The What, Why, and How of OKRs
Legend says that if an executive speaks the words “goal setting framework” three times in a meeting room, a management consultant will appear from nowhere and shout “OKRs!” to the entire room.
That is absolutely not true and we totally made it up.
If that did happen though, the magical consultant would be right. Search online for effective frameworks for goal setting, and we’re certain you’ll see OKRs appear on the first page. The popular framework was first used by Google back in its early days and more recently gained credibility with business leaders like Bill Gates, Jeff Bezos, and Richard Brandson testifying to its effectiveness.
If you’re reading this, you’re either curious to know what it is, or you’re looking to understand how it works. Chances are you’re a leader backed by a talented and hard-working team, and you’re looking for an approach to keep them focused and motivated. Traditional project management tools help organize but not orient. That’s where OKRs come in, and that’s where North can help.
Before we get straight into implementing OKRs, it’s important to understand the history and purpose behind it. There’s a lot you can do right with them, and a lot you can do wrong. Your success depends on how well you understand and implement them. In this guide, we’ve broken down and
A Brief History of OKRs
Google popularized the OKR framework, but they didn’t invent it. The credit for that goes to Andy Grove, the co-founder of Intel, and the first to implement it, at least two decades before Google was born.
During his time as CEO of Intel, Andy initially turned to Peter Drucker’s Management by Objectives ( MBO ) technique to avoid the “activity trap” that managers fall into, losing the focus and time spent on vision and strategy. Andy took the MBO concept and upgraded it with the Key Results component, creating his own version of management strategy. With that, OKRs were born, cementing Andy Grove in management history as the father of the OKR framework.
In 1974 John Doerr joined Intel as an intern, eventually becoming one of its most successful salespeople. He learned OKR during his time there. Doerr later moved into the venture capital space went on to join Kleiner Perkins Caufield & Byers, one of the first major investors in Google. He became an adviser to Google in its very early days, and introduced OKR to founders Larry Page and Sergey Brin. The rest is history.
The silicon valley legend’s book Measure What Matters is one of the best resources on OKRs, recommended to leaders and companies of all sizes and industries.
OKR stands for Objectives and Key Results. Simply put, it’s a goal-setting strategy that prioritizes outcomes over outputs. They connect the company and the various units within it to results while providing a clear unified direction to work towards. They’re short, ambitious, clear, and most importantly, measurable.
OKRs also include initiatives, which explicitly describe the steps needed to achieve the key result and overall goal
Here’s the textbook definition from John Doer himself.
An Objective is simply what is to be achieved, no more and no less. Objectives are significant, concrete, action-oriented, and (ideally) inspirational. When properly designed and deployed, they’re a vaccine against fuzzy thinking—and fuzzy execution.
Key Results benchmark and monitor how we get to the objective. Effective KRs are specific and time-bound, aggressive yet realistic. Most of all, they are measurable and verifiable.
An Initiative is a description of the step or work or steps you’ll take to achieve a key result. If an Objective is your destination and a Key Result shows the distance to go, then an Initiative describes the directions you’ll take to get there.
If you’re curious to see what these look like, check out our lightweight examples here. We’ll go deeper in a bit.
Why Use OKRs?
Nobody says you need touse OKRs. Management principles have a degree of subjectivity to them, and there’s a fair bit of art to the science. Understanding the core philosophy on which they’re built makes the a world of difference in executing it. To do that, you need to understand the principles on which they are built.
The OKR system of setting goals, tracking progress, and measuring performance inherently rests on 4 pillars. These pillars form the foundation on which a solid OKR strategy is built – the stronger the pillars, the better the strategy.
Transparency in process and clarity in communication builds a culture of trust within organizations. Companies cannot afford to isolate teams from the goal-setting, and must ensure all information available for anyone and everyone; this ensures alignment, collaboration, and empathy.
Organizational agility is key to achieving success. Agile is often branded as a product development skill and ignored by other departments. In reality, agility should be a deep-rooted philosophy in operational teams as well. A company, no matter how large, should be able to respond quickly
As John Doerr says, measure what matters. Tangibility is key – if you have goals that can’t be tracked, measured, and compared against metrics, then you don’t have a good system in place.
It’s logical to assume you’re only doing well if you achieve all your goals at 100%. It may seem like deliberate cognitive dissonance but it’s actually ok to achieve 70% of your goal. Setting ambitious goals means dreaming big and putting in the effort to achieve that 100% – they’re moonshots. Moonshots push the team out of their comfort zone, and they work collectively to achieve more. What isn’t acceptable, is accepting 70% as the new norm and not stretching yourself.
Aside from the business impact, there’s the cultural benefit of implementing an OKR system. Your people are, well, people. Not machines that can be programmed with numbers and directions. The core OKR principles ensure alignment, focus, and most importantly, motivation. The system fosters a culture that values transparency and collaboration, thereby leading to increased and sustained employee engagement.
Set the Cadence
- The Spectrum of Need – Most companies will lie on the spectrum of can to should to must implement OKRs
- First Understand if OKRs can help your company, then figure out how to implement them.
Before you start using OKR it’s important to have a clear understanding of the challenge you want to solve, or to put it another way, the Business Objective you’re hoping OKR will help you achieve. For most organizations, OKR solves the challenge of executing business strategy in a way that’s clear to all employees, transparent and measurable.
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