“There are so many people working so hard and achieving so little.” Andy Grove
OKR: Objectives and Key results is a critical thinking framework and a goal setting system designed to help organizations create value through focus, alignment, autonomy, accountability, empowerment and transparent communication.
To reinforce these characteristics, I would like to mention Henrik Kniberg’s work. He emphasizes the need to work on autonomy and alignment as two fundamental dimensions in order to achieve a more productive work environment. For a more in-depth understanding of how alignment links with autonomy check out this video.
Returning to the topic at hand, the OKR framework plays a crucial role in achieving an organization’s purpose and vision. They provide the link between a company’s objectives and its day-to-day activities. Moreover, before starting with OKRs it is essential for you/your team or company to define WHY. The importance of the why is to create a sense of purpose that inspires people in order to act.
What are OKRs and how do they work?
Objectives and Key performance results (OKR)s are about: setting out what you want to achieve (objectives) and how you get to the objectives (key results).
In other words, the objective is the direction, something you want to achieve. This is your “What”. The key results are metrics or indicators that reflect the achievement of the objective. This is your “How”. Key Results are measurable, verifiable, quantitative, make the objective achievable, are difficult but not impossible.
How do OKRs work?
The management team establishes the strategic OKRs, then the OKRs are presented to all employees so they can write their tactical OKRs. Each employee must answer two questions: how can we contribute to the strategic OKRs and which of the key results included in the strategic objectives can we impact.
To ensure transparency in the process, all OKRs should be published and should be readily available to everyone in the organization.
It is very important to establish deadlines in order to meet the objectives. OKRs work optimally when the year is divided into four parts and they are set quarterly. This allows you to focus on priorities and establish a basis for immediate feedback, which is another advantage regarding this objective-setting system.
What is the history behind the OKR methodology?
The concept was created by Andy Grove, during his time working for intel as the CEO in the 1970s. He improved the MBO (management by objectives) model. Afterwards John Doerr joined Intel where he learned this methodology. He later presented it to the founders of Google in 1999. Subsequently, in 2000 Google started using OKRs. This methodology helped Google with its explosive growth and to became the company it is today. In 2017 Doerr published his book “Measure What Matters” where he explains how any company, team and/or individual can thrive using this powerful methodology.
Today, companies such as Google, AOL, Dropbox, LinkedIn, Oracle, Slack, Spotify, Twitter, BMW, Disney and many others around the world use this methodology to grow, improve and achieve their goals especially in today’s uncertain, volatile, agile and complex market conditions.
How can OKR help your business?
John Doerr highlighted five key factors/ main benefits/ advantage that your company can leverage and spell out the acronym “F.A.C.T.S.” so that when using OKRs, we can say that OKRs give us “just the F.A.C.T.S.” : Focus, Alignment, commitment, Tracking, Stretching.
- F: Focus on priorities and on the important. Focus is what an OKR system strives for excellence. The objectives have to be limited, they should NOT be more than 5-7.
- A: Alignment should be top down, bottom up and across the organization.
- C: Commitment and accountability. The work with OKRs ignites a commitment throughout the organization, given that the work is collaborative, transparent and permanent in the achievement of results. Each person is responsible for his or her contribution and that of the team as a whole.
- T: Tracking progress in OKRs with team’s regular feedback Evaluations should be shared with everyone in the organization. People should know if they are being successful.
- S: Stretching. To deal with heterogeneous contexts, 10x organization, etc… OKRs help you follow a structured way to develop an agile business strategy, execute the right action to unlock the potential given its flexibility and great adaptability to any situation or context.
Key objectives and results are a powerful force with proven effectiveness in achieving excellence.
What are the main benefits of OKRs?
Here are 9 benefits of working with this powerful methodology:
There are two types of goals you can set. They both serve different purposes with different ways to interpret, read and act on them.
- Committed OKRs: are ones that your organization or team has agreed to execute and might have a clear action plan for achieving them (like product releases, hiring, and customer impact). The score given to these OKR can reach up to 1.0 .
- Aspirationational OKRs are more visionary (like higher-risk, big picture growth and innovation) and probably will not reach the 1.0 score, but they are important in order to move towards the future.
According to Harvard Business Review, companies where their everyday activities are tied to the organization’s vision—are more than twice as likely to be top performers.
When it comes to choosing aspirational or committed goals, it will depend on your company and the overall strategy. Both types of goals have a unique value and determining when to use each will pivot your organization for success.
If you are interested in this topic and you want to implement it in your company, team or at a personal level, Euro Business Coach can help you in this great challenge. Book a free intake session now.