Summary

Discover how aligning organizational strategy with OKRs drives long-term business success. Learn the five organizational strategies, including corporate and business strategies.

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 who 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 achieving 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 cause teams to 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 to 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, 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:

Competitive Strategy

Compares your firm’s strengths, weaknesses, and differentiators against your competitors and uses it to determine the right steps 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 80s, Intel was fighting for survival. Motorola, their biggest competitor, had created a faster microchip that was easier to program. Their sales team realized that unless they won more designs than Motorola, their days were numbered. Overnight, Intel’s strategy changed to ‘dominate the market’ for microchip sales: enter Operation Crush.

To achieve their competitive strategy, their team used OKRs to 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 they’d steered customers to see the long-term value of Intel vs. the short term ease of use offered by Motorola, and bested the competition.

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 birds-eye view for what they need 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 startup, 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 some years, their corporate strategy balances towards growing existing solutions; and other years it favors more R&D to find new solutions. OKRs help their complex team find synergies and coordinate effectively as their top priorities shift in service to their long-term mission. They enable Ariadne to mobilize limited resources quicker in order to address the highest priority gaps.

Business Strategy

A more granular version 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 they wanted to attract clients outside of Brazil. They knew such a large undertaking might impede their speed of expansion. OKRs helped remind everyone of their strategic choice to become a global company. OKRs helped constantly communicate the importance of their business strategy to acquire customers in Mexico.

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 it is a priority to execute a functional strategy, 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. They turn 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, reduce complications, and NICU admissions. The content teams also set OKRs to increase the number of early interventions that arise from patients who engage with their educational resources. Both examples contribute to achieving their functional strategy for improving clinical care.

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 they would navigate disruption from the supply chain to safety protocols and remote workflow. In 2024, many organizations are creating strategies for how to deploy generative AI effectively. From detailed planning and management of processes, to resources and technologies, good operating strategies enable organizations to work seamlessly.

Using OKRs for Operating Strategy

When Rick Klau left Google Ventures to become the state of California’s Chief Technology Officer for Innovation, 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, eliciting 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 radically 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.

If you want to learn more about using OKRs to align your organizational strategy, take our OKRs 101 course or sign up for our Audacious newsletter.