OKR - Hybrid OKR with STO model

The STO model is a commonly used 3-layer organization management system. 

STO model – A quick recap

Organization management is divided into 3 layers

  • Strategic
  • Tactical
  • Operational

Strategic [Direction] 

  • company’s vision [Where] – where the company wants to be
  • Missions [What] – what is the plan to get there

Tactical [How]

  • Strategy [how] – the strategic plan to execute the direction
  • Benefits [reward] – the outcome that we want to achieve, the targets and milestones. 

Operational [Do]

  • Deliverables [output] – the tasks and activities to be performed to achieve the benefits

Traditional STO model 

The traditional STO model is a one-direction dissemination that will take 1-2 months year-end to define. Organizations plan a year-end executive retreat, workshops to create the following years’ plan. 

The smoke finally emerges from the chimney…

The executives come out with a plan, raised high. The plan is preached to all departments in a few company wide townhalls. Employees clap, give a rah-rah. The plan is distributed in a nicely printed laminated sheet of paper. 

Employees put them in their drawers and get on with their usual work…

Until next year…

This STO model has worked for many years until the marketp0lace become more global, more agile and chaotic. Constant changes caused companies to adopt a new management style, but hybrid it with the traditional STO model.

Mapping OKRs to the STO model

Organizations begins to adopt OKRs. OKRs can be created at all strategic, tactical and operational levels, but still with the direction of upper management. Top-down dissemination continues.

It might be in the form of department management teams defining their own department objectives and directing their staff to execute it. Staff might not participate in the OKR creation, but just follow direction. The is disseminated further down to the internal sub-departments or sub-groups.

As you see the diagram below, each layer of OKRs are connected top-down, there are no bottoms up or sideway linking 



Apply OKRs to STO model with success – 360 approach
To apply OKR successfully to your STO model:
First – continue with the annual organization goal planning retreats. This is important to revisit long term goals (Vision/ Mission) and adjust for the short term (annual) goals to provide the accurate direction for the immediate year.
Second – Provide the direction, but do no stop at top 10 annual goals. It might be too vague and too high level. Strategic team need to be more refined in telling tactical/ operations teams what they are looking for. Provide a SWOT analysis for each goal. SWOT: Strength/ Weakness/ Opportunity/ Threats. Encourage your tactical and operation management team to create their own OKRs and align to the SWOT. A more defined weakness or threat will give tactical and operational teams a better idea to create more accurate OKRs for alignment.     
Notice that the OKR are not top-down, but now bottoms-up. When department OKRs create their ORKs, review with strategic management, if their align. Strategic team to enpower and collaborate, rather than dictate and direct. 

For tactical and operation teams adapt a tier approach and align OKRs one level up.

Encourage peer to peer OKR alignment for collaboration.

Encourage individuals to also create their OKRs.

Peer to peer and team OKRs need to aligned back to the department OKRs (tier 2) and in turn align back to strategic team (tier 1) OKRs. 

Word of caution

It is important not to overly ‘nest’ OKRs. A max 3-5 tiers of OKRs is recommended. 

Overly nested OKRs create confusion and also means the tier 1 OKRs will never reach a high completion status, because many downstream OKRs might not be completed.  

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