The OKR Framework is a popular framework in goal setting and management that helps organizations implement a solid strategy. By reading this article you will have a good understanding of the concept of Objectives and Key Results framework!
With a set of specified, explicit, and quantifiable actions, OKRs aim to help every employee of the organization, from important stakeholders and executives to team members, grasp the company's objectives.
Several Silicon Valley firms and multi-billion dollar businesses like Google currently adopt the OKR technique.
Due to the complexity of today's organizations, team members frequently feel disoriented by the constant change they encounter.
The strategic aims and objectives of the organization are frequently so high-level and ethereal that they leave employees not only feeling lost but also demoralized and lacking in motivation.
PeterDruckercreatedManagementbyObjectives,orMBO,in1954,whichmarkedthebeginningofthelengthyOKRhistory. Asearlyas the 1970s,AndyGrove,theformerpresidentofIntel, created the OKR Framework.
Which businesses utilize OKR? Several organizations, including the biggest Fortune 500 businesses like Zynga, Sears, Twitter, Oracle, and many more, use OKRs on a global scale, to know more check this article "Which Companies Use OKRs".
How OKR's work? 3-5 important measurable achievements are specified under 3 to 5 high-level objectives that make up a typical OKR. The aforementioned important results can be measured using a predetermined set of indicators or scores, which are typically between 0 and 1.0.
Quantitative indicators are used by organizations to monitor or gauge progress. Your goal-setting process cadence is how frequently you do it. You might have annual and quarterly goals for your company, just like Google. You can start by making OKR a crucial component of your organization's quarterly planning and progress reviews. Yet, depending on the requirements and objectives of the organization, it can also be done on a monthly or annual basis.
Each department's OKRs should have the same deadline in order to facilitate collaboration and prevent complications. Keep in mind that OKR is designed to be a straightforward process. You may learn all there is to know about OKRs in our post on "OKR Basics".
OKR Framework And Its Benefits
There are many advantages to using OKRs, but there are also undoubtedly drawbacks. By learning how to handle these issues, you may create successful OKRs for your business.
One of the top team management techniques, according to leading experts, that every business should use is the OKR.
Why utilize OKRs? because it is quick, easy, and requires few resources. because it preserves the corporate culture. because it tremendously benefits the organization, especially employee performance, and productivity.
Affects Your Business According to studies, employees that utilize OKR are generally more productive at work, which leads to better performance and higher sales than those who don't. Team members that didn't use OKRs actively requested to participate in the OKR process in subsequent cycles.
Advantages of Company/Organizational Culture Having a clear focus on metrics and KPIs is one of the main advantages of employing OKRs for an organization. A culture change from output to results is created by this.
The organization gains clarity, cohesion, and transparency thanks to OKRs. These elements work together to significantly raise employee engagement.
How to implement the OKR Framework
The diagram below depicts how your organizational vision is connected to every team and individual contributor in your team from the annual down to the quarterly OKRs.
Short-term Goals (done every year)
Objectives and Key Results (done every quarter)
Why Does the Vision of Your Company Matter?
An organization must first establish the "Why" before attempting to attain its objectives.
Every team member must be aware of the motivations guiding the organization's initiatives, procedures, and activities.
You should start by keeping the "end" in mind as the leader who must guarantee that Goals and Key Outcomes are implemented by setting them, such as how you envision your firm in a few years.
Your company's vision should serve as a guide for how you set your goals.
It should be simple, to sum up your company's mission in one line. It should outline the goals of your organization. It's essentially the culmination of all your hard work and your company's ultimate dream.
Business taglines and vision statements are frequently confused. While a vision statement may be clever and memorable, it is not intended to promote your company's products but rather your team and culture.
As a result, it is not essential that your vision statement appeal to everyone. Simply go big and ambitious.
Even though it can take your company years to realize this vision, it will serve as the impetus for your hard work and that of your employees.
How to Define a Company Mission Statement
Part of the steps involved in Objectives and Key Results implementation in your company is the definition of the mission statement. Your mission statement lays out the reason why your company exists.
For example, if an entertainment brand’s vision statement is “to make children happy,” its mission statement will be something like this:
“To be the world’s leading providers of entertainment and information for kids. Using our portfolio of brands to differentiate our content and services, we seek to develop the most creative, innovative, and profitable entertainment experiences in the world.”
When creating your company vision and mission statement, consider these tips:
Determine the things you are really passionate about.
Envision what you intend to be at the end of the journey.
Think about your skills, experience, talent, and resources and how you can use them to contribute to the world.
Determine the main economic denominator that is essential for your company. Understand what drives your economic engine.
How to Strategically Plan for Your OKRs
Creating your company vision and mission statement is one thing. Achieving them is another. Using the “Hedgehog Concept”, you can attain your mission statement in the following ways:
Focusing on what you are passionate about should help you specialize in products or services that you have a drive for. Market research can guide you in identifying industry standards and developing strategies to ensure your products and services are in high demand.
Focusing on what you do best. You should consider the resources of your company in thinking about this. That includes the skills, knowledge and experience of your employees. You have to know your organization to determine what it is best at. It gives you an opportunity to establish efficient internal processes and strategies to attain your company's vision.
It is vital that you identify the economic metrics of your success. What level should you have reached in order to say that you achieved success?
Many companies utilize strategic planning systems that allow them to focus on the goals they set under each category.
However, these systems are not made to replace Objectives and Key Results as your goal-setting strategy but should be considered instrumental to the implementation of OKRs.
In some organizations, annual goals are created through OKRs. They are now divided into quarterly OKRs to allow team members to focus on implementation.
Take note that the key results of your company will show the main metrics that the leadership team supervises and is held accountable for.
Many companies confuse “tasks” with “key results”. These two are not the same. Tasks are activities that employees have to do as part of their roles, while key results are indicators of success.
OKRs do not promote micromanaging of teams. The framework helps companies determine what constitutes success and what teams and individuals need to do in order to attain their goals.
The high-level key results are assigned either to the leadership team or the CEO. The high-level KRs can also be assigned to a specific department or team instead.
If Objectives and Key Results are too narrow from the top, by the time they have been cascaded to the team members, individual contributors might end up having a “to-do list” instead of OKRs, and therefore, be less empowered to set their own goals.
Each component of the OKR framework supports smooth and successful implementation and thus has an important meaning in the overall process. As pluswerk consulting suggests, it is best to use the synergy effects of all components in the picture below.
OKR Framework Overview
COMPANY MISSION - The company mission is a brief description of the company's vision and purpose, and how they should be implemented.
MID-TERM-GOALS - Mid-term goals (so-called MOALS) are the link between the company mission and the OKR. They are usually defined for one year.
OKR PLANNING - At OKR Planning the respective objective and key results become defined for the entire cycle and at all levels. This is done both top-down and bottom-up.
OKR WEEKLY - The OKR Weekly helps to synchronize the objective and key results implementation and supports self-responsibility as a solid ritual of the teams during the cycle. The weekly should only take about 15 minutes and should give an overview of the current status of the OKR.
OKR REVIEW - Review meetings are used to determine the degree of achievement at the end of an evaluation cycle. The scoring should be consistent with team standards.
OKR RETROSPECTIVE - During a retrospective, the teams analyze the OKR process from a systematic point of view. What did the team learn? What should be improved in the next cycle?
OKR COACH - As experts, coaches, facilitators, and change agents are OKR Coaches responsible for the smooth implementation of the OKR framework in the company and support their teams in the Definition of OKRs and other regular events.
The Cycle Of The OKR Framework
Each cycle has many opportunities for improving teamwork, communication, and strategic goals. The following events help:
During the cycle, objectives and key results are usually not changed unless the company faces an unexpected and extremely important event to which it must respond.
However, this is rare; usually review and retrospective show the potential for improvement for the next cycle.
The sustainable implementation of the OKR framework within a company takes time. It usually takes about 3-4 cycles to get the full pull from OKR.
A meaningful, well-designed implementation plan can significantly reduce the learning process.
Measures such as in-house training, the training of OKR Coaches, orientation workshops and moderated planning by experts, review,s and retrospectives raise the learning quality and speed.
It´s important to note: always stay humble and open to making mistakes and learning new things!
How to set OKR for your team
Step 1: Set the stage
Introduce or re-introduce the concept of OKRs in your team and explain how the KRs are scored and how it affects their performance.
Tell them that OKRs are meant to feel ‘uncomfortable’ and it’s perfectly fine to set an ambitious goal and miss it (as long as they are making progress of course).
Step 2: Identify your objectives
Encourage your team members to participate in the brainstorming process. Your team goals should be aligned to the senior goals (company objectives).
Try to come up with 3 to 5 aspirational objectives.
Step 3: Identify your key results
List down the measurable outcomes that indicate whether you have achieved your objectives. Remember that you’re not dealing with tasks. You are dealing with results.
Here’s an example:
Objective: Increase profit by 10%.
Launch seasonal campaigns (summer promos, Holiday fares, ) and double the revenue from the past year
Take cash discounts on suppliers to save 10% on purchases
Outsource fleet distribution to stores to reduce cost by 20%
One of your KRs may require collaboration with another team. Follow up with them from time to time and make sure that they’re on board.
Step 4: Review and analyze
You may find yourself revising your objectives or key results as you review your initial list. If you’re 100% confident that you can hit your KRs, that means you’re not being ambitious enough and you’re still in the ‘safe zone’.
Try to increase your target up to the level that you find uncomfortable.
Step 5: Ask for feedback
Getting feedback is very important, especially for the people who will be involved in the execution. They may have great suggestions to improve your OKRs.
Step 6: Scoring
A critical aspect of measuring Key Results is scoring. You may adopt Google’s sliding scale of between 0 and 1. This quantitative metric tells whether you missed, came close to, or hit your target.
Note that a score of .7 on a key result is considered a success more than 1.
OKR at Google: A Case Study
Google Ventures partner Rick Klau gave a very fascinating insight in one of his presentations about how Google sets OKRs. OKR is pretty simple. It starts with setting up an objective and is followed by identifying several “Key Results”.
At Google, objectives are set annually and quarterly. When Rick Klau took charge of Blogger – a blog-publishing service owned and operated by Google – the objective during one quarter was to improve the company’s reputation.
While Blogger was a huge platform and has been around for many years, it was losing popularity as more and more blogging platforms such as Tumblr enter the industry. To improve Blogger’s reputation, Klau created 4 Key Results:
Re-establish Blogger’s leadership by speaking to at least 3 industry events
Coordinate Blogger’s 10th anniversary PR efforts
Reach out personally to Blogger’s users
Fix DMCA process and eliminate music blog takedowns
Annual OKRs are more high-level, usually encompassing the quarterly objectives of Google. But these OKRs are not set in stone. They change and evolve as the need arises.
According to Klau, Google also adopts OKRs at managerial and team levels, even personal levels. This is critical to how they grade their employees and ensure that every single person in the company gets things done and works together to keep the company on track.
By the end of each quarter, everyone working in Google grades their key results.
They adopt a 0-1 scale. The goal is not to reach 1 in every Key Result. Otherwise, it will be assumed that the member has created a Key Result that’s too easy. As Klau puts it, the member is ‘sandbagging it’. Employees are aiming for a score of 0.6-0.7.
Another interesting practice within Google is that their OKRs are open to everyone. Not only do they see each other’s OKRs, but also their scores.
It might seem a little intimidating, but it helps employees in Google understand what each other is working on.
KPI goals are typically obtainable and represent the output of a process or project already in place, while OKR goals are somewhat more aggressive and ambitious.
What is OKR methodology?
The goal of the OKR methodology is for every member of the organization – from the key stakeholders and leaders down to the team members – to understand the objectives of the company through a set of defined, specific, and measurable actions.
What is an OKR goal?
Objectives and key results (OKR) is a framework for defining and tracking objectives and their outcomes. … OKRs comprise an objective—a clearly defined goal—and one or more key results—specific measures used to track the achievement of that goal.
Who created OKR?
OKR has a long history that can be traced back to 1954, when Peter Drucker invented MBO or Management by Objectives. In 1968 Andy Grove co-founded Intel and while CEO at Intel he developed MBO into the model of OKR which we use today. In 1974 John Doerr joined Intel and learned OKR during his time there.
How many OKRs?
As others have already mentioned, 3 – 5 objectives is usually optimal. And each objective should have 3- 5 KRs as well. But as OKRs represent the most important things you do, you shouldn’t have too many.
What is a good key result?
The way key results are defined is the soul of the entire OKR philosophy. Key results are essentially measurable indicators of the success of the parent objective. Key results, unequivocally tell you how much of the objective is achieved. … Do note that key results are results & not activities/tasks
How to properly do an OKR Scoring for your team is also very crucial so that everyone will be kept accountable, high performing, and in cadence with the phase of your company.
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If you liked this article and you are looking for a way to align everyone in your organization, let’s have acall or simply download our OKR Guide. We also offer OKR consulting and OKR training, but our approach differs from other companies, we believe OKRs should be fully integrated with your product development.