OKR - Objectives and Key Results

Revision as of 17:07, 21 February 2021

Every organization has different objectives when carrying out a project, program or portfolio and these objectives have to be aligned throughout the whole organization, involving all levels of an organization is an explicit of the approach. This article will present a collaborative goal-setting tool which allows to set both individual and team challenging goals with measurable results. OKRs, Objectives and Key Results, are how organizations track progress, create alignment and encourage engagement around measurable goals [1].

No one individual – or company – can “do it all”. OKRs are really helpful in the context of goal definition process, and for leaders, they give a lot of visibility into an organization. In case of complex circumstances, the catalogue of objectives consists of different characteristics that are usually of different importance, so it is of great importance to prioritize the different characteristics in the goal definition process [2]. With a select set of OKRs, we can highlight a few things – the vital things – that must get done, as planned and on time [3].

On the other hand, Key Results monitor how we get to the objectives, so they must be measurable and verifiable. At the end of the designated period a regular check and grade of the key results should be done. If an objective is well framed, three to five Key Results will usually be adequate to reach it.

OKRs were created at Intel by Andy Grove and taught to John Doerr by him. Since then, the most innovative and best managed companies in the world have adopted them, such as Google, Netflix, Twitter, Uber, etc.

Big idea

John Doerr, in his first slide at his presentation to Google, defined OKRs as “a management methodology that helps to ensure that the company focuses efforts on the same important issues throughout the organization” [5]. OKR is the acronym for Objectives and Key Results, and it is based on the principle of breaking down the vision and goals of organizations into concrete objectives and formulating several measurable results [4].

OKR as a planning tool helps the setting and division of objectives from top to bottom through the whole organization, while supporting the adaptation of short-term goals to current needs and ensure usable results in shorter intervals. Usually, OKRs are thought in a timebox of 3 months.

OKRs stand out for its simplicity and are used to track progress, create alignment with the strategic objectives and encourage engagement around measurable goals. For this reason, it is of great importance to apply OKRs through the different levels of an organization, and all of them must have a correlation between them. This methodology gives a solution to many of the usual problems in a company, such as improving the communication between the different departments involved in the project or ensuring the liability and motivation the employees by increasing the company’s transparency.

Objectives: What is to be achieved, no more and no less [5]. By definition, objectives are significant, concrete, action oriented and inspirational.

Key Results: Benchmark and monitor HOW we get to the objective [5]. Key Results are the marks you hit to achieve the goal. Effective KRs are specific and time bound. Most of all, they are measurable and verifiable. Key results typically include hard numbers for one or more gauges: revenue, growth, active users, quality, safety, market share, customer engagement, etc. You either meet a Key Result’s requirements or you don’t; there is no gray area. At the end of the designated period, typically a quarter, the key result is declared fulfilled or not. Where an objective can be long-lived, rolled over for a year or longer, key results evolve as the work progresses. If an objective is well-framed, three to five Key Results will usually be enough to reach it, and once they are all completed, the objective is necessarily achieved. [5, Key Results: Care and Feeding, Chapter 4]

Planning and tracking [ThePowerMBA]

It is recommended to set both annual and quarterly objectives and track them with that periodicity. Managers should review all the progresses in each of the OKRs. However, it is also recommended that both the time frame and monitoring are set according to the type of objective, project, urgency, etc., as well as establishing a measurable scale for each Key Result, like for example a scale from 0 to 1.0. When scoring OKRs, it is of great importance to mark what we have achieved and address how we might do it differently next time, as a low score forces reassessment: Is the objective still worth pursuing? If so, what can we change to achieve it?

Moreover, OKRs do not expire. OKRs are a positive force for more, but they also stop us from persisting in the wrong direction. As in any data-driven system, tremendous value could be gained after the completion of the work from evaluations and analysis. [5, Superpower #3: Track for Accountability, Chapter 10]

How it works? [ThePowerMBA]

As aforementioned, OKRs are composed by Objectives and Key Results. The first step is to set the different targets of the organization. There are different objectives for each level, and it is recommended to set more than just one objective. The objectives will define what the organization aims to reach, and they must be aligned with the strategical level. These objectives must be ambitious and challenging, but there is no way of measuring them. Subsequently, as second step, different key results for each objective should be arranged. Every key result allows us to know if we are in the good direction to achieve our goals. The key results can be measured, and it will be easier to focus on achieving the key results than the objectives.

It is of great importance to align all the OKR in the same organization in cascade from top to bottom. Cascading forges unity, it makes plain that all the project team is in this together. This way we ensure that all the organization contributes to the strategic goals.

Application

Limitations

Annotated bibliography

[1] Panchadsaram, R., & Prince, S. (2020, September 9). What is an OKR? Definition and examples. What Matters. https://www.whatmatters.com/faqs/okr-meaning-definition-example/

[2] Züst, R., & Troxler, P. (2014). No More Muddling Through: Mastering Complex Projects in Engineering and Management (2006th ed.). Springer.

[3] Doerr, J. (2018). Measure What Matters: OKRs: The Simple Idea that Drives 10x Growth. Portfolio Penguin.