ExO - Exponential Organizations
Enterprise Evolution: How OKRs and ExOs Rewrite the Rulebook for Large Corporations?
Have you faced challenges while implementing OKRs in a large organization? Is the resistance to change a familiar scenario? Over nearly seven years, our experience across various industries has shown that larger organizations often resist alterations to established processes.
The larger the organization, the stronger its immune system, pushing out everything that disrupts the established order.
This resistance manifests not only with the introduction of the OKR system but also with new business initiatives spurred by OKRs. Does this resonate with your experience?
OKR (Objective and Key Results) is a strategic execution framework that empowers organizations and teams with flexibility, adaptability, which means agility, focus, and alignment to drive progress toward clear and ambitious objectives and key results.

It is also a continuous discipline and communication culture that encourages employees to be actively involved in setting goals, measuring progress, celebrating success and learning from lessons.
Here are some of the typical problems we encounter:
  • Top management is significantly distanced from team leaders and often unwilling to participate in OKR setting sessions, let alone track them, delegating this to lower levels. Those, without sponsor support, gradually lose interest and the necessary discipline to maintain the system.
  • Legacy in the form of KPIs and a bonus system is so ingrained in the organization's DNA that the mere idea of detaching results from money causes rejection. As a result, companies often revert to familiar KPIs, dubbing them with the trendy term OKR.
  • Aligning OKR between all levels and teams takes so much time that even the most devoted run out of patience.
  • Initially, in planning sessions, employees, inspired by the opportunity to set ambitious goals, propose breakthrough ideas that are either immediately rejected or, even worse, make it into the OKR but are simply ignored in the course of work. Many times, I've come across wonderful ideas for goals and key results, all painted in red on an OKR dashboard.
The list of pains can go on, but is there a solution? Of course, there's no universal recipe, and often the answers are obviously hidden in the problem's description - engage top management, review the reward system, etc. But you can also go back to the beginning and explore the question - why does this company need OKR, for what and where is it appropriate.
OKR is a tool for implementing strategic changes. That's why it's essential for top management to at least define and communicate a clear strategy and direction of changes to employees. But it's also important to understand that changes vary.
In practice, such degrees are often conventionally distinguished:
  • Run - current activity, possible linear growth of quantitative indicators, improvements, optimization of familiar activities.
  • Easy change - simple changes where there's a clear action plan, best practices, examples of similar successful changes in other companies, predictable results.
  • Hard change - significant changes, creating something new where the end result isn't entirely clear because there are no such implemented examples from other companies. However, the company's business model remains the same.
  • Disrupt - such innovations that make previous practices obsolete. Typically, the company's business model is transformed.
In our experience working with various companies, we encountered two frequent mistakes in the application of OKRs:
  1. All Run (operational) activities were included in OKRs, leading to numerous goals and no noticeable advantage from using OKRs. This is often seen at the enterprise level in teams that are already burdened with current tasks and ambitious KPIs. As a result, they aim to avoid increasing their already high workload. Without significant improvements in business indicators and movement towards strategic goals, motivation to use OKRs waned, and companies reverted to their previous management approaches.
  2. In a burst of enthusiasm, disruptive ideas were included in OKRs. These ideas were either ignored or shifted the focus and resources from primary activities, adversely affecting business indicators. Consequently, this led to dissatisfaction and disappointment from top management and other employees, leading to the abandonment of OKRs. Although in this situation, OKRs would be the best way to manage change, the approach to it needed alteration.
As one solution, we'd like to share the concept of developing Exponential Organizations (ExO). This idea gained popularity about a decade ago after the release of the book "Exponential Organizations" by Salim Ismail and Peter Diamandis. The research behind the book focused on the world's most successful companies and identified key drivers of their growth. An ExO is defined as an organization that grows its key financial indicators annually by two times or more. These companies also make a distinctive, substantial impact, showcasing exceptionally high productivity compared to similar organizations, all thanks to their innovative organizational models and rapidly evolving technologies.
If, at the very inception of a business (during the startup phase), several of the 11 attributes of an exponential organization are implemented, the likelihood of success multiplies. To sequentially apply different growth drivers, OKR serves as the primary system, focusing the entire team on what's most crucial at any given time. It also assists in adhering to the selected course or swiftly changing direction based on data from experiments.
But what about existing businesses, especially those with entrenched structures, established over years, with well-defined and regulated business processes and models?

Here it's essential to distinguish between the Core business and the Edge. The Edge represents the "fringes" of an organization - autonomous teams that derive resources from the core organization but don't directly impact it. They are also referred to as "internal startups".
The purpose of these autonomous teams is to develop disruptive ideas. Through continuous experimentation, they aim to nurture an exponential organization that, in the long run, could potentially outpace the core business and then replace it. Typically, this comes with a change in the business model, which could be devastating for the core business.
As you might've guessed, OKRs serve as an ideal system for enacting a disruptive strategy, which itself is also a hypothesis subject to revision. Thanks to OKRs' flexibility and data-driven nature, they foster an experimental culture aimed at achieving the best business outcomes.

Conversely, in the Core of organization, OKRs can also be beneficially implemented, but for driving strategic changes that enhance the current business model, not disrupt it. Thus, OKRs in the core part might be more realistic, less ambitious, but crucially must be clearly supported at all levels. They aid in vertical and horizontal alignment, helping teams prioritize tasks. 
It's also essential not to include operational (Run) activities in OKRs and to maintain an appropriate balance of Run and Change within teams. This balance is determined by the team itself and can vary from period to period. That's why a team shouldn't have too many OKRs – one to three change objectives at most.

In conclusion, it can be said that large corporations, faced with the need to adapt to a rapidly changing world, can significantly enhance their competitiveness by combining the OKR methodology with the principles of ExO. It's important to understand the uniqueness of each enterprise organization and strive for an optimal balance that ensures effective forward momentum while maintaining the stability of the core business.
Discover Your Organization's Exponential Readiness
Determine the extent of your organization's exponential capabilities and identify areas for enhancement.
Dive into our Exponential Quotient (ExQ) survey now!