OKRs (Objectives and Key Results) are a strategic framework that fosters collaboration and alignment within organizations. They define significant and measurable objectives, with key results monitoring progress towards those objectives. Used by innovative companies like Google, OKRs follow specific rules, promoting a culture of continuous improvement and adaptability to market challenges. Maintaining focus and flexibility are key principles in the OKR setting and management process.
Goal selection is the first line of defense against excessive dispersion of efforts. OKRs possess an inherent quality, allowing them to adjust to the demands of both business requirements and the challenges posed by the market, rendering them exceedingly flexible instruments. An OKR possesses the capacity for adjustment or cessation at any point within its iterative process, with instances arising where pertinent key results emerge weeks or months subsequent to the establishment of an objective. In the discourse on goal formulation, Andy Grove, CEO of Intel Corporation, posits that the paramount requirement of an efficacious system is the provision of focus; the restriction of objectives to a modest quantity facilitates the judicious allocation of finite resources.
OKR work flow
It is possible to assume that different organizations use OKRs at various levels: corporate, team, and individual (larger companies may have additional levels). Within an OKR work flow, there are distinct moments where different professionals interact in different ways:
- From four to six weeks before the start of the quarter: brainstorming to define the OKRs for the upcoming quarter and subsequently the annual plan, which can help steer the direction of the company.
- Two weeks before the quarter: communication of corporate-level OKRs for the current year and for the upcoming quarter. Finalization of OKRs for the company and communication to all members.
- Beginning of the quarter: communication of team-level OKRs for the first quarter. Based on the corporate OKRs, teams develop their own OKRs and share them during meetings.
- One week after the start of the quarter: one week after the communication of team OKRs, employees share their own OKRs. This may require collaboration between employees and their managers.
- During the quarter: employees track progress and conduct periodic check-ins, measuring and sharing their progress by regularly checking in with their manager. Individuals estimate the likelihood of fully achieving their OKRs.
- Towards the end of the quarter: employees reflect and evaluate their first quarter OKRs. Each individual assesses their own OKRs and conducts a personal evaluation, reflecting on what they have been able to achieve.
According to Google's model, a quarterly cadence of OKRs is most suitable for keeping pace with the rapid changes in today's markets. A three-month time frame prevents continual procrastination and leads to real performance improvements. However, this type of OKR compilation protocol is not universal for all organizations. A technical team might opt for six-week OKR cycles to stay in sync with development sprints, while a monthly cycle might be more effective for a company that is still finding its footing and needs to discover the best fit between its product and the market. Essentially, this ties into the theme of focus, giving each organization the freedom to find the best cadence for its OKRs; often, the best cadence is the one that can keep the organization focused on the ever-changing market it operates in.
Here is a list of common errors in creating OKRs, along with brief explanations for each:
- Writing "business as usual" OKRs: when OKRs are drafted based on what the team believes they can achieve without changing anything, rather than being based on what the team and its customers truly desire.
- Drafting non-aspirational OKRs: a team's OKRs should credibly engage most of the available resources. If a team manages to achieve all its OKRs without utilizing all available human and capital resources, it is presumed that it is either accumulating unused resources or the team lacks sufficient motivation. This serves as a signal for senior management to reallocate resources to teams that make more effective use of them.
- Defining objectives of low value: objectives of low value are those that, even if achieved with the highest score, will go unnoticed and will not significantly impact the organization's well-being.
- Setting insufficient KRs for the objective: it is essential that key results are formulated in a way that a high score yields a rating of 1.0 for the objective. A common mistake is writing key results that are necessary but not sufficient to complete the objective they are related to. This error is particularly harmful because it delays both the identification of resources required for the objective and the realization that the objective will not be completed by the deadline.
Creating a less crowded list of objectives is always a challenge, especially for organizations that are highly innovative and constantly seek new opportunities both internally and externally, but it is a necessary process. If an objective is well-defined, usually three to five key results are sufficient to achieve it. Too many can obscure focus and obscure progress. Additionally, each key result must lead to improvement; if you are confident in fully achieving a KR, it is likely not a necessary KR.
Clear communication of the organization's strategic objectives is a crucial focal point. Leaders must be able to articulate to their employees why they are engaged in certain activities rather than others. Employees and colleagues need more than monthly targets to stay motivated. Most employees want to know and understand how their objectives relate to the company's mission. The informational process cannot stop at presenting high-level OKRs in a quarterly meeting but must be fueled by sharing practices between leadership and frontline employees.
In most organizations, strategic objectives remain confidential, resulting in a significant number of individuals working on incorrect tasks at any given time. Transparency fuels collaboration; for instance, if an employee is struggling to achieve a quarterly goal, their colleagues can see that they need assistance. They can step in with feedback and offer support, thereby improving both interpersonal and team communication and teamwork. Equally important is that working relationships among individuals deepen and strengthen. In large organizations, it is often the case that different people unknowingly work on the same objective. OKRs, by allowing everyone to see each other's goals, eliminate redundant efforts and align everyone's schedules, saving time and money.
Taking any organization as an example, it begins by setting high-level objectives. Then, during the transition from planning to execution, managers and all staff members link their daily activities to the organization's vision. The term for this connection is alignment. Focused and transparent OKRs are capable of connecting the work of each individual to team efforts, department projects, and the overall mission of the organization. OKRs are a tool that can align businesses both horizontally and vertically.