OKRs (Objectives and Key Results) are a goal-setting methodology that helps companies to align and focus their efforts. Executed well, they create a workplace where everyone knows exactly what they need to get done, and feels motivated to do it.
In this article we’re going to look at OKRs in some detail; specifically where they came from, their elements, and some of their key benefits and challenges.
The history of OKRs
“There are so many people working so hard and achieving so little.”
Andy Gove, CEO Intel
The OKRs story begins in the late 1960s, with a Hungarian immigrant called András István Gróf. Having survived scarlet fever and then both Nazi, and communist occupied Hungary, András escaped for the USA, where he began a new life as Andy Gove. He joined Intel as their third employee and made his way up to COO.
As Intel expanded, he developed an innovative approach to management called ‘OKRs’. In his book, “High Output Management.” he distilled OKRs into two very simple questions:
- Where do I want to go?
- How will I know when I have got there?
In 1974, John Doerr joined Intel as a salesman and was introduced to OKRs at a course taught by Andy Gove. Captivated, he introduced OKRs to Larry Page and Sergey Brin when they were founding Google.
OKRs are still central to Google’s culture and management style today and have been adopted by other behemoths such as Twitter, Spotify, Linkedin, Amazon, and Uber.
What are Objective and Key Results?
“I was quickly able to tie my work directly to the company’s goals. I kept my OKRs pinned up in my office and I wrote new OKRs every quarter, and the system has stayed with me ever since.”
John Doerr, venture capitalist, and tech investor
OKRs consist of two main elements:
- Objectives: an aspirational statement indicating direction towards an outcome.
- Key Results: 3-5 success criteria for each Objective, presented on a 0-100% scale or any numerical unit you choose.
To be effective, OKRs need to be written in straightforward language, have clear ownership, and be trackable over a specified period of time.
OKRs should align with each other, typically connected from the top down. This is known as a cascade. Cascading OKRs helps to provide focus and clarity by showing a ‘Golden Thread’ to connect the work that teams are doing with the strategic goals of the business. This gives teams an understanding of ‘why’ they are working on the things they are working on, while giving leadership teams an understanding of progress.
Objectives: “Where do I want to go?”
An Objective is a statement of intent. It’s something your organisation or team wants to achieve, with an indication of the desired outcome. They can be inspiring and usually focus on the large aims of the company.
Aim to create 2-4 objectives per team. They should be:
- Engaging – concise, memorable, and aspirational.
- Aligned – to each other and to your organisation’s strategy.
- Owned – by someone/a team who can oversee their execution.
- Achieve record online sales
- Create a simple, yet powerful website
Key Results: “How will I know when I have got there?”
“The key result has to be measurable. But at the end you can look, and without any arguments: Did I do that or did I not do it? Yes? No? Simple. No judgements in it.”
John Doerr, venture capitalist and tech investor
Under each Objective sits a series of Key Results, or ‘KRs’. These help you understand whether you’ve met your Objective. They should be quantifiable with clearly defined numeric measures. (This eliminates opinion when you’re assessing whether you’ve met your Objective.)
Effective Key Results
Aim to create around 3-5 KRs per Objective. They should be:
- Specific – focused on one area to measure.
- Challenging – ideally stretching a bit beyond the team’s capabilities.
- Defined as ‘committed or aspirational’
- Tangible – something you’re able to mark progress against.
- Quantifiable – for example 10%, 10 points, or £10,000
Key Result examples
- Objective: Achieve record online sales
KR: Hit £100,000 sales for Q1
- Objective: Create a simple, yet powerful website
KR: Average time spent on website increases by 35%
A set of Initiatives typically sit under each Key Result. These are sometimes referred to as the ‘hypothesis or bets’ because each Initiative describes a specific project or deliverable presumed to be required to successfully complete the Key Result.
Initiatives are often a series of experiments undertaken at the start of an OKR. When one of these experiment-based initiatives yields useful results it can be built upon and developed further in terms of budget, resources and/or time. On the other hand, initiatives that are making no impact on the progress of the KR may need to be stopped in favour of the ones that are.
Using the same example as earlier, this might look like:
Objective: Achieve record online sales
KR: Hit £100,000 quarterly profits
Initiative: Launch ‘refer a friend’ campaign to a small subset of our customers
Objective: Create a simple, yet powerful website
KR: Average time spent on website increases by 35%
Initiative: Conduct a series of small workshops with a cross-section of customers to find common pain points on the website
Committed and aspirational OKRs
“If you set a crazy, ambitious goal and miss it, you’ll still achieve something remarkable.”
Larry Page, co-founder of Google
Companies often differentiate between committed and aspirational OKRs:
These sorts of OKRs absolutely have to happen and often relate to a revenue or growth target. They are usually owned by an individual or team and are set to be achieved within a month or quarter. The expected score is 100%.
As the name suggests these OKRs are more ambitious, and sometimes known as ‘Moonshots’. They may be owned by an individual or team, and then reassigned as they roll over from year to year. The expected score is around 70%.
The benefits of OKRs
“OKRs have kept me and the rest of the company on time and on track when it mattered the most.”
Larry Page, co-founder of Google
Alignment and clarity
Cascading OKRs down from company strategy to the team and individual level means everyone’s efforts become linked together. Rather than teams working on unrelated things, all efforts are focused and coordinated, giving a sense of clarity that can otherwise be missing.
Where previously a company’s wider strategic goals were perhaps only known to senior management, OKRs are visible to everyone at all levels of an organisation. This helps foster collaboration and a sense of purpose by giving teams an understanding of what everyone else is working on and opportunities to work on shared goals together.
Because Key Results are quantifiable, decisions become informed by fact and data rather than a hunch or opinion. By assessing the progress of your OKRs, you can monitor if you go off-course, and take action to make a change before problems arise.
A deeply engaged team
When an organisation’s wider Objectives are transparent, each individual understands their unique contribution to the organisation’s success. By making teams directly accountable for OKRs each quarter, engagement increases along with a greater sense of purpose.
OKRs distribute decision making around the company and allows different teams to work on KRs related to the same objective – driving collaboration and opportunities to innovate.
Focus on outcomes
Linking Initiatives to quantifiable Key Results (or outcomes) means the impact they’re having can be monitored. Then, if something is seen to be having an impact on the KR it can be invested in and developed. On the other hand, the things that aren’t moving the dial, can be stopped, and the results recorded and learnt from. This allows the whole organisation to take a more entrepreneurial approach and helps the ROI become clearer.
The challenges of OKRs
Although the idea behind OKRs may seem simple, the implementation takes time and patience. Here are some things to bear in mind as you consider whether OKRs are right for your organisation.
Successful implementation of OKRs takes commitment and buy-in from the top. Many companies will trial OKRs in smaller teams to get a feel for them before rolling out company-wide.
Failing to achieve your OKRs
Objectives should be aspirational and ambitious in order for a company to grow. With this in mind, not meeting an Objective is inevitable and can affect morale. This can be mitigated by providing the right education around OKRs and their purpose, and an environment of Psychological Safety.
Keeping OKRs updated
Even the best-intentioned organisations sometimes spend weeks or even months creating OKRs, only to have them languish in a spreadsheet. Software platforms like Just3Things are designed to support cross-functional teams in setting OKRs, while ensuring that checking-in on OKR progress is easy.
Drafting effective OKRs
Writing OKRs can be deceptively time-consuming. Teams need to be trained and processes followed to make them effective and consistent across the board. It’s a good idea to draft OKRs in team meetings so they can be reviewed altogether. This also ensures they are relevant to the teams working on them.
As you can see, adopting OKRs is a journey you set out on, not a single event. Executed well, they can transform internal culture, increase collaboration and efficiencies, and ultimately the quality of your business outcomes. An OKRs software platform like Just3Things makes creating, communicating and tracking OKRs simple. Read more about our platform, or get in touch to find out more.
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