OKRs (Objectives and Key Results) are in the driver’s seat of almost every successful company in 2021, and in this article, we’ll look at why they are considered so important to so many industry leaders– and how to implement them in your business for maximum benefits.
OKRs’ Fiftieth Birthday
OKRs are nothing new. This strategy-execution framework’s concept dates back to 1971 at the microprocessor giant Intel. Intel’s resident management guru Andy Grove (a Hungarian émigré born András István Gróf) created OKRs as a way of quantifying individual and team achievement within a company, rather than obsessing over qualifications or hierarchies. It was a bottom-up, rather than top-down management approach. Employees can set their own OKRs in collaboration with their managers, and are held accountable for them throughout the quarter.
We must realise –and act on the realisation– that if we try to focus on everything, we focus on nothing
The other thing that OKRs do is maintain alignment within an organization, which is why they have proved particularly popular with fast-moving, ever-expanding Silicon Valley companies. Making sure everyone is on board with your corporate direction is much easier when you have the full transparency that implementing the OKR framework provides.
Grove effectively re-invented professional accountability and objective setting, and Doerr further systematized it at Google. The concepts are not complicated. Objectives are outcomes a company sets for itself, and the Key Results are the measurable components of those outcomes.
Because OKRs are highly scalable, it has become a key management and organizational tool for many top companies. It works at individual, team, department, and company level, and lends itself very well to further systematization via SaaS platforms, which help companies devise and maintain their OKR focus.
How to Initiate OKR Adoption
Those who have implemented an OKR-based culture within their organizations have a few pieces of advice to share with teams trying to start implementing OKRs:
- Explain the why and how: It won’t do to simply announce that you’re adopting OKRs without giving some of the background to your decision, and explaining why you’re taking this approach. Introducing OKRs helps get your employees to buy into the framework– especially if your company culture tends to be change-resistant. Nonprofits and traditional industries may face greater obstacles in developing an OKR culture than firms within the digital economy that are used to constant iteration.
- Start slowly: Don’t begin by making each employee state his or her OKRs, or by trying to instill it across the whole company – this is a recipe for chaos and disaster. It pays to lead by example– especially if your business doesn’t have an open and learning-oriented culture. Start adopting OKRs with upper management, and demonstrate their willingness to take a goal-orientated stance. Alternatively, trial OKRs with a less resistant team or department, then roll it out when you can exemplify the advantages it brings.
- Move Horizontally or Vertically. When expanding OKR implementation, take a horizontal, top-down, or bottom-up alignment approach. However, don’t try to do all of these at once. If departments are dependent on one another to succeed, horizontal alignment might be the best approach. Meanwhile, if the C-suite usually sets priorities, top-down alignment works best; but if employees and teams have their finger on the pulse of what changes need to be made, bottom-up alignment can be the best approach.
- Beware of Pockets of Resistance Some teams will be happier to adopt OKR than others. Your sales or marketing departments are probably used to measurable metrics (KPIs) and goal setting, so it won’t be a radical shift for them. Your R&D or design departments may feel differently. Stress that OKRs need not be task-specific, and in fact value driven OKRs often work better.
For more on value driven OKRs, see below.
Pay attention to these hard-won lessons as your company adopts OKRs and the process should progress smoothly, without undue struggle. There are several other aspects of OKR to bear in mind as you develop your strategy – one is the notion of “cadence” and another is “value”.
What is Cadence and How does it Relate to OKRs?
Cadence describes the cycle of OKR reviews that a company undertakes, to check that it is still on track. The most essential of these, advanced by most OKR practitioners, is the weekly check-in.
This is a look at how the corporate and local objectives are being met, where any problems may lie, and what adjustments need to be made in order to meet the set goals. It is not about identifying and assigning blame, but more about locating where support may be required, or revision necessary.
In addition, it is typical to have quarterly assessments at a company-wide level and a major annual review. Most companies will be used to working to such a cadence, since quarterly and annual reporting has long been a standard requirement. However, these corporate get-togethers are far more about internal alignment than external communication. These sessions are an opportunity to measure progress against goals and, again, revise where necessary.
Finally, depending on your management structure, managers may have regular OKR-based one on ones with employees, across their whole teams, to ensure that individuals feel supported and that their contributions are useful and appreciated. Once again, these are not disciplinary procedures, they are corporate health checks. The baseline assumption is that anything which isn’t working is either misaligned, or else OKRs may be unrealistically set. Remember that, at an individual level, OKRs should be set by each employee, not by their managers (although managerial sign-off remains part of the process).
OKR is a methodology not a specific prescription; every company must set its own internal rhythms for introspection and accountability.
The best way to manage OKRs is to use an OKR software. Profit.co has the most intuitive OKR software on the market, with free 24/7 live support chat and features that will keep OKRs at the center of all aspects of your company– from tasks, to performance management, to employee engagement. You can get started with your OKR adoption today completely free by signing up with Profit.co!
Key Results – Values not Tasks
One important aspect of OKR worth emphasizing is that objectives should be set with measurable outcomes which can be quantified. Although key results can include things like “launch product X” or “develop three designs for Y”, it is often more helpful to set a goal which may not be fully achievable. This may seem counter-intuitive, but it is very much part of the OKR culture to aim high, even if you’ll always fall a little short. OKRs don’t take the form of a checklist of tasks, rather they are a public pronouncement of your ambitions for the relevant period (weekly, quarterly, annually).
For instance, value-driven, quality key results might include:
- Increase customer uptake from 23% to 53%.
- Develop a new product line of five viable items.
- Compile an email campaign targeting 10,000 potential new customers.
The goal here is to have something concrete to measure achievement against. Do you achieve a 30% increase? Do you have five new viable products? Did you hit your goal of addressing 10,000 new customers? If you didn’t, was this due to the goal being unrealistic?
Key Roles within a successful OKR Implementation
There are various key roles in the implementation team you’ll need to fill. These must be people who are fully on board with the process, who understand exactly what needs to be achieved.
These roles include:
- Executive Sponsors – these are champions at the top levels of the company who will promote the aims and approaches of OKR, to help bolster any flagging enthusiasm occurring at lower levels of the hierarchy.
- OKR Champion – A departmental head who will spearhead the development of your OKR strategy and help push it through.
- Team Ambassadors – Committed leaders, all of whom need to be co-opted into driving the development of OKRs within their departments. This can be C-Suite executives as well as departmental heads.
- Individual Employees – Ultimately, everyone must be part of a successful OKR implementation, so each staff member has a role to play in making it work. Resentment will spread if committed employees see others neglecting to work to their stated OKRs.
For more insight into how Google sets its OKRs, Google Venture’s Rick Klau gives an excellent presentation in this video.
Transparency – a Vital Aspect of OKR Implementation
Another of the radical concepts behind OKR, which was adopted with enthusiasm by Silicon Valley companies, is full transparency and visibility throughout the organization.
At Google, OKRs throughout the entire company– from CEO Sundar Pichai down to the newest hire– are completely visible to all employees. This is quite a brave notion for traditional businesses more used to conducting performance reviews behind closed doors. But it works for several interesting reasons:
- Public Goals are Achievable Goals: When you set goals that you know everyone else in the company can inspect, you’re more likely to make them realistic. This is allowing for the fact that they should also be aspirational. In other words, you shoot for the ceiling, if not the stars. You don’t make outrageous claims where you’ll only ever attain 30% of what you set out to. Human nature means you’ll tend to set goals where you might score 70% or more.
- Public Goals Create a Self-Perpetuating Work Ethic: When you know your ambitions are on display, you are less likely to be side-tracked to tasks which do not contribute to achieving those aims. At the back of employees minds is the fact that they will inevitably have to give a progress report for each of their OKRs. Without requiring heavy-handed management, conscientious staff can be relied upon to police their own workloads and targets.
- Public Goals Make Integration and Alignment Easier: When you state your own goals, it is easy to see where these are misaligned with those of your colleagues. Nobody needs to be working in the dark, unsure of what other colleagues are doing, when they can simply log onto an OKR platform, look up the colleague in question and read off their OKRs. Any issues or incompatibility of goals can be discussed at the next OKR review meeting.
- Public Goals create Internal Competition and Reward Ambition. When everyone can see what everyone else has promised, it gently encourages employees to be more ambitious in what they are offering. While traditional firms offer financial bonuses, benefits, or promotions as primary methods of promoting internal competition, OKR-adopting firms simply render it obvious who is performing at the highest level – the individuals setting the most ambitious targets and regularly scoring high against them.
For these four reasons, being highly transparent across the whole company promotes an egalitarian approach to performance review. It might be likened to the way scientists must promote their hypotheses by publishing articles which are then peer-reviewable by anyone. To succeed as a scientist, work must be as widely accessible as possible. Similarly, in adopting OKR, corporate entities rely on gentle peer pressure to motivate staff and maintain strategic alignment.
How OKRs relate to SMART Goals
Many will be familiar with the SMART designation of goal-setting. SMART Goals traditionally stands for Specific, Measurable, Achievable, Realistic and Timely. What OKRs do differently is replace “achievable” with “ambitious”. The reason for this is the belief that goals should be aspirational, rather than benchmarks that can be ticked off.
Scoring for the metrics of OKRs at Google is carried out periodically by individual employees. They assign themselves a grade, a decimal figure between 0 and 1, for between four to six individual OKRs. If an employee scores a 1 across the board, this is viewed with suspicion, as a sign that the employee may not have set sufficiently ambitious OKRs. A “better” result would be 0.6 or 0.7, showing that the individual has been striving towards a challenging goal.
How to Track OKRs Across Time
With every employee devising their own stack of OKRs, and the system implemented across a whole organization, it can be difficult to have full managerial oversight over all those metrics.
Fortunately, a host of SaaS solutions have been devised to help manage the process. Many of these work alongside project management and communications tools, either by being complete business management systems or through a host of API-driven integrations with other productivity apps and platforms.
These OKR platforms allow companies to track and measure their OKRs, and display them at the individual, team, department, or corporate level on dashboards, and by means of customizable reports. Stakeholders, boards, and senior management love the insight this level of transparency provides, and executives find that it’s much easier to give progress reports and updates, when performance metrics are at their fingertips.
OKR platforms can streamline your OKR adoption. Want to learn how Profit.co can launch your OKR program efficiently and effectively? You can book a free demo with our OKR experts to discuss how your business can benefit from Profit.co!
OKRs: an Engine for Growth
While it is true that not every company wants to adopt a Google-like culture of total transparency and accountability, OKRs are a tried and tested method of achieving impressive performance results. It is worth considering whether the massive success of companies such as Google, Amazon, Netflix, LinkedIn, Deloitte, Siemens, Adobe and others can in part be attributed to their adoption of OKR, and its ambitious roadmap for growth.