OKRs have become increasingly popular in recent years as a goal-setting framework. Some of the world's most successful organizations such as Google, Microsoft, Amazon, and GE all use OKRs to keep everyone aligned with the company's overarching objectives.
So, what exactly is an OKR? OKR stands for Objectives and Key Results. An objective is a specific, measurable goal that you want to achieve. Key results are the metrics by which you will measure progress towards that goal. When used correctly, OKRs can be an extremely effective tool for aligning your team's goals with your company's strategy.
OKRs can be used in businesses of all sizes, from small startups to large corporations. They are especially popular in fast-paced and rapidly growing organizations such as startups and tech companies because they provide a flexible/agile framework for setting, measuring, and achieving goals.
In this guide, we will cover everything you need to know about OKRs, including how to set objectives and key results, how to roll out OKRs within your organization, and best practices for OKR implementation. By the end of this guide, you should have a good understanding of how OKRs can be used to transform your business. Let's get started!
The History of OKRs
The concept of OKR can be traced back to the 1950s with management by objectives (MBO), a system developed by Peter Drucker, whose name is probably well mentioned in many training seminars, meetings, and lectures. In the 1970s, Andy Grove, the legendary manager of Intel refined the concept and introduced it to his company. Grove was a strong advocate of using measurable goals to track progress and drive results. He believed that setting specific, measurable goals was essential for any organization that wanted to achieve success.
John Doerr, who worked at Intel at the time, learned about OKRs and introduced them to Google when he joined Kleiner Perkins (one of the search engine's early investors). In his book "Measure What Matters", Doerr tells the story of how OKRs transformed Google from a small startup into a tech giant. Since then, OKRs have been adopted by businesses of all sizes, from small startups to large enterprises.
The Benefits of OKRs
When used correctly, OKRs can be an extremely effective tool for achieving business success, including
- Increased focus and alignment: OKRs help to ensure that everyone in your organization is working towards the same objectives. This can help to break down silos and encourage collaboration between teams.
- Faster decision making: by setting clear objectives and key results, businesses can make better decisions about where to allocate resources.
- Increased accountability: OKRs can help to increase accountability within an organization by holding individuals and teams accountable for their results.
- Improved communication: OKRs can improve communication between managers and employees by providing a clear framework for discussing progress and objectives.
- Increased motivation: the challenge of achieving ambitious OKRs can help to increase motivation and engagement among employees.
How to Set OKRs and Key Results
Objective
An Objective should be clear, qualitative, time-bound, and (ideally) inspirational. It should be something that you can reasonably accomplish within a set period (usually one quarter).
Key Result
A Key Result is a metric by which you will measure progress towards your objective. It should be quantifiable and have a clear target or deadline.
For example, let's say you are a startup that wants to set a growth related OKR:
Objective: Increase our user base through digital marketing
Key Result:
- Increase the monthly visitors to the website from 30k to 50k
- Achieve a conversion rate of 30% from website visitors to app downloads
- Reduce the bounce rate from 65% to 40%
Due Date: Q1 2022
As you can see, this OKR is specific and actionable, has measurable key results, and has a clear deadline.
Here's another example for Marketing:
Objective: Increase brand awareness
Key Result:
- Increase social media engagement by 20%
- Get 10 influencer mentions
- Launce 5 new Ad campaigns
Due Date: Q2 2022
This objective is more qualitative but key results are still actionable and measurable
For more examples of OKRs, check out our template.
How to Implement OKRs in Your Business
Once you have set your OKRs, it's time to roll them out within your organization. Here are a few best practices for doing so:
- Set realistic and achievable objectives: as mentioned earlier, OKRs should be ambitious but still achievable. If an OKR is too easy, it's not going to be effective. On the other hand, if it's too difficult, it will demotivate employees.
- Be specific and measurable: OKRs should be as specific and measurable as possible. This will make it easier for employees to understand what they need to do and track their progress.
- Involve everyone in the process: from setting OKRs to tracking progress, it's important to involve everyone in the organization. This will help to ensure buy-in and commitment from all employees.
- Keep it simple: OKRs should be concise and easy to understand. This will make it easier for employees to stay focused on the most important objectives.
- Use weekly check-in meetings: Have a short meeting (15-30 minutes) every week to check in on progress and address any blockers. This will help to keep everyone on track and engaged.
- Review and revise as needed: OKRs should be reviewed on a regular basis to ensure they are still relevant and achievable. objectives and key results may need to be revised if they are no longer realistic or achievable.
- Celebrate successes: When an objective is achieved, it's important to celebrate the success and share lessons learned with the rest of the organization. This will help to maintain motivation and engagement.
OKRs can be a powerful tool for driving growth and improving performance in your organization. By setting ambitious yet achievable objectives and involving everyone in the process, you can ensure that your OKRs are effective and impactful.
OKRs vs. KPIs: What's the Difference?
OKRs are a framework for setting goals and measuring progress. They are typically used by organizations in which strategic planning is a key part of their operations. KPIs, on the other hand, are a tool for measuring progress and determining whether it is sufficient. They are often used in conjunction with OKRs, but can also be used independently.
When it comes to setting goals, OKRs are more focused on the future and what you want to achieve, while KPIs are more focused on the present and measuring progress. OKRs are also typically more ambitious than KPIs. This is because they are designed to challenge employees and push them to their limits.
KPIs can be used to measure progress towards OKRs, but they can also be used to measure other things, such as operational efficiency or customer satisfaction.
While OKRs are also used to measure progress towards a goal, they are not limited to this. OKRs can also be used to set ambitious goals that may not have a specific metric associated with them. For example, an OKR to increase brand awareness may not have a KPI associated with it, but it's still a specific, measurable, achievable, relevant, and time-bound (SMART) goal.
Common OKR Mistakes and How to Avoid Them
When setting OKRs, it's important to avoid common mistakes that can lead to ineffective OKRs. Here are a few of the most common mistakes:
- Not being realistic: OKRs should be ambitious but still achievable. If an OKR is too easy, it won't challenge employees and if it's too difficult, it will be impossible to achieve.
- Not being transparent: OKRs should be transparent to everyone on your team. If team members are unsure of what the OKRs are or how they fit into the larger picture, they're likely to become disengaged and lose motivation.
- Not setting cadence: OKRs should have a cadence, meaning key results should be measured and updated on a regular schedule (weekly, bi-weekly, monthly etc). This helps ensure that the objectives remain relevant and that team members are held accountable for their progress.
- Not being flexible: OKRs should be flexible enough to adapt to changes in the business. If an OKR is no longer relevant or achievable, it should be updated or discarded altogether.
- Setting too many objectives: it's important to focus on a few key objectives and not try to accomplish too many things at once. By setting too many OKRs, you'll lose focus and likely end up achieving none of them.
- Including tasks as Key Results: Key results are the measurement of progress, not the task itself. Tasks should be included under the Key Results as action items.
The Bottom Line
OKRs can help organizations achieve amazing results by setting ambitious goals and keeping everyone aligned and committed to them. However, it's important to avoid common mistakes that can lead to ineffective implementation. By involving the entire team in the OKR-setting process, setting goals that are ambitious but achievable, running weekly check-in to update progress, and reviewing and adjusting them on a regular basis, you can ensure that your OKRs are effective and motivating.
This article was brought to you by the OKR experts at Quokka HR. We help companies transform their people management practice with our software solutions.
Contact us today to see how we can help you achieve your goals!
