OKRs and Lean Management Principles: How they complement each other

OKRs and Lean Management Principles are connected in numerous ways and can complement each other to great and positive effect. Lean management, according to simplilearn.com, can be defined as:

Lean management is a business methodology that is designed to increase quality and efficiency by eliminating wasted resources like time, money and effort. The idea is to produce only the best and most valuable services or products for customers and clients at the right price.

simplelearn.com

It is likely to be Toyota that is most famous for its application of Lean management principles combined with a values based culture – continuous improvement (Kaizen) and Respect for people are very strong Toyota values that are practically applied.

The following Link is an excellent Lean management resource.

Similarities between Lean and OKRs

Both are tools or systems focused on continuous improvement. In order to achieve a level of excellence in implementing lean and OKR methodologies stakeholder buy-in, customer-centricity, upskilling and strong leadership must be present. To implement Lean and OKRs effectively time and effort wasters such as very long meetings without a real purpose, creating products or features that does not address customers or users specific needs, must be removed. Lean management practitioners have been effectively using ‘visual management tools’ such as for example, but not limited to Kanban boards for several decades – Those very same boards have become a staple for most Agile and OKR practitioners.

‘Stand-ups’ have been a regular occurrence in the context of applying lean methodologies for a long time, with the purpose of making meetings more energetic, collaborative and time effective. Companies that foster new  and agile ways of working have adopted stand-ups and created their own versions of these short yet powerful meetings that suit their culture best – As an example, meeting participants could be asked to read a very short meeting briefing as the gathering starts as a technique to regain focus on the meeting content itself.

A lean management principle that we strongly believe in, at the OKR Institute, that has a tremendous positive effect on the deployment of OKRs is, ‘Genchi Genbutsu’ (loosely translated as ‘go and see for yourself’). Elon Musk is well known for visiting the factory floor of Tesla at odd hours when engineers are doing very important work, to see for himself and to guide and support where he can. Generally speaking. Leaders cannot afford it to separate themselves from the execution of strategies anymore, and within this context Genchi Genbutsu is a sound principle to abide by.

Differences between Lean and OKRs

While OKRs are future directed and ambitious goal setting frameworks, designed to be the bridge between strategy and execution, lean management is a comprehensive management system mainly focused on creating operational efficiency and effectiveness. While OKRs, when effectively deployed make strategies clear as they are aligned thereto, operational effectiveness is not a strategy but within context may be a necessity. Lean management is a means to achieve operational effectiveness while OKRs are a means to make strategies transparent , measure the success of them, and to  bring them to fruition.

As most companies do focus on increasing operational effectiveness, achieving operational effectiveness do not, in general differentiate you from the competition. Lean, within context, can have a very technical focus creating a ‘here and Now’ sense of urgency. OKRs are about creating a far-reaching and highly ambitious desired future state for the company that differentiates you from the competition in a meaningful way. OKRs tend to create future directed team dynamics, mindsets and thinking and creates urgency within that context.

The very good news

Some hold the view that methodologies, systems and tools such as OKRs, KPIs, Lean management and Agile methodologies can be conflicting and cause a great deal of confusion. However here is an essential leadership and or coaching skill to acquire:

By becoming knowledgeable in all the areas in which the above methodologies complement each other (and they can complement each other to a high degree), making these complementary areas transparent to all involved and more importantly, supporting your teams to apply these learnings to their advantage, it can take you to the mountaintop of performance. None of these methodologies are perfect yet all of them have elements of truth and excellence to them, by combining all of these complimentary advantages inherently contained in all the mentioned systems, greatness can be achieved:

• KPIs are necessary ‘business health metrics’. A declining KPI, such as for example a decrease in sales can be vastly improved by an OKR, whereas an Actualized OKR can become a KPI.
• Agile and OKR practitioners are already benefiting from ‘lean practices’ such as ‘genchi gembutsu’, stand-ups, Kanban board and more, it is a matter of refinement to suit your company culture and what best works for you.
• Sound strategy formulation means very little, or nothing without execution excellence. Formulating the right strategy for your company within the specific industry and economy that you operate within is an art. Aligning transparent, outcome-focused OKR action plans to your well formulated strategies bridges the gap between strategy and execution.
• Lean management principles can help you achieve operational effectiveness while you are executing your future directed strategies.

Going through our Globally renowned suite of courses will empower you to use OKR , Agile, and lean methodologies to Your great advantage:

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