OKR stands for Objective and Key Results. OKRs are goals, that through discussions, describe precisely where the biggest improvements need to be made, and a desirable future end-state that is hard to achieve and measurable. For example, 70% can be an acceptable success rate, depending on the difficulty grading.
The history of OKRs is longer that than most think and interesting. In the 1950’s, Peter Drucker introduced MBOs or Management by Objectives to focus managers and employees on results, not simply on looking busy. Andy Grove whilst at Intel to the MBO idea and evolved it to become OKRs. Under Grove and using OKRs, Intel increased its revenues from $1.9 billion to $26 billion. He later documented this journey in his 1983 book High Output Management.
Andy Grove believed that top-down management systems were broken and that every employee not only counted and that could set their own goals.
John Doer attended an Andy Grove seminar and later took the idea to Google in 1999. The rest is history. Google went on to achieve x10 growth and has over 100,000 employees. John Doer’s book ‘Measure What Matters’ is still a popular OKR book.
Roll forward to now and Objective and Key Results (OKRs) are now a mature and established way of setting goals. Taking the best of frameworks that have come before, like MBOs, Balanced Score Card, SMART and KPIs, and evolving them, introducing ideas like ambition, alignment, and agility. All necessities for performance management and survival in modern companies.
OKRs are not just a goal setting format, they create focus, inspire ambition, accelerate innovation and encourage collaboration. It’s no surprise to those using them that they have been credited with Google’s x10 growth.
In choosing OKRs as your way of setting, communicating, and managing goals you will be benefiting from the fact the framework that has been created and refined over a long time.
As far as this guide is concerned, and how it can help you today, OKR best-practices are well understood and are tried, tested, and trusted. We have shared what great OKR creation and management looks like in this ultimate OKR guide.
People normally find OKRs as they are looking for a new and better way of working. Perhaps you are here because you are:
Do not be too hard on yourself if that what has brought you here. It is really hard to foresee and manage your way through all of complexity and dependencies you face, so structure and support is needed. Which is where Objectives and Key Results (OKRs) come in.
OKR are a simple, flexible, lightweight and agile way of setting goals, that fits under the umbrella of ‘Performance Management‘.
Their simple structure makes OKR accessible to everyone. Here is the basic OKR format, with an Objective and 3 – 5 Key Results.
OKRs are designed to be inclusive, with a bottom-up, top-down and side-to-side approach to setting goals. Which is very different to the old-school top-down approaches. So once you have an OKR like this it is for other teams and suggest other OKRs and Initiatives for help to achieve it. Many of the OKRs that do this are likely to be cross-functional.
Choose OKR and you will be embedding the systems, processes, technology and habits that will ensure that your strategy, goals and productivity are continually being aligned with opportunities for value capture. Embedding the best ways of working in your company DNA and culture. If you learn to use Objectives and Key Results well, you will:
“At Google, all OKRs, starting with the CEO’s, are visible to all other employees. At LinkedIn, the CEO’s executive team reviews OKRs weekly. This kind of transparency also has several benefits: surfacing interdependencies among teams and units, creating urgency and “mindshare,” and reinforcing the nonhierarchical culture and mind-set that characterize truly agile organizations.”
OKRs can be a core part of a drive for continuous improvement. The journey there will need persistence, commitment, agility, understanding and the ability to deal with set-backs along the way. Is the reward worth the effort? For most the change is transformational and for employees is like having oxygen pumped into the building.
Changing the way you set goals will evolve every aspect of your business. From the strategy defined, the processes followed, the tasks that are done, the behavioral norms adopted, and an individual’s own personal development.
You should expect all the big lagging metrics to improve; from Revenue to Retention, and NPS to Employee Retention, the KPIs that investors care about should trend in the right way.
Every company and starting point are different, you will need to find ‘your’ way of working with OKRs and evolve it through time.
You’re going to be creating momentum and having some amazing and some really challenging conversations – and the truth is that not everyone will be onboard initially. This is where ‘getting the right people on the bus‘ comes in. Likely challenges are going to be:
That said, to use OKRs the good news is that you only really need to understand three goal entities:
Plus the idea of cadence e.g., annual and quarterly OKRs with frequent check-ins and meetings – usually weekly.
OKRs are not meant to be used to describe all of your metrics, targets, BAU activities, projects, and tasks.
OKRs are how you make what matters most a goal, propose to measure the goals success, and then align other goals and your executional plans.
As such, OKRs are complementary to Strategy and KPI Tracking. In fact, it’s common for KPIs that are priorities for improvement to become Key Results, and Initiatives that are planned to become Projects.
OKR is a top-down, bottom-up and horizontally aligned way of setting goals. The framework gives employees more freedom to create their own goals and have an input into other teams and colleagues goals, which creates the alignment, improves transparency and collaboration.
This is why the most important aspects of OKR planning to get right is the ‘planning meeting’ whereby priorities, Objectives, measurement (Key Results) and execution (Initiatives) are shared, discussed and agreed.
OKR advantages over other goal setting frameworks is the frameworks ability to set highly aligned goals with measurable outcomes within shorter planning cycles. This improves goal clarity, agility, business and team performance. You can read about how OKRs compare to frameworks like SMART in section 3.
OKRs are not for everyone though. The framework is for those that want to share strategies and priorities, guiding and inspiring teams and employees towards the outcomes you want. OKRs require you to trust and empower your people to work out how to deliver the results you want.
Are you ready to trust your teams to deliver your strategy?
Trust, for the avoidance of doubt, does not mean you are not in control – you will be, you just won’t need managers to to be overly controlling.
What is also important from an employee’s perspective is that the OKR is not the only reference point used to define an individual’s contribution or achievements. Depending on roles and responsibilities, employees contribute in a wide range of valuable areas, in a variety of ways. If you over-index on recognition by OKR, expect OKRs to be used sub-optimally.
This is why ZOKRI combines market leading Company and Team OKR features with features like Personal OKRs, KPI and Initiative tracking, and Personal Development Plans. This provides a more rounded view of performance and stops your OKR system being a dumping ground for everything.
There is strong evidence to show that the more goals you have the less you achieve, and what you do achieve might not be the most important ones. For example, if you are an employee with a number of goals, it is common to either, distribute your efforts evenly, or focus on the Objective you find most rewarding.
Having clarity on what you should be investing your time and energy into without having to think about it is easier when you have just one thing to focus on. So when you see people working on lots of OKRs expect less to be achieved.
If there is a need for a number of OKRs, set a sequence that makes sense, and don’t start another until one is finished. To help ZOKRI has Key Result States like ‘Not Yet Started’ to help with this. Remember that with goals and OKR, less is more.
The reality for most teams is that you can only get a few things done at any given time. The key to OKR planning is to get absolute clarity on what is holding you back and attack that. This can mean saying no to things that are obviously a good idea. Something that’s hard to do, especially when you’ve a number of great opportunities.
Only 15% know the most important goals
Research by FranklinCovey suggests that only 15% of employees actually know their organization’s most important goals —either there are no goals or they have too many goals.
The critical path to goal achievement is unknown
It’s common to not know which critical activities provide the greatest leverage on goal achievement.
Progress is not being discussed in over 90% of cases
Less than 10% of employees meet their manager to discuss goal progress at least monthly.
If you don’t have a long-term Mission and Vision, and a clear a focused Strategy, you can struggle to get OKRs working work well. Think of your Mission as your long-term guide. And your strategy as an expression of the battlegrounds you must win this year.
OKRs are natural recipients of this guidance. This is why ZOKRI allows you to define your Mission, Vision and Purpose, and even a North Star metric, if you have one, along with Strategic Pillars, and align OKRs to these.
“People who understand and buy into the strategy will work toward achieving it. If people don’t understand or buy in, at best they won’t contribute much, and at worst they will actively undermine the strategy” Management Today
Dave Richards is MIT Innovation Lab co-founder
As you will see in upcoming sections, OKR are an obvious fit for teams that can control and apply their time where value is identified. Teams like Sales, Marketing, and Engineering for example. These team have KPIs, are already re-assessing goals and priorities frequently, and often already working in an agile way.
There are also teams in companies that are more service orientated, with much of what they do being geared towards following established prescribed processes, business-as-usual (BAU) activities, and maintaining existing levels of performance.
For example, some teams have roles that exist in a constant state of workload uncertainty, and deal with what happens and is given to them each day, like Customer Service with in-bound support needs, and Legal with Contracts requests.
Other teams work hard, follow processes, but have unpredictable outcomes, like research based teams that are in a constant state of experimentation and never know when break-throughs will happen.
How can we make sure OKRs work for the more BAU orientated teams and teams where outcomes are harder to measure and less certain? It’s much easier than you think.
These teams can and should firstly use get clarity on what these systems, processes, and jobs-to-be-done are. Then assign what are sometimes called ‘health metrics’ or KPIs to track their performance levels.
Obviously, you need to keep the BAU that’s performing well on-track. Where you think there are improvements to be made, your OKR planning focuses on these areas. For example:
Specific role orientated processes and jobs-to-be-done are also a possibility for consideration, but the outcome could be:
ZOKRI is the leader at recognising the diversity of roles and responsibilities in an organisation. The software allows Health Metrics or KPIs, and Initiatives to be tracked and have owners and collaborators, as well as OKRs.
This provides you with a way of valuing BAU work and providing the same level of transparency present with OKR. This way you will avoid a two tier system of employees that are highly visible via OKRs and those who work hard in the background.
It is OKR best practice to involve other teams in your OKR planning conversations. It’s common when you’re having cross-functional discussions to identify challenges or opportunities that require a cross-functional team to capture the value. If you plan in silos the chances of spotting these opportunities is greatly reduced.
Other common starting points for a cross-functional OKR teams are:
Hopefully you can see that the answer is, it depends on you team, roles, responsibilities, and the quarter itself.
It’s totally fine to have one OKR in a BAU biased team. Perhaps to improve a process whilst working hard on maintaining a range of team Health Metrics / KPIs.
It is also fine to have a cascade of related OKRs that are supporting each other. OKRs are flexible and work for all organizations and team types as long as you recognize that a one-rule approach for everyone won’t work.
Regardless of what team you’re in, or your seniority, ZOKRI allows everyone to be seen and participate in helping a company succeed. The people that are often ‘invisible heroes’ doing the BAU processes and maintaining already great KPIs, and the agents for change that are focused at helping to fight the battles you’re trying to win. ZOKRI sees them all, and everyone belongs and participates.
It’s good to know what can go wrong so you might avoid what are easily avoidable issues. What happens often is teams and employees are told OKRs are going to be used to set goals. What they need to create ambitious and measurable goals that align with company and department goals. Oh, they will be used in appraisals as well.
This blanket ‘one-way’ for all approach does not allow for the variance in companies, teams, roles and responsibilities that exist. It does not recognize that measurement is easier for some and not others and does not recognize that a key performance lever you want to pull is ambition or stretch, and if you link OKRs tightly to appraisals and don’t recognize people as having different ways of contributing, then OKRs will be used in a sub-optimal way.
You can’t just apply OKR basics in an identical way across a company, or even across goals within a company. You need to allow your strategies, the planning period you’re in, and the goals themselves to dictate how you’re going to apply OKR.
Through conversation and collaboration, work out what a desirable future end-states can look like and how best to measure success. For some, that’s just doing the every-day well. For others it’s achieving the near impossible.
Sometimes your OKRs will be specific in what success looks like, like ‘financial goal’, but the path to get there presents a number of possible options. Other times, OKRs are more specific, like when you’re launching a product in a market where your plans are already well defined. The goal then becomes about hitting success metrics and executing.
It’s this blend that makes great companies. It’s knowing when and where to focus your efforts and be ambitious. This usually means putting more than you’d like in the ‘great idea but not doing now’ pile. It’s also about knowing when and where to keep what’s already working doing just that. OKRs and ZOKRI give you a platform to express and manage all of this.