By now, everyone with their finger on the pulse of the technology industry will have heard about the most popular goal-setting strategy that industry leaders have been using to bring their companies to the next level – OKRs.
This acronym stands for Objectives and Key Results, a goal management system that is utilized by organizations of all shapes and sizes, from technology titans such as Google to the smallest of startups.
Andy Grove, the famed CEO of Intel, is credited with developing the concept of OKRs in the 1970s, a framework that was further developed and popularized by John Doerr and his 2018 book, “Measure What Matters.”
But what exactly are OKRs?
Let’s break down this methodology:
Objectives, the “O” in OKRs, are qualitative, inspirational, time-bound goals that are set to be executed by a specific group of people within a company or by specific individuals. A solid objective might be: “Strengthen our sales team.”
Key Results, the “KR” in OKRs, help quantify this goal and put it into an actionable and usually metric-based framework. These are targets used to measure the completion of an objective.
For example, key results that could help measure the success of the above objective to “strengthen the sales team” could be:
- Decrease average time taken to convert a prospect into a customer from 18 to eight days.
- Conduct at least one training program per month.
- Hire three new sales representatives.
OKRs rely on a framework of regular check-ins, frequent feedback, continuous learning, team collaboration and problem-solving to help companies take abstract goals and make them concrete realities. This is a simple, and yet immensely powerful practice that brings focus and alignment to organizations.
Why do you need them?
Despite their growing popularity, OKRs are just one of many goal-management techniques. Why is this method specifically needed for your company?
According to John Doerr, there are five essential elements to this methodology: focus, alignment, commitment, tracking and stretching.
These elements make OKRs the most effective goal-setting strategy. If formulated correctly, companies will have distilled their goals down to between three and five written objectives. These objectives are then paired with actionable key results.
OKRs can be aligned in between levels, with corporate key results can inform the objectives for each of their departments; this is called top-down alignment. Alternatively, team or individual objectives can inform the key results for departmental objectives; this is called bottom-up alignment. This ensures that the entire company, while they may be working on different tasks in their day-to-day, will ultimately be contributing towards the same goal.
Companies that are committed to this methodology that can faithfully measure and track their key result progress, have the opportunity to reap the benefits of OKRs.
When followed correctly, OKRs can help teams reach greater success than they have before. Setting stretch goals is necessary for ensuring that employees aren’t simply setting targets they know they can achieve, but rather setting goals that will push them out of their comfort zone, resulting in phenomenal outcomes.
This combination of requirements, while demanding, formulates goals that both motivate employees and guide them. Managers and company leaders can check in on employee progress and encourage work, while also allowing employees to take ownership of their goals and contribute to larger company objectives.
How can OKRs take your success to the next level?
Aspiration is ingrained into the methodology of OKRs. Users of this framework are encouraged to think bigger, stretching their targets.
Objectives should aim at qualitative ideals more than quantifiable goals. They are designed to motivate and energize. Ambitious, abstract and memorable language can be used to write a company’s objectives – whatever communicates the goal to a team and sticks in their mind.
Key results have the job to make this aspirational goal a reality. Pairing the ideal with concrete, substantive key results creates a path from where you are now to where you want to be.
Target amounts should stretch beyond what employees think they are capable of. It’s a good rule of thumb to think of the target goal that can be achieved if everything goes smoothly and make that number the 70 percent progress mark on your key result. Then, aim for 100 percent completion.
Using this framework to contextualize goals within your organization helps create a culture of motivation, accountability and precise execution.
This methodology ultimately builds on itself. While OKRs can be studied, it’s important for companies to get their feet wet. Sometimes, companies have a difficult quarter. Without any sort of framework to measure goals or progress, the exact reasons for this slump remain unknown. But, with OKRs and the essential process of check-ins, tracking and reflection on progress, users of this approach can identify where they strayed off course and adjust their OKRs for the next quarter to help avoid a future recurring problem.
Furthermore, this system encourages employees to take ownership of their OKRs. Individuals are accountable for their personal OKRs, but also for contributing to team, departmental, and in some cases, even corporate-level OKRs. Employees who can see their progress reflected in an OKR software have tangible proof of their contribution to larger company goals and will feel more engaged with their work, finding more purpose behind their day-to-day tasks, thus breeding motivation and fueling productivity so you can bring your company to the next level.
The nature of OKRs is to engage employees, stretch targets and learn from past mistakes. This combination of dedication and adaptability makes OKRs a wildly popular goal-setting tool that is used by the most successful and innovative companies across industries.