Understand the concept of Objectives and Key Results (OKRs)
Objectives & Key Results bridge the gap between your long-term vision and day-to-day activities.
This article is an extract from the introduction chapter of our book “OKRs AT THE CENTER - How to drive change with goals and create the organization you want.” It provides a short overview about the basic concept and definitions.
Long-term goals of a company are typically manifested in the purpose, mission, and vision. They help articulate meaning, and give people orientation. As inspiring and important as they are though, they are too high-level to help prioritize the initiatives and day-to-day challenges that every employee faces. If you worked for Microsoft in the 1980s and looked only at the company vision—“A computer on every desk and in every home”—would you have known exactly which initiative to drive next?
This is where the concept of OKRs steps in: OKRs bridge the gap between the high-level purpose or vision and the specific tasks needed to make it a reality. OKRs describes the next ambitious and inspiring step you want to take in order to achieve the high- level goals.
Similar to a microstrategy, the Objective describes the next step toward the company’s purpose or vision. OKRs work on a shorter timeline than Vision, and are oriented around using the most current information you can gather. So, after you complete an Objective, you pause, reflect, and calibrate the next step with the latest information available at that point in time so that—step by step—you can get closer to what you are trying to achieve.
As much as Objectives provide direction, there is still a lot of room for misinterpretation and contrary activities in pursuit of the Objective. What’s the best way to achieve this Objective? How do we know that we’re on the right track?
This is where the second part of OKRs come in—the Key Results. Key Results (KR) quantify the Objective with measurement criteria so you know whether or not you are on track—and know when you have actually achieved your Objective.
Note: As we believe that there is no one way or right way of using OKRs, wording is important to ensure everyone is on the same page. In our work we use “OKRs” to describe the holistic concept with all its processes and “OKR Set” to describe a specific goal consisting of one Objective and various Key Results.
This example on the right might illustrate the principle of the OKR Set definition.
As OKR Sets are very dependent on the company context, amount and level of OKR sets in the company and many more factors, it is important to focus on your own OKR Set formulation instead of looking for “best practices”.
Conquer new customer segment ‘online marketers’
KR1: Increase the leads in the funnel to 100,000
KR2: Achieve a $50,000 turnover in the next quarter
KR3: Increase the customer satisfaction by 30 %
KR 4: 4 new products for online marketers are live
An OKR Checklist can help you during the definition process:
OKR Sets are typically defined in dedicated OKR Definition workshops. if you would like to know more about how to facilitate such a workshop check out our OKR Workshop GuideI
The way you define your OKR Sets—how you express your goals and make them measurable—is only one part of the OKR concept. Another critical part of OKRs is the ongoing process of using them. This is called the “OKR Cycle.” The OKR Cycle refers to the entire process from OKR Definition and Alignment to the regular OKR Check-ins you hold during the cycle, and finally to the OKR Reflection at the end of each cycle.
A typical OKR Cycle looks like this:
OKRs are defined for a short time period, often for a single quarter. They are based, as we said, on the company’s purpose, vision, and mission, but also on the current strategy of the company
The definition is followed by an alignment process to link all company levels and different teams. Alignment can be executed top-down, bottom-up, or with a mix of both. The result is aligned OKR Sets for the whole company, which are, ideally, transparent to all employees.
Following this, you begin a rhythm of OKR Check-ins, which allow teams to track progress on a regular (e.g., weekly) basis to change tactics as needed and remove obstacles along the way.
Finally, an OKR Reflection at the end of each OKR Cycle provides insights that you can use to improve the OKR Process and to define your OKR Sets for the next period. The reflection provides critical feedback on your method of working with goals and how your company approaches its challenges. It helps you learn about your culture and how you collaborate. It also provides insights on the potential for improvement of other organizational elements, which is why we say that OKRs can be the driver of organizational change. The rhythm provided by this regular cycle of planning, execution, and reflection can be a motor that drives your change efforts.
So, to summarize, the OKR Cycle is an iterative process that allows you to define ambitious and measurable goals in an aligned, participatory, and transparent way. From there, you work with these goals through a process of regular check-ins and reflections.
OKRs are often associated with Google, but the idea was originally developed in the 1970s at Intel by Andy Grove. At the time, Intel was trying to shift the whole company strategy and transform itself into a world-class microprocessor supplier in a very short time frame. To succeed, Intel would need to refocus.
Grove’s system helped the company focus on a quarterly north star—the Objective. This objective was than accompanied by a specific set of measurable Key Results to quantify it and allow people to understand progress toward the objective.
Google was introduced to OKRs in 1999, when former Intel employee John Doerr introduced the system to the management team at the young company. Google has worked with OKRs ever since. Through employees of these companies, the concept has spread throughout Silicon Valley, the tech industry, and beyond. If you want to read more about the history, see “Measure What Matters” by John Doerr.
An organization is a complex system. To change the system and create long-term success, you need new habits, structures, and processes that enable new principles of working throughout the organizational system and for all employees.
As goals are a key cornerstone of the organizational system, changing the way you work with goals has the potential to drive ongoing change across the entire system to create more focus, alignment, value creation, connection to meaning, autonomous decision-making, and faster learning cycles.
That’s why we see goals at the center of every organizational transformation.
OKRs AT THE CENTER - How to use goals to drive ongoing change and create the organization you want!
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