When your organisation is looking for a way to set goals, you might want to consider the OKR (objectives and key results) process that Google, Twitter, LinkedIn and other high-achieving companies use. It is a simple management framework that helps everyone in the organisation see progress toward common goals.
Organisations of every size and representing every industry are always looking for ways to drive performance. It’s been a widely accepted practice to set organisational, department and individual goals to plan where you want to go, but many organisations practice a top-down goal-setting framework that often ends up getting stuck in the phase of figuring out what goals to set rather than moving through to achieving those goals. The Objectives and Key Results (OKR) framework offers an effective alternative that’s used in practice by Google, Spotify, Uber, Twitter, Airbnb and more.
What are OKRs?
OKRs, Objectives and Key Results, are a simple tool that helps an organisation achieve goals by building specific and measurable actions as well as communicating and monitoring progress toward them.
Objectives define where you want to go. They are short and inspirational. Companies typically create three to five high-level objectives per quarter. Objectives should also be ambitious. While choosing the right objective is one of the most challenging aspects of this practice, when you do it correctly you’ll be able to tell if you have reached the objective.
Increase profit by 20%
Key Results are the deliverables that you define for each objective so that you can measure your progress toward achieving that goal. Each objective should have two to five key results. And all key results need to be measurable.
Example key results:
Reduce production costs by 10%.
Implement new shipping software by August 2018.
The concept of OKRs was first developed by Andy Grove in the 1970s when he was president of Intel. The idea became popular when John Doerr, who also worked with Andy Grove at Intel and later became a venture capitalist and early investor in Google, introduced the concept to Google in the 1990s, which made it into a popular approach for the tech companies in Silicon Valley and beyond. Today, companies and not-for-profit organisations across all sectors are using the tool.
John Doerr’s formula for OKRs is:
I will (Objective) as measured by (set of Key Results).
Key Principles of OKRs
There are several key principles of the OKR goal-management framework, which include:
- Simple and agile: OKRs are typically set monthly or quarterly so that an organisation is nimble enough to respond to changing conditions. The framework is simple and easy to understand and use which results in organisations investing time and resources into achieving their goals rather than the process to define goals and communicating to everyone in the organisation what they are.
- Creates clarity and alignment within an organisation: OKRs are public. Since they are transparent it helps ensure alignment throughout all levels and departments in achieving the objectives and to ensure everyone is moving in the same direction.
- Bidirectional: OKRs do not cascade from the top to the bottom. The strategic OKRs are set and then each group and individual builds tactical OKRs that align with the strategic OKRs simultaneously. This creates a much more efficient and effective process than cascade goal-setting models.
- Encourages collaboration: OKRs make it easy to understand how every employee in the organisation has a critical role to play in achieving the strategic OKRs. Since everyone is moving forward toward a common objective, it makes it clear that no one can accomplish the ultimate goals alone.
5 OKR Best Practices
In addition to the key principles there are some best practices that will turn the OKR approach into a powerful goal management framework, which include:
1. It is okay to only achieve 60-70% of OKRs
If your organisation achieves 100% of its OKRs, they are likely to be too easy and you need to set more ambitious goals.
2. OKRs are not an employee evaluation tool
In order to have employees feel safe setting ambitious OKRs, they need to know they won’t be negatively impacted if they don’t achieve every OKR.
3. Everyone needs to get on board
The commitment to OKRs needs to be company-wide. The process won’t work if only a portion of employees and management are committed.
4. Process needs to be lightweight
Don’t overburden the process with unnecessary meetings or documentation. Part of the allure of the OKR process is that it is lightweight. Companies that are successful in deploying OKRs keep it simple as it was intended to be.
5. Patience with your organisation as you learn the process
As with any management tool, it might not be perfectly executed the first time you try. Give yourself and your organisation time to become proficient with the OKR process.
Since some of the most successful companies of our time rely on the OKR process it just might be able to drive your organisation’s success as well. I have helped many organisations create strategic goal management approaches and would be happy to help yours.