Making the right decisions can separate a failed business from a well-established one. Therefore, a robust goal-setting and management system is crucial to the success of any business. In this article, we investigate and answer the question: can OKRs help to overcome business failure?
Why do businesses fail?
The main reason businesses fail is a lack of financing or mismanagement of cash flow. That is, when the company pursues unprofitable ventures, other reasons that may lead to the closure of a business include insufficient marketing, forced closure ( by the government), dissolution, etc.
As mentioned above, the number one reason businesses fail is a lack of financing. However, countless underlying factors lead to this. In many cases, businesses fail due to:
- A lack of focus or direction.
- Poor understanding of their customer base and target audience,
- Poor planning.
- Inability to react or adapt to changes.
What is OKR?
OKR stands for Objectives, Key Results. It is a robust goal-setting and tracking framework developed by Andrew Grove in the 1970s. The methodology follows a simple but robust system whereby an organization/company, team(s), or individual sets an objective and measures progress or milestones through key results.
What makes OKRs vital for businesses on a decline is that it helps tackle many of the challenges they face.
It is important to note that the framework is not an end-all, be-all to all your problems but nudges your company in the right step forward and significantly increases your chances for success.
How do OKRs help companies overcome business failures?
Here are some ways OKRs can help organizations, businesses, and companies overcome failure.
OKRs foster focus and alignment: The objectives and key results help to ensure that all parties in a business or organization are working towards the same goals. This helps eliminate distractions and ensure everyone is focused on what matters most, which could be, bolstering sales efforts, increasing productivity, diversifying, cutting costs, etc.
OKR help with planning: Inadequate planning is another common reason businesses fail. Many businesses do not carefully plan their operations, and as a result, they are unprepared for the challenges they may face. OKRs can help organizations overcome this issue by providing a framework for planning and goal setting. By setting clear objectives and key results, businesses can create a roadmap for success and ensure they are always working towards their most important goals.
OKRs innovation and creativity: One of the factors that lead to decline and failure is lack of creativity. When a company lacks distinct features that distinguish them from others (either through its work ethics, services, and products), the organization is likely to fail during economic turbulence.
By setting lofty ambitions or moonshots, OKRs spur all parties in your business or organization to think outside the box and stimulate innovations and creativity- all of which are needed to stay one step ahead of the competition.
High adaptability: Many businesses struggle to keep up with the rapid pace of change in today’s business environment, leading to a lack of progress and ultimately, failure. OKRs can help businesses overcome this issue by providing a framework for continuous learning and adaptation, thanks to their effectiveness in achieving long and short-term goals.
OKRs can help a company quickly respond and adapt to perturbations in the market while following its long-term vision.
As we have established, OKRs can help companies overcome failure and drive growth and sustainability, even in the harshest market environment. In this section, we will share some examples of companies that used OKRs to overcome decline and failures and stay ahead of the competition.
Examples of companies that overcome failure with OKRs?
Here are some notable examples of how OKRs have helped businesses.
An example of a company that adopted OKRs to combat decline and overcome failure by driving innovation and growth is Intel. In the 1990s, Intel was facing intense competition from companies like AMD, and its market share was declining.
The company adopted the OKR methodology to set growth and measure progress to help it focus on its core competencies and drive innovation. The company was able to turn around its fortunes, garnered outstanding success, and regained its position as a market leader.
Another recent example of a business that has successfully used OKRs to overcome failure is LinkedIn. In the early 2010s, the company struggled to monetize its platform and faced intense competition from newer, nimbler startups. The company implemented OKRs as a way to focus its efforts and drive growth- This helped LinkedIn to diversify its revenue streams, improve its product offerings, and ultimately become a more successful and profitable company.
Other notable examples of companies/businesses that have used OKRs to overcome challenges include Hubspot, Dropbox, Zappos, and Adobe.
Having a robust goal-setting and management system such as OKR offers many crucial benefits for struggling businesses on the brink of failure. The advantages the system provides, directly and indirectly, address issues on the revitalization, growth, and success in any industry.
So, can OKR help overcome business failures? The answer is a resounding yes!
OKRs, (among other strategies such as cutting costs, diversifying, expanding into new markets, seeking outside funding, etc.) can be a powerful tool for overcoming business failures.