Quick Insight
Business strategy and execution is a set of hypotheses and tests of those hypotheses. Strategy is more like betting than baking. Bets involve uncertainty and risk. When you bake a cake, you’re following recipe steps toward a more certain outcome (depending on your baking skills). Not all hypotheses prove true. Even a disproved hypothesis is useful. We learn something.
The Objectives and Key Results (OKR) process is often referred to as a performance tool, but it may be better thought of as a learning tool. Companies must learn new techniques to achieve stretch goals. That means experimenting with new ideas. Each OKR cycle is a set of experiments and reviews of the results.
Business strategy and execution is a set of hypotheses and tests of those hypotheses. We want to achieve objective “Y” and think key result actions “X” will get us there. To state that as a hypothesis, we believe that if we do “X,” then we achieve “Y.”
You could achieve all the key results and not achieve the objective. For example, your objective might have been to win the big game (e.g., state championship, division title, or Superbowl). You put in the work to increase the stats you monitored as your key results.
However, this doesn’t guarantee success in a world of uncertainty, luck, and constantly improving competitors.
It takes skill to determine if our hypothesis was wrong or the outcome was bad due to uncertainty or luck. It takes humility to get a good outcome but realize it was due to good luck and not a good strategy.
Strategy is more like betting than baking. Bets involve uncertainty and risk. When you bake a cake, you’re following recipe steps toward a more certain outcome (depending on your baking skills).
Not all hypotheses prove true. Even a disproved hypothesis is useful. We learn something. In the short cycles of OKRs, we learn things quickly. Every quarter we adjust and refine key results to achieve our objectives.
- Rob Stephens
Founder of CFO Perspective and the Finance and Strategy Toolkit (FAST)
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