What is an OKR?

OKR is an acronym that stands for “Objectives and Key Results”, a popular goal management framework that helps companies define and track their objectives and their outcomes.

The History

It’s a framework used by some of the most successful companies in the world including Google, Intel and many more. The concept’s early beginnings lie in Peter Drucker’s Management by Objectives (MBO) approach where objectives are clearly defined and agreed upon between an executive and their employees. This MBO approach was then adapted by Andy Grove the then CEO of Intel in the 1970s and was later published in his book “High Output Management”. The concept of OKR was a further adaptation by John Doerr, who was one of the earliest investors in Google. His introduction of OKR at Google in 1999 quickly became an important focus for the company, and with their success other companies such as LinkedIn, Twitter, Dropbox, Spotify, AirBnB and Uber followed suit. Now, OKRs are pretty commonplace among new age companies and in places like silicon valley, almost every company uses them.

The Anatomy

Digging further into its anatomy, OKRs have two components (as the name obviously suggests): Objectives and Key Results:

Objectives (O) are qualitative, high level, aspirational goals.
Key Results (KR) are quantitative, specific, actions that define how the Objective shall be achieved.
While Objectives should be written in an aspirational manner, Key Results should be actionable and measurable

The way John Doerr defined goals translates into a formula like the one mentioned below

Doerr’s Goal Formula

I will ________ as measured by ____________.

This formula is the best way to explain the structure of an OKR. The 2 parts of this formula is set to “what I want to accomplish” (objective) and “how I’m going to get it done” (the key results )

Adoption of OKRs

The real reason why OKRs are so popular is that OKRs are simple yet extremely effective. Every company or team can adapt and tweak it, creating different versions of it – as long as the core principles are preserved.

OKRs are frequently set, tracked, and re-evaluated – usually quarterly. OKR is a simple, fast-cadence process that engages each team’s perspective and creativity. The key aspects that needs to be kept in mind are:

  • Set goals for short periods of time (usually for a quarter). Longer the periods, harder it is to adapt and improve.
  • Keep the objectives simple, straightforward and easy to understand. Easier the Objectives are to understand, easier it will be to align with other objectives
  • The objectives should be aspirational. More aspirational the objectives, the more impact they will carry.
  • OKRs should drive alignment within the organization and in between teams & between employees. OKRs shouldn’t be created in silos.
  • In order to achieve alignment and participation, OKRs should be set in a transparent manner.
  • Define Key Results that are quantified and measurable.
  • Track your progress regularly. Without consistently measuring the progress, it won’t be possible to achieve your OKRs.
  • Detach OKRs from Rewards. To drive aspiration, the employees must feel secure and not worry about compensation impact. OKRs are not an employee evaluation tool, it’s a management tool.
  • Don’t set more than 3-4 Objectives max per level (e.g. per department, per employee)
  • Only keep 3-5 Key Results (maximum) per Objective. Key Results must measure the value (impact) it drives to be effective.

OKR Examples

Now that we have a decent understanding of OKR, let’s run through some examples and see what makes for a good OKR.

Thus, with OKR, a goal isn’t just what you want to achieve; it must include a way to measure achievement. OKRs have helped multiple businesses stay on track in a fast-paced, ever-changing industry, while still encouraging innovation. What about you?

Example 1:

O: Improve Customer Experience
KR 1: Decrease the time taken to answer a call by 20%.
KR 2: Increase first contact resolution by 10%.
KR 3: Improve Net Promoter Score from X to Y.

Example 2:

O: Successfully Launch Version X Of Our Product.
KR 1: Get ____(number) of signups with demo of version X.
KR 2: Achieve sign up to a trial ratio of over 25% as compared to the previous version.
KR 3: Achieve 50% more trial-to-paid conversions as compared to previous version

Thus, with OKR, a goal isn’t just what you want to achieve; it must include a way to measure achievement. OKRs have helped multiple businesses stay on track in a fast-paced, ever-changing industry, while still encouraging innovation. What about you?

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