(Objectives & Key Results)
OKRs, which is an abbreviation of 'Objectives and Key Results', is a management goal-setting methodology that's become commonplace amongst today's high-performing businesses across sectors, sizes, and geographies. In this post, I offer a quick guide to OKRs: what they are, what benefits they provide, and where to start. I've also created an OKR Template for you to download and use below. This provides a framework for constructing your OKRs in the context of your 'Big Picture' thinking, and with an appreciation and understanding of any potential enablers and blockers. The OKR Template encourages you to focus your thinking so you can get everything onto one page, thereby offering a concise, accessible and consumable reference that you and your team can use on an ongoing basis to guide your planning, actions, and business.
A quick history
Since the 1950s, companies have adopted a variety of techniques intended to align and improve employee performance. Peter Drucker popularised the concept of 'Management By Objectives' or MBOs in his 1954 book, 'The Practice of Management', a process where managers and employees define and agree upon objectives and what they need to do to achieve them.
In 1981, George T. Doran offered the S.M.A.R.T. Goals concept: Specific, Measurable, Achievable, Relevant, and Time-Bound; a criteria to make objectives easier to understand and clearer on what was required. At the same time, Key Performance Indicators - KPIs - started to gain popularity as a performance management tool.
Then in 1999, John Doerr introduced a model to Google that would revolutionise the thinking and practice of goal-setting...OKRs.
The original development of OKRs is attributed to Andy Grove, the legendary co-founder of Intel, who first introduced the approach during the early 1970's and later documented in his 1983 book: 'High Output Management'. He explained the concept of OKRs accordingly: "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 judgments in it."
In 1975, John Doerr, a salesperson at Intel at the time, attended a course taught by Grove where he was introduced to OKRs. In 1999 Doerr, who had gone on to work for the venture capital firm Kleiner Perkins Caufield & Byers, presented the idea of OKRs to one of their startup investments - a company called Google. The idea took hold, and OKRs quickly became central to Google's culture and way of operating.
Larry Page, the CEO of Alphabet and Co-Founder of Google, said, "OKRs have helped lead us to 10x growth, many times over. They’ve helped make our crazily bold mission of 'organising the world’s information' perhaps even achievable. They’ve kept me and the rest of the company on time and on track when it mattered the most."
Seeing their success at Google, and with employees leaving to join new startups and other businesses, the OKRs model has spread throughout Silicon Valley and beyond to organisations including Oracle, Twitter, LinkedIn, Amazon, Dell, Facebook, Adobe, Uber, and many more. They've also extended outside of the tech space to companies such as Anheuser-Busch, Gap, and Sears.
What are OKRs?
"It's like goals set in a fractional manner."
Eric Migicovsky - Founder, Pebble
OKRs help businesses to focus effort on the same important issues throughout the organisation. They provide a framework for leadership to discuss how the work of an individual employee is connected to the overall business strategy. Because they are visible to everyone - top-down, bottom-up, and cross-functionally - OKRs ensure everyone is working toward the same outcomes.
OKRs consist of two elements: the Objective, and its associated Key Results:
Objectives represent what the business / team / individual want to accomplish. They are qualitative goals designed to propel the organisation in the desired direction. They should be significant to the company and personally meaningful to the individual. They should also be aspirational and ambitious, feeling a bit uncomfortable. In this respect they're a stretch; they aren't easily accomplished and will require incremental effort and innovation to achieve. Objectives should be ambitious and a bit aggressive, but you shouldn’t be setting goals that are so big that they’re impossible. They should challenge employees to push further, but not demotivate them by making them feel that they're un-attainable.
Key Results (KRs)
Key Results are how the business / team / individual will accomplish the Objective; they clearly make the objective achievable. They lead to Objective grading, i.e. only by the attainment of the Key Results will the overall Objective be delivered. Key Results are should be specific and measurable, avoiding vague language such as "increase sales".
OKRs are about outcomes or results, not about tasks or activities. Activity does not equal results; being busy doesn’t mean you are accomplishing the desired outcomes. Google’s re:Work on OKR Goals states: “One thing OKRs are not is a checklist. They are not intended to be a master task like… Use OKRs to define the impact the team wants to see, and let the teams come up with the methods of achieving that impact.”
OKRs fall into two buckets:
i. Operational - centred on a company's metrics and relating to the operating drumbeat of the business. Management will typically set these at a company level, while employees set operational goals at departmental or team levels.
ii. Aspirational - These are bigger picture ideas about how a company is going to go about changing the world. They set the scene and are designed to help all employees figure out how they can contribute to the aspirational ideas. Aspirational goals can come from any level in the organisation.
It’s important to strike a balance between Operational and Aspirational Objectives. While no OKRs should be “easy,” having only Operational Objectives doesn’t provide an opportunity for employees or teams to use their strengths to push to complete really ambitious goals.
Benefits of OKRs
"Vision without execution is hallucination."
OKRs impose disciplined thinking so major goals are surfaced. The reduced number of goals creates focus in the organisation and disciplines efforts and initiatives.
They let everyone know what's important. Transparency and simplicity enable the team to understand the goals and priorities of the organisation as well as how each individual can contribute.
Establishes indicators to show how along we are. They allow faster adjustments and better adaptation to change; increasing innovation and reducing risks and waste.
Keeps organisations in step with each other and aligned. The use of shared OKRs improves collaboration among different teams, solving interdependencies and unifying competing initiatives.
Where to start?
Before you move to OKRs, it's important to secure executive endorsement and commitment. If people are going to change the way they work and behave, they need to buy into the value that OKRs can bring, and then be prepared and willing to adopt the process. This is especially the case for leaders who must to be on-side and willing to advocate and promote OKRs to the team.
Have a roll-out plan
Be clear on how and where you're going to roll-out OKRs across the business. Determine at what level you'll introduce the program, i.e. executive only, team level, or company-wide. This will depend on factors such as: the stage that your business is at, how big your team is, how engrained they are in legacy processes, and how much disruption you're prepared to take in the short-term. Having a plan will help as you educate your teams, gain buy-in, and secure ongoing commitment.
Go top-down and bottom-up
OKRs should not only cascade from the top-down, but should also come from the bottom-up. Setting Objectives that are only top-down will thwart motivation and creativity. Your employees have a firm understanding of what their priorities need to be in order to drive results. Giving them some level of autonomy to establish their own goals encourages independence and facilitates growth opportunities.
Don't have too many
Aim for 3-5 Objectives at company, team, and individual levels. Fewer are definitely better, especially when you first introduce them to the company. It's important to impose limits on OKRs, otherwise you'll set your team up for failure. Too many and employees lose focus, feel overwhelmed, and will ultimately disengage from their work. Many managers make the mistake of encouraging more OKRs so that their teams will accomplish more, but this typically backfires. Fewer Objectives allow employees to perform above-and-beyond expectations, rather than struggle with too much to accomplish. If individuals or teams are consistently meeting all of their Objectives, you can look to increase the number for the next period, or make them more challenging.
One of the reasons that OKRs are so effective is because they make it easy for managers to check in on progress. The key is to ensure that this is done regularly though. If you set Objectives at the beginning of a Quarter but then fail to follow up on progress until weeks later, you'll likely find that not much has been done. In order to have consistent progress, you must check in every week with each of your team members. This generates a cadence of accountability and support to ensure that things are moving in the right direction and at the necessary speed.
"Ideas are precious, but they're relatively easy.
It's execution that's everything."
To help as you look to pull your OKRs together, the following template will guide your thinking and structure your goal setting:
The template comprises of three sections:
1. Big Picture - your primary drivers and ambitions as an individual, team, or business
2. OKRs - your specific Objective and Key Results for the project / period in question
3. Considerations - the factors that will either enable or impede progress towards achieving your OKRs
Taking the time to focus on these three aspects will generate goals that are more aligned to your overarching mission, more considered in their definition and, ultimately, more progressive in their achievement.
The following pointers provide some direction as you complete each section:
As we start to prepare our OKRs, we need to go back to first principles and understand our 'Big Picture'. This is our underlying reason for being and ultimate ambition. By doing so we'll give grounding and context to the OKRs that we subsequently define, ensuring that they're in-line with, and moving us towards our primary mission. Our Big Picture thinking answers the following questions:
Why are we here?
What's the reason that our business or brand exists? What's our 'Why'? What's our core purpose?
What's our ambition?
Where, ultimately, do we want to get to? What's our end destination? What do we want to accomplish as an individual, team or business? How are we going to put a dent in the universe?
What does success look like?
How will we know when we get there? What's our definition of success?
Once you've answered these questions they shouldn't change as you move forward. As you develop subsequent OKRs for this or future periods, your Big Picture is constant and should be repeatedly referred to as your guide...your 'North Star'.
Objectives & Key Results
The meat of the template are the OKRs themselves. The template is intended for the creation of one set of OKRs, i.e. one Objective with up to five Key Results. Separate sheets can be used for additional Objectives.
As you craft your detailed OKRs, consider the following:
Objective: I / we will...
What's our ambitious goal? What do we want to achieve?
Key Results: As measured by...
How will we benchmark or monitor that we've met our Objective? What's our specific and measurable outcome that indicates that our Objective has been met?
Once we've outlined our OKRs, we should finally consider what factors will either help us to achieve them, or conversely inhibit and impede our progress. Identifying and reviewing these factors as you lay down your OKRs will prepare you as you embark on the their achievement and realisation, informing your strategies, tactics and actions.
What accelerates our success? What factors will help us to deliver our Key Results?
What gets in our way? What hurdles and obstacles do we need to get over?
Give OKRs a go
OKRs are the not-so-secret weapon of some of the world's most successful businesses. They're more than an exercise in goal setting; they create transparency, collaboration, and mobilisation across the organisation, changing the culture and ways-of-working. Yet, they're a straightforward tool that's accessible for all.
Use the template above as a starting point to consider and craft your OKRs. Give them a go and see how they can take your business to the next level.