OKRs: The Guide That Explains Everything You Need To Know
OKRs (Objectives and Key Results) is a recent leadership foundation that helps organisations set, communicate, and measure their goals. Primary function of OKRs is to connect an individual´s personal objectives with the team and the company in a hierarchical way.
The main goal of OKRs is for every member of the organisation – from the key stakeholders and leaders down to the team members – understand the objectives of the company through a set of defined, specific and measurable actions.
Because of today’s complex nature of organisations, team members often find themselves feeling lost among the rapid changes they deal with every day. It happens often that employees feel discouraged and have a lack of purpose just because the company goals and strategic plans are too high-level and abstract.
OKR at Google: Case Study
There are numerous small and large companies that have adopted Objectives and Key Results to achieve their goals. Among these are Twitter, Oracle, LinkedIn, Trello, etc.
But it wasn´t entirely a new concept. One of the companies that started using OKRs long ago is Google. When Google was just starting their business, one of its investors, John Doerr, suggested using OKRs. The idea was actually adopted from Intel and proven to be highly effective.
How Does Google Use OKR
Rick Klau, Google Ventures partner gave an insight in one of this presentation about how OKRs work at Google.
Using OKRs is very simple. It starts with setting up an Objective and followed by identifying Key Results (Key Results should be quantifiable as it´s the only way to find out whether you have achieved your objectives).
Your objectives shouldn´t only be measurable, but they should be as concrete as possible. Stating you want to increase your sales is not concrete and measurable, it´s abstract. Instead, you can define that you want to increase your sales by 30%.
At Google, objectives are set annually and quarterly. When Rick Klau took charge of Blogger – a blog publishing service owned by Google – he set a quarter objective to improve the company´s reputation.
Because of an increasing competition, Blogger started losing popularity as other blogging platforms entered the market. Therefore, Klau created 4 Key Results to improve Blogger´s reputation:
- 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 at Google are normally more high-level, enclosing the quarterly objectives. What´s important to note is that they change and evolve as the need emerges.
Google adopts OKRs accross whole organisation, at managerial, team and even personal level. This ensures that everyone gets things done to achieve the company goals.
By the end of each quarter, all stakeholders at Google rate their key results. The scale at Google is 0-1. The idea is not to reach 1 in every Key Results, otherwise, it is assumed that the Key Result was too easy to achieve. Employees at Google aim for a score of 0.6-0.7.
Transparency at Google is important. Everyone´s OKRs are visible. Everyone can see each other´s OKRs and their scores. It helps them understand what others are working on.
Key Elements of OKRs
Probably you´ve understood the main purpose of OKRs and how it can benefit your organisation. The real challenge though is setting up your own OKRs and analysing the Key Results to achieve your company objectives.
There are only two elements of an OKR:
- Objectives – depending what your role is, you start by identifying 3-5 key objectives of your company, team, or on a personal level. While objectives should be ambitious, they should also be measurable. You, as a manager, you should make sure that such objectives are carefully communicated to everyone on your team.
- Key Results – the “objectives” answer the question “What?”, whereas “key results” answer the question “How?”. Key Results must be quantifiable, achievable, clear, difficult, but not impossible. Most importantly, Key Results should be measurable. This is the only way to track your or your team’s progress, understand the issues, and develop/improve processes along the way.
Many people may compare OKR to other traditional goal-setting practices that were used before. However, the OKR process is different because it has two additional aspects:
- Cascading alignment of goals
- Breaking up Objectives into smaller, actionable steps
There is one element we may not forget to mention – tactic. Tactics fall under Key Results and inform the “how” part. Note that tactics are different from the tasks. They are strategies that are used to perform those tasks.
Normally, you may deal with tasks using a project management tool, such as Trello or Asana. These tasks fall under tactics. Often, you may need a combination of different tactics to achieve the Key Results that support your objectives.
How often do you establish an OKR?
The frequency of setting your goals is called cadence. If you have several departments in your organisation, it´s important that each department has the same time constraint to help with coordination and avoid complexities.
You may set annual and quarterly goals within your company. Just remember, OKR is meant to be a simple process.
Characteristics of Objectives
The goals of objectives should be to:
- Answer what you want to achieve within a certain time-frame (e.g. after a quarter)
- Serve as a strategic theme that oversees your accomplishment
- Qualitative as it is supported by a set of actionable steps
- Each objective should have 1-5 key results that are measurable
Characteristics of Key Results
Key Results should:
- Refer to the results you´re looking for
- Help you to measure your progress
- Resonate to HOW you will achieve your objectives
- Be measurable – you should include a KPI (Key Performance Indicator) that is quantified through metric
In most organisations, Key Results (KRs) are used among teams, not in management level. Teams don´t create the goals (unless they are personal goals), but managers or leaders they assign the goals for teams. They normally own the KRs.
Managers or leaders will have contributing goals, but won´t have KRs. The goals are higher level goals that have the same attributes as the KRs, which are aligned with the senior goals.
How to set up an OKR for your team
Step #1: Set the stage
Introduce the concept of OKRs to your team, explain how the KRs work and how KRs effect their performance. Explain them that purpose of the OKRs is to also make them feel uncomfortable when they set ambitious goals and miss it (as long as they are making some progress). Encourage them to go outside their comfort zone.
Step #2: Identify your objectives
Ask your team members to take part in brainstorming sessions. Don´t forget that your team goals should always be aligned with the senior goals (company objectives). Try to come up with 3-5 objectives.
Step #3: Identify your key results
Put down the measurable outcomes that show whether you have achieved your objectives. You´re dealing here with results, not tasks. See example below:
Objective: Increase profit by 20%
- Launch seasonal campaigns (e.g. Christmas promotion) and double revenue from the past year
- Use cash discounts on suppliers to save 10% on purchases
- Outsource distribution to stores to reduce cost by 10%
Step #4: Review and analyse
When you´ll review your initial list of KRs what may happen is that you will revise your objectives. If you´re very confident that you´ll hit your KRs, that means you´re not being ambitious enough. To get out of your comfort zone, try increasing your target one level up.
Step #5: Ask for feedback
Getting feedback is crucial, especially for those who will be involved in the execution. Listen to the feedback, some people might give you great suggestions to improve your OKRs.
Step #6: Scoring
A critical aspect of measuring KRs is scoring. If you´d like, you can use scoring that Google uses. They use scale of between 0 and 1.
Extraordinary Qualities of OKRs
OKRs have distinctive qualities that help transform many organisations across various industries. List below indicates some of them:
- OKRs give a sense of purpose and direction – the company objectives are cascaded to individual team members more clearly
- OKRs help an organisation to focus on the success of the business and allow to focus on everyone´s effort
- OKR allows everyone in the organisation to align their goals with company goals
- It measures and tracks the performance in a way that helps to motivate employees to do better
- Regular assessments and progress check-in help with better execution
- OKRs are focused on results and outcomes, not on tasks
- Creating OKRs means involving the group, not only selecting individuals or key people
- Helps managers measure the performance of team members and allows more targeted feedback
- Brings transparency to the company because everyone can see what others are working on
- OKRs foster collaboration across teams and between team members
Committing to a goal helps to drive performance among employees, some studies have shown. Setting challenging goals motivates your employees to perform well.
OKR is a goal-setting system that helps organisations to set ambitious goals and achieve them through measurable actions. OKRs should be set quarterly or annually. It´s important to focus on objectives that can be achieved within a certain time frame.
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.
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