OKR History for the Leadership and Management Nerds
If you landed on this page, you have my respect for researching a topic that only gets researched by management nerds 😉 Kidding aside, it’s also great to know about OKR history and the framework has evolved to what it is today so you will have full understanding of the rationale behind its final form.
The idea of restructuring and streamlining corporate processes and organisational structures began with Taylor and Ford, known as the “Fathers of Scientific Management”.
Together with his colleagues, he began to treat business as a science, thinking ways to measure and improve output per employee. In recent times, we call it ‘productivity’.
They brainstormed about how they can increase output by figuring out how to optimise work schedules and break times. They also thought of ways to streamline the production process in factories. All these lead to tangible and remarkable results.
It was in the 50s when Peter Drucker, who was deemed as the greatest management guru of all time, sparked the idea that managers’ goals are important. In addition to increasing output, Drucker proposed that organisations should also aim at specific outcomes. He called this framework “Management by Objectives”.
Fast-forward today, almost every company makes use of a goal-setting strategy, giving high regard to the importance of setting objectives in driving remarkable results. Some companies set goals twice a year, others four times a year.
So the framework that they use is definitely essential in deciding the course of their respective companies.
OKR History – 21st Century
OKRs, as they are known today, were first introduced by Andy Grove in Intel. He was in fact the co-founder of Intel and former CEO. In his book “High Output Management”, he talked about the need to attach key results to goals (calling these goals as “objectives”). These key results are what make OKR very effective and transformational as they refer to how goals can and should be attained.
What are Key Results? According to Grove, these answers whether a company has achieved its goals. They have to be in chronological milestones.
For example, a one-year goal can be broken down into a 12-month key results, or quarterly key results. Setting milestones were very relevant in Intel that time because theirs was a large company and has a need to translate strategic planning into actionable goals and milestones.
Another unique characteristic of ORKs, as opposed to MBOs, is that it involves a bottom-up process. Meaning, insights should come from the employee up to the manager and CEO to be able to bring buy-in and empowerment.
He believed that when employees are given the opportunity to provide their insights and contribute more to the goal-setting process, they are more likely to help the company achieve its goals.
Before this, companies create goals and pass them down to the employees. With OKRs, employees set their goals with the guidance of their leads, often done through one-on-one coaching sessions.
Grove also insisted that OKRs need to be aggressive. Meaning, they have to be challenging and difficult to achieve. He calls this ‘stretched goals’. With his definition of OKRs, Grove believes that hitting 70% of your goals is as good as achieving all of them.
How OKRs Spread
OKR was the secret ingredient of Intel’s success. And it was not a surprise when this management principle quickly gained the attention of other Silicon Valley companies, including Google.
It was Jon Doerr, a venture capitalist who has worked at Intel under Grove’s leadership, who introduced OKRs to Google, which was then just a small company with 30 employees. Google’s version of OKR was much similar to that of Intel’s, only that they are a lot shorter (they do it every three months).
This is to keep up with the fast-changing industry of technology companies. They upheld Grove’s position that goals should be done in a bottom-up manner. They also retained the visibility of everyone’s OKRs.
Everyone in Google can check each other’s OKRs and see what everyone else is up to. This strategy has maintained alignment between the company goals and the employees’ objectives and pushed collaboration and accountability.
Google values stretched goals as well. So much that with their scoring of 0-1, getting a 1 would mean that you didn’t set your goals high enough. Measuring key results remained to be a standard process.
Today, many other companies have adopted OKRs. They include Amazon, Zynga, Twitter, Spotify, and many others. They have their own tweaks in OKRs to fit the needs of their organisations.
What remained constant across these companies are the basic concepts that came from Grove. One is that objectives should be clear and specific. Some companies like to limit their objectives to 5, like Google.
Others have as many as 10 objectives. Regardless of the number, they have to be written in concise and understandable statements. Second, key results must be measurable and time-bound.
Some companies have key results for each month, others per quarter, while the rest would go with yearly ones. They also differ in terms of scaling OKRs.
While Google and others use numbers, others use words like “Good” or “Not Enough”, even emoticons to know whether a team or employee has reached their objectives.
For decades, OKRs have proven to be a solid, reliable tool that helps the world’s top companies achieve their long-term goals. Thanks to its early proponents – companies now have a powerful framework to keep up with the changing times and have everyone in their ranks to work in harmony.
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