Luis Goncalves
Last updated on | Strategic Alignment

OKR Guide: Understanding OKRs and How It Benefits Your Business

by Luís Gonçalves
okr guide

OKR Guide – Understanding OKRs

Due to the complex nature of organisations, employees often face challenges among the rapid changes they deal with every day. It is often that employees feel demotivated, discouraged and have a lack of purpose just because the company goals are too high-level and abstract.

That´s where Objectives and Key Results (OKRs) steps in to help companies with goal setting and implement a solid strategy.

OKR helps any organisation to achieve its goals by helping teams and individuals create their own goals and take actions, from improved focus to better team alignment, transparency, and accountability.

The main components of OKRs are: objectives and key results. Key results describe how the objectives will be measured.

This method ensures that team members learn how to prioritise, focus, and align the outcome of their tasks and responsibilities.

OKR helps companies convey strategies to their team members in a practical and quantifiable manner. OKR also helps to move forward from output to outcome-based methods.

Objectives & Key Results

What is an objective?

Objective is a goal, intention, or a purpose to be sought in the future. An objective provides you with an inspiration and serves you as an OKR guide throughout achieving a certain goal.

What is a Key Result

Key Result is a metric system where there is an initial and target value measuring progress towards an objective.

Key Result helps you measure the distance you covered and implies how far/how close you are from your goal, whereas objective serves as your goal or destination.

What s an initiative?

Initiative describes what you will do in order to determine your Key Result. An objective is your destination; a Key Result is your meter; and, Initiative will help you reach that place.

OKR History Key Aspects

The history started back in 1954 when Peter Drucker founded Management by Objectives or MBO. Later, when Andy Grove founded Intel in 1968, he developed MBO and remodelled it into what we know today, the OKR.

In 1974, John Doerr joined Intel and he learned about OKRs there. Later when he joined one of the major investors of Google, Kleiner Perkins Caufield & Byers, he became a mentor in Google in its early days.

Doerr then introduced OKR to the founders of Google, Larry Page and Sergey Brin. These two implemented OKR at Google, which is still in use today and inspire other companies to use it. 

OKR and its Benefits

Impact on Your Business

Studies have shown that employees who used OKR tend to be more effective at their jobs, which results to better performance and increased sales. 

Company Culture Benefits

One of the major benefits of using OKRs is a cultural shift from output to outcomes, which allows an organisation to greatly focus on metrics and KPIs. Companies using OKRs system have more focus, alignment and transparency within the organisation.

When these factors are combined, it leads to a significant improvement in employee engagement.

OKR Guide – How to Get Started with OKRs

Before implementing OKRs, it is really crucial for every company to understand the challenges or issues they want to solve or the objectives they want to achieve. For most companies, OKR is a powerful framework that allows to solve problems and create a clear, transparent business strategy.

The role of a person in charge of OKR implementation is very important as the success of OKRs highly depend on this person. Normally, this person is known as the OKR Ambassador and his main role is to ensure that each team member who uses OKR is engaged, receives help and guidance throughout the process.

OKR is also a learning process that enables employees to think about the specific steps they need to take to be able to focus on outcomes (objectives), not just the output (tasks).

If you´d like to know how to set up an OKR, check some examples in the article on how to engage your employees to commit to the company goals.

Setting up OKR Cadences

The frequency of setting your goals is called cadence. In most organisations, OKRs are set up either annually or quarterly.

When planning for the annual OKRs, companies tackle high-level goals, which correspond with their yearly strategic cadence. Quarterly OKRs are usually owned by teams and departments, followed by shorter review cycles.

This process makes it easy for an organisation to shift direction in terms of strategies. The quarterly goals are always aligned with the main goals of the company.

Creating an Ultimate OKR

Most of the organisations have a mission and a vision. But very often these are difficult to understand as they are too generalised and broad. However, OKRs help turn the mission and vision into actionable items that are measurable and attainable.

You´ll be able to define your long-term organisational goals by turning your mission and vision into your ultimate OKR.

The ultimate OKR is normally set for long-term, around 10-25 years. A great example is when ex US President John F Kennedy decided America will send a man on the moon. They called it the Moonshot Goal”.

To accomplish this, NASA set smaller goals to achieve this purpose. Later in 1961, NASA achieved their ultimate goal.

How to Create Company OKRs

Your OKRs represent your strategy as to where you want to lead your organisation. Your OKRs should include 3-4 key results and these must be all measurable. You can review these OKRs annually or quarterly to keep track of your progress.

As the leader, it is necessary that you decide on what you want to achieve in the following 12 months. Gathering feedback from your team members is important in creating OKRs and ensuring that everyone is aligned.

I´ts a great idea to facilitate an OKR workshop to introduce the concept to your team. Allow your employees to provide suggestions on what they think the top priorities of your company should be.

In sum, commiting to a goal helps to drive performance among employees and setting challenging goals motivates your employees to perform well. OKR, the goal-setting system, helps organisations to set ambitious goals and achieve them through measurable actions.

Setting OKRs gives every leader like you a clear guidance on what to focus on during a given time frame. By adopting this popular strategy, you can tremendously foster growth and success within your organisation.

If you are interested in implementing OKRs in your company please take a look into my OKR Training and OKR Consulting pages.

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Luís Gonçalves

About Luís Gonçalves

https://plus.google.com/u/0/+LuisGonçalves1979

Luis Gonçalves is an Entrepreneur, Author & International Keynote Speaker. He works with Senior Executives to implement his ‘Organisational Mastery’ system so they can greatly increase the effectiveness and efficiency of their organisations; enabling them to become recognised and highly rewarded Leaders.

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