WHAT EXACTLY IS OKR?
OKR is an acronym that stands for Objectives and Key Results. It is a framework for defining and tracking objectives and their associated outcomes (key results). It is used extensively by many high performing enterprises around the world to help drive those organisations to success.
The term OKR was originally coined by Andy Grove, CEO at Intel, in the early 1970s. Intel were looking for a way to focus their entire organization around a mission to own the semiconductor market at a very competitive time in their history. OKRs gave them the advantage they needed to gain the market share they wanted and to overtake the competition.
Twenty years after Intel began using OKRs, John Doerr, an early stage Google investor, gave a presentation at Google, introducing them to the concept. Google were just 40 employees at the time. Google adopted them straight away and OKRs have been credited, in part, for Google's meteoric growth ever since.
John Doerr's book, "Measure what matters", provides a great introduction to OKRs.
The basic concept behind OKR is simple. A goal should be clear and measurable.
The concept may be summarised as follows:
- Each OKR should consist of a very clear, unambiguous and inspiring objective that gives everyone a clear idea of “where we want to get to” and;
- A set of outcomes (or key results), which enable us to determine, without ambiguity, whether the outcome of the objective is successful.
- Lower level OKRs should align upwards to higher level OKRs
- Progress towards objectives and key results should be updated regularly and two-way feedback between employee and manager should be frequent.
- OKRs should be graded at the end of each goal period so that lessons learnt can be applied to the next goal period.
Benefits of OKR
Implementing OKR in your organization can provide a number of benefits, depending upon the size and structure of the organization. Historically, OKR has been used in larger enterprise organizations, but small and mid-size businesses are also starting to see clear benefits for introducing the methodology in their own companies. Here are 6 clear reasons why you should consider OKR in your business:
OKR helps communicate company priorities
One of the key features of OKR is that it provides a mechanism for letting employees create goals that align with the company's priorities. OKR tools, by their nature, tend to present company priorities to staff in a very clear and effective way.
When company priorities are communicated effectively to staff, it achieves the following.
- You avoid confusion and miscommunication around the direction the company is heading.
- You make it easier for employees to focus on priorities.
- Your employees become more inspired.
- You achieve greater “buy in” from employees towards company priorities.
OKR helps ensure employee efforts are ambitious and linked to company goals
By asking your employees to focus on goals that are aligned with the company’s goals you ensure that everyone is prioritising on the right things and you intensify their contribution to the company. And when your staff can see how what they do contributes to the bigger picture they feel more engaged.
The idea behind OKR is that employees set a mixture of committed goals and aspirational goals. When you ask your employees to set themselves challenging aspirational goals and not simply goals that they know they will achieve, they tend to be more motivated, resulting in higher levels of engagement.
OKR encourages outcome orientated goals
A common mistake that many organizations make when setting goals is to forget about outcomes. They instead focus on action-based goals. OKR measures the success of an objective using key results, which, by their nature, are outcome focussed.
By focusing on outcomes you achieve the following:
- Employees become more accountable.
- Goals are more impactful on the bigger picture.
- Progress can be measured in more meaningful ways.
- Employees are more likely to achieve more.
OKR gives managers the tools to coach their teams and give regular feedback
If companies are seeking exceptional -- not merely incremental -- performance gains, they must invest in training managers to be inspiring coaches. Today's employees require ongoing coaching conversations to perform well. An informal weekly check-in lasting less than 15 minutes can be incredibly powerful if it is meaningful and focused. These types of conversations don’t come naturally to most managers.
Having a check-in feature as part of an OKR tool that can provide some structure to these conversations is extremely valuable in these cases.
It can help managers understand what is going on in their teams and can enable them to spot opportunities for giving praise for great achievements. It can also help managers identify obstacles preventing employees progressing towards their goals and give them a platform from which to coach the employee towards successful outcomes.
OKR keeps employees regularly focussed on their goals
Once goals have been set and agreed, it’s really easy for employees to forget all about them until it’s time to review them. This is a common behaviour that needs to be avoided at all costs as it loses many of the benefits associated with setting goals.
For goals to be effective, they must be forefront in everyone’s minds. If things don’t go to plan and a goal looks like it’s not going to be achieved, people need to know about it straight away so that remedial action can take place. Without regular focus on goals, the goal setting process just becomes a fruitless exercise. Continual focus on goals and their outcomes is what drives forward productivity.
OKR encourages transparency of work across the organization
When organizations become more transparent about their goals and the reasons behind the decisions they make, they experience a number of benefits.
Firstly when information is shared openly, hierarchies are lowered and trust increases. Employees then feel empowered to make faster, more informed decisions and this can help the speed at which the overall organization performs.
You’re also much more likely to get better “buy-in” to your company strategy by your employees.
How To Write OKRs
OKRs are more than just goals. They are a way of connecting employee goals with the company strategy, so taking care to write well crafted OKRs will maximise the chances of the company successfully executing on its strategy.
For an objective to be effective, it should satisfy the following criteria:
An objective should be clear
An Objective should describe what you want to achieve in a clear fashion. Everyone in the organization will have sight of it, so it needs to be written in a form that everyone can understand. If it needs some context to help people understand its importance, add a description and provide the necessary background information. However make sure that people can read the title of the objective and fully understand its intention. Avoid the use of acronyms and other such jargon unless you know that everyone viewing the objective will know its meaning.
An objective must align with strategy
Your objective should support a company objective, either directly or indirectly. Objectives that are not aligned serve little purpose in terms of their contribution to the overall company strategy.
Since your objectives will be supporting the organisation’s strategic objectives, it is critical that the objectives that you decide upon will achieve the following:
- They will help the organization meet its objectives. If the objective you choose will have no impact on the organizations’s objectives then it is probably not the right objective. Ask yourself: Does this objective help the company achieve its goals? If the answer is no, strike it off.
- They are aligned with the company long term strategy? Familiarise yourself with the organization’s annual goals when crafting your objectives. Is your objective inline with the company’s longer term strategy?
An objective should be ambitious but achievable
Objectives should include a mix of committed and stretch goals. The stretch goals should be challenging. Challenging goals energize employees. Ideally employees should set themselves goals that they believe they have a 70% chance of achieving. This probability of success will ensure that goals are ambitious enough to challenge but not so challenging that they are unattainable.
Never tie compensation directly to the outcome of OKRs. As soon as this happens, team members will not commit to stretch goals. Instead they will game the system to find goals that they know they will achieve in order to be compensated.
Objectives should be inspiring
Goals must be inspiring. Write them in such a way that those people that read them, or who are expected to align with them, will be excited and inspired. Probably the most inspiring objective ever was set by John F Kennedy, when in his "moonshot" speech in 1962, he challenged the country to send a man to the moon and bring him back to earth again before the decade was out. Clearly, not all objectives can be as exciting as this, but it's important to inspire and enthuse all those who are involved, in some way, with the objective.
Objectives should be time limited
OKR provides an implicit deadline for objectives. By default they will be expected to complete by the end of the goal period. Sometimes though, they will have a different deadline. Perhaps they will be expected to complete earlier as other goals will depend on them. Sometimes they will transcend multiple goal periods and have a deadline beyond the end of the current goal period. If this is the case then set an explicit deadline.
Objectives should be measurable
It is critical to be able to know, at the end of a goal period, whether an objective has been achieved or not. It must be measurable. OKR uses key results as the measure for whether a goal has been achieved. An objective may comprise one or more key results that define what a successful outcome will look like for an objective. If every key result of an objective has been met, then the objective will be considered to be achieved.
Crafting Key Results
An effective set of key results will define, without ambiguity, whether a particular objective has been met.
A key result should have good coverage
A set of key results must have good coverage and must also be very specific in terms of the defined outcomes.
If you can say with absolute certainty that the goal will have been achieved if each of the key results are met then you know you have key results with a good coverage.
Key results should be quantitative and outcome oriented
To make a key result specific, you should try to ensure that it is outcome oriented rather than task oriented and that it includes a numerical value.
Key results written in a task-oriented fashion tend to be ineffective and don't engender much accountability on the person responsible for the key result. An example of an task oriented key result is:
“Attend the Channel Partner Conference and speak to possible channel partners”
Whilst it is perfectly possible to say with absolute certainty whether or not the above key result was met, there is no real outcome associated with it. It would be more effective if it was re-written with an outcome in mind. For instance:
“Sign up 3 new channel partners that each contribute at least $10k in revenue within 2 months”.
A key part of OKR is the requirement for department, team and individual goals to align up to a higher-level goal and ultimately to the company priorities. This ensures that employees’ efforts are focused on helping drive the organization to its desired state.
OKR should include a healthy mix of downward cascading of goals and upward alignment of goals. Employees should take an active role in helping decide the goals that should support the company’s OKRs and, in fact, when employees are given more autonomy around setting their goals, they are more engaged, more committed and more likely to achieve them.