Summary
In most industries, there’s more than one way to reach a goal. So how do you ensure that everyone is working on the most efficient, innovative, or tactical one? By using Objectives and Key Results.
Everything in business starts with a strategy — something that outlines what your business is, where you want to go, and what choices you’ve made to get there. But as you turn strategy into a plan of action, reality often deviates from the plan. Or needs calibrating. How will the organization respond? This is why you need an organizational strategy.
Read on to discover what an organizational strategy is, the five types of organizational strategies, and real-world examples of organizations that used a methodology called OKRs (Objectives and Key Results) to drive long-term success.
What is an organizational strategy?
Broadly speaking, an organizational strategy is a game plan. It encompasses purpose, mission, how you’ll achieve a competitive advantage, as well as goals and objectives for all areas of your business. Company leaders create an organizational strategy so they can make the best decisions about how to use resources — inventory, time, and money — to succeed. A clear organizational strategy is key to operational excellence.
Why does your business need an organizational strategy and how does it work?
In most industries, there’s more than one way to succeed. How do you ensure that everyone is working together? Different strategies help teams prioritize different goals and actions. Don’t leave your team guessing what your strategy is.
Clear organizational strategy provides explicit guidance for employees. Having a formal organizational strategy often helps minimize conflict, reduce confusion, and keep everyone pointed in the same direction, even when things change.
Why OKRs should go hand-in-hand with organizational strategy
By itself, strategy isn’t enough to lead teams to success. No matter how smart a strategy seems on paper, your team still must execute it. OKRs are how you translate organizational strategy into clear goals and effective action. OKRs help leaders create alignment, track progress, and close strategy gaps across all aspects of the organization.
Every organization needs multiple strategies to run effectively. Some relate to the business model, while others relate to how you operate. Some reflect long-term direction, and others describe choices for how you manage day to day.
Five types of common organizational strategies, and how OKRs help teams achieve them:
1. Competitive Strategy
Compares your firm’s strengths, weaknesses, and differentiators with your competitors’ and uses it to determine how to compete and win. This can include product or service differentiation, faster supply chains, or even a more competitive pricing model.
Using OKRs for a Competitive Strategy
During the microchip wars of the 1980s, Intel was fighting for survival. Motorola, its biggest competitor, had created a faster microchip that was easier to program. Intel’s sales team realized that unless they won more designs than Motorola, their days were numbered. Virtually overnight, Intel’s strategy evolved to “‘dominate the market” for microchip sales: enter Operation Crush.
OKRs were crucial to this turnaround, helping define success and track timely progress:
Within weeks, thousands of employees redirected their efforts toward a common Objective: winning sales. The OKR clarified that winning was about changing engagement — not product. It prioritized creating a new narrative for clients, emphasizing that the microprocessor they chose today would be the most important decision they made in the next decade.
By the end of the year, sales teams had steered customers to see the long-term value of Intel, contrasting it with what they called the short-term ease of use offered by Motorola, and bested the competition.
2. Corporate Strategy
As organizations grow, structure becomes more complex and diversified. Business divisions that could be standalone entities often live under the same corporate umbrella. Even if they operate independently, at the highest level they all exist to create value for the corporation. A corporate strategy clarifies the bird’s-eye view for what is necessary for all the entities to achieve together. It could be through partnerships, the operating model, or even sourcing and sustainability.
Using OKRs for a Corporate Strategy
Corporate strategies aren’t limited to for-profit entities! Ariadne Labs was challenged to unify nearly 100 different medical disciplines under one roof. The organization is a hybrid of three types of institutions: academic, healthcare start-up, and nonprofit. This makes articulating common, overarching goals and priorities especially hard, because success to an academic looks different than success to a clinician or a grant writer.
Ultimately, every division at Ariadne exists to improve lives through improved care. But in some years, Ariadne’s corporate strategy balances toward growing existing solutions; in other years it favors more R&D to find new solutions. OKRs help the complex team at Ariadne find synergies and coordinate effectively as the top priorities shift in service to the long-term mission. OKRs enable Ariadne to mobilize limited resources more quickly in order to address the highest priority gaps.
3. Business Strategy
Other companies may need more granular versions of a corporate strategy. They can apply broadly to one entity within a conglomerate or more narrowly to a unique revenue model within the same organization. A complex corporation like Google, for example, may have one business strategy for search and a different one for YouTube or Maps.
Using OKRs for Business Strategy
All strategies illuminate an organization’s choices. A common one is: Should we go further or faster? Nubank, a Brazilian fintech company known for providing credit cards to the young, urban middle class, made a conscious decision to expand. And the company wanted to attract clients outside of Brazil. Nubank knew that such a large undertaking might impede the speed of expansion. OKRs helped remind everyone of Nubank’s strategic choice to become a global company, and helped constantly communicate the importance of the business strategy to acquire customers in Mexico.
4. Functional Strategy
Functional strategies define specific areas to increase the impact of an organizational expertise. Think Apple and its supply chain, Tesla’s manufacturing expertise, World Central Kitchen’s global logistics capability, or Amazon’s commitment to customer service.
Using OKRs for Functional Organizational Strategy
Whenever executing a functional strategy is a priority, OKRs can help. Let’s take Maven, a digital clinic and telehealth specialist whose mission is to transform the U.S. healthcare system for women and families. Maven has functional strategies to improve health outcomes in clinical care, and turns these into OKRs to help prioritize, align, and track desired improvements. For example, in maternal health, clinical teams set and track OKRs to achieve more successful births and reduce complications and NICU admissions. The content teams also set OKRs to increase the number of early interventions from patients who engage with their educational resources. Both examples contribute to achieving their functional strategy for improving clinical care.
5. Operating Strategy
This type of strategy focuses on implementation and execution, because improving operating excellence can require strategies, too! For example, during the pandemic, almost every company had to determine how it would navigate supply-chain disruptions, new safety protocols, and remote workflow. In 2024, many organizations are creating strategies for how to deploy generative A.I. effectively. Good operating strategies enable organizations to work seamlessly, providing detailed planning and management of processes, resources, and technologies.
Using OKRs for Operating Strategy
When Rick Klau left Google Ventures to become the Chief Technology Officer for Innovation for California, one of the state’s operating strategies was to upgrade its technology and tech-enabled services. Klau and his colleague Phoebe Peronto used OKRs to complete a complicated website migration initiative. Clarifying the outcomes across different teams changed the way they worked together: re-evaluating critical and non-critical functions, soliciting help from other internal teams, and shifting priorities to get the migration across the finish line on time. As the team gained confidence in their improved capabilities, they dramatically accelerated the pace to migrate additional sites. The process also significantly decreased the time it took to identify and resolve an issue.
When clear operational strategies are linked with effective OKRs, teams thrive. As Klau says, “You could see them lean into that and get excited about the process.” Thanks to OKRs, “they’d started to see what they were capable of.”
Conclusion
Regardless of which organizational strategies you put in place, use OKRs to align ideas with great execution.