when the request for visibility is framed in a cost reduction context which can trigger a desire to protect projects and people by over stating value intended or achieved. When it takes months to get information you don’t trust, you can’t make fast, fact-informed decisions.

Managing Outcomes Instead of Output

When every team, initiative, and product has defined Objectives and Key Results (OKRs) and its outcomes for the company and customer are transparent, executives and everyone else can make value-based choices. In contrast, when all you can see is “ship this” and “deliver that” — not why you’d ship or deliver anything — it’s impossible to make tradeoffs at your level or determine priorities further down in the org.

Strategic priority as it is translated through the org

Outcomes should be a common language for teams across the organization, and the one thing they can all align on. The intent of OKRs is not to force a cascade of top-down strategy, but rather to operate as an agile, outcome-focused organization with broad results transparency that enables everyone to know the why of the work and the how of the strategy.

Strategy and its Pillars

Everyone’s decision speed and quality improve as a result; this radical transparency on objectives and results helps you cut through the clutter instantly to maximize business results.

Too Many Priorities Signals an Alignment Problem

Even if you’re not in trim back mode yet, you probably hear from deep in your organization that there “too many priorities” and teams are overwhelmed by competing demands for their time. Fundamentally, that means they don’t have a good decision framework to determine what matters most. Your resources are peanut-buttered across unequal priorities and teams are stalled.

OKRs are how priorities are determined by each team in alignment with company strategy; they are the framework that teams use to make value-based decisions and assess the relative value of potential results for their work. The framework is as powerful for saying what is not a priority as it is for deciding what is; teams can elevate and deprecate tasks based on the results they’re trying to create for the company or customers. The OKR below for building a digital product shows what driving outcomes looks like — these guide team choices on what activity to prioritize.

Digital Product Team OKR

Facts and Data Create True Agility

With its first OKR cycle in WorkBoard, an organization has its first real-time inventory of value creation in motion for a given quarter. The initial inventory often reveals very limited understanding of strategy and just how output — not outcome — oriented the organization really is.

As uncomfortable as it is to see these issues, it’s excellent information: Now you know where alignment is falling apart and where activity is disjointed from business impact or simply isn’t creating any business value. This is organizational debt that every leader needs to see and address now to reduce waste, drive focus, and concentrate resources on value generation.

After several quarters of an OKR cycle, one large product organization with over 40,000 people used WorkBoard Insights to optimize resources against strategy execution even further. It had 266 teams around the world working toward a single outcome but with no relationship to each other. They weren't aligned, cooperating, or gaining any leverage from their related efforts.

With this data, the transformation team could:

  1. Connect and amplify complementary teams
  2. Consolidate and concentrate efforts of duplicative teams
  3. Divert teams that were fully redundant to other efforts entirely

The data gives them true agility and enabled them to reduce enterprise waste, increase usable resources, and improve outcome speed.

That organization, like many others, is driving a OneCompany initiative to operate more cross-functionally and reduce the silo barriers that trap value. WorkBoard Insights gave them data to see whether those efforts were changing behaviors: In practice teams across the organization remained siloed – just 3% of teams had truly cross functional outcomes, collaboration and cooperation. This silo pattern contributed to the 266 teams working without awareness or leverage of each other; now the data enables the company to both objectively see and change the pattern for the first time.

Annual Flex Isn’t Flexible Enough Today

You’ll need to make strategy and resource allocation decisions like these every quarter, not once a year. If we learned one thing in the last three years, it’s that each quarter we will need to adjust course in response to unforeseen macro issues.

The coming years will be the same: Today you need to concentrate resources and eliminate waste heading into recessionary times, and you will need to be just as fast and flexible to increase investment wisely to optimize advantages during and after times of constraints.

To quickly adjust strategy, make decisions that drive both durability and advantage, and then rapidly bring those decisions to life, you need:

  • An outcome-based operating model that extends beyond the leadership team to the teams executing strategy
  • A continuous value inventory so everyone can see the business results teams are driving at any point in time
  • A single, digital source of truth on the strategy and its execution so you can align, drive, measure and accelerate outcomes

You won’t be left wondering what the value of all the activity is or handicapped by under investing simply because you couldn’t see or harness mis-used resources. Quite the opposite in fact — you will have a competitive advantage.

Additional Reading

OKRs are a Competitive Advantage

OKRs are a Competitive Advantage

Jeff Gothelf, co-author of Lean UX and OKR expert, explains how teams that set their goals as OKRs have a unique competitive advantage in their market.

McKinsey and WorkBoard: Building a Digital Operating Rhythm with OKR Software

McKinsey and WorkBoard: Building a Digital Operating Rhythm with OKR Software

WorkBoard CEO and Co-founder Deidre Paknad joined Daniel Eisenberg, an Executive Editor at McKinsey & Co. for a recent conversation that covered the genesis of WorkBoard, the imperative for digital inclusivity, and what enterprises of all sizes can learn from the constraint mindset of startups.

WorkBoard Named Deloitte Fast 500™ Company

Executive Conversation: The CIO as a Transformational Partner

Albemarle's Chief Information & Digital Transformation Officer, Patrick Thompson, shares his experience of executing transformation strategies as a partner to CEOs and why a digital operating rhythm is crucial to speed and agility today.