Are you looking to boost the productivity of your business? if you said YES, then the key is to put the focus on your goals and measure all the results which are most important.
One of the major problems most of the businesses face is the fact that the leaders and their subordinates have different goals and approaches to achieve them. It grows as one of the biggest challenges to achieve the goals of the business because they are not on the same page.
To keep them aligned together so that they can run after the actual goals of the business together, OKRs framework is one of the best ways.
The concept of OKR might be novel to some, but it has been proven to be a success for many leading businesses around the globe, and they have felt various differences in implementing this outstanding framework to their companies.
To understand OKR in detail, here we have compiled this Ultimate OKR Guide where you can read about everything that you should know about OKRs.
What is OKR?
OKR is the short form of Objectives and Key Results. It is an excellent framework to take the right steps towards achieving your business goals because it helps your organization in aligning better with the purpose and enhancing the focus of everyone on the tasks that matter the most.
OKRs are not only for the leadership teams but also for all the team who wants to set goals and track their performance. OKRs make it easy for businesses to accurately put the company’s strategy into action on all levels, that too, in a measurable and actionable way. One of the main objectives of OKR is to link the company, employees and goals to measurable results while keeping all the leaders and employers work collectively towards the same goal.
A Quick Brief on the History of OKR
Andy Grove, one of the founders and first CEO of the computing giant, Intel, is considered as the pioneer of OKR. He introduced OKR for the first time to Intel and documented everything in his book “High Output Management” in the year 1983.
It was further explained by John Doerr, the iconic investor behind Google, Amazon, Sun Microsystems and few others . He first heard about the OKR in a training held in Intel delivered by Andy Grove. According to him “The Key Result has to be measurable.” In 1999, Doerr introduced OKR to a start-up called Kleiner Perkins Caufield & Buyers which has already had some business with Google.
The concept of OKR then became quite famous and it became central to Google’s culture because it helped them to make sure that all the efforts that their business is putting are on the essential issues.
Nowadays, OKR is highly preferred among thousands of organizations, including Google, LinkedIn, Twitter, Oracle and more.
Structure of OKR
The overall structure of OKR is quite simple and straightforward to understand. It revolves around two key things called Objectives and Key Results.
Let’s dive deeper and see what are Objectives and Key Results?
Objectives are the milestones that your business needs to achieve in order to achieve their goal. They provide a clear cut direction regarding the goal. Using OKR, you can easily set all your main objectives relating to your team, business or your personal life at a time. The objectives are often qualitative and hard to measure. That’s where Key Results come in.
For every objective, there are some measurable outcomes that you can add as key results so that you can easily track the progress of your objectives. These results are based upon the KPIs, which matter the most in terms of meeting your decided objectives. They are also very effective to discover the hurdles while chasing those objectives in order to make necessary adjustments to them.
Characteristics of Objectives
Here are all the key characteristics of objectives which can help you set them for your needs in a better way.
- Objectives should be easy to understand so that they can be implemented properly.
- Objectives should reflect the targets that you want to accomplish in a specific time.
- They ought to be qualitative as they are supported using a set of actionable steps.
- Objectives need to be flexible so that you can adjust them accordingly.
Characteristics of Key Results
Here’re all the key characteristics of key results which can drastically improve the implementation of this framework.
• Results ought to be helpful in measuring your progress in a specific time.
• They should refer to the results that you are looking for.
• They should reveal how close you are to your objectives.
Example to Create OKRs
To understand OKRs in an even better way, consider this example.
Suppose you are a marketing agency and your customer is asking you to pull off record metrics in different areas of marketing.
Assuming that your team already scored record breaking conversions for your client in the previous quarter, your OKRs should look something like this:
O: Achieve 50% more results than the previous quarter
KR: 200000 visitors on the website
KR: 40000 signups
KR: 25000 trials
KR: 6500 paid customers
How to Setup the OKR framework successfully
If you are using OKRs for the first time, then it’s better to set them on a quarterly basis because it provides you and your team with the room to learn and adapt this framework with perfection. You can also set different OKRs for various teams like for some teams, you can set certain OKRs on a quarterly basis, and for others, you can make annual OKRs depending on the requirements.
In order to successfully implement OKRs for your business, you should follow certain steps which are listed below:
1 - Conduct Meeting to Let Everyone Know
The first and foremost step is to communicate with everyone by arranging a meeting so that they feel comfortable about it because it might be a new concept for the employees who are not aware of OKRs. You should tell them the benefits it can have by setting and tracking specific results.
2 - Select a Tool
The next step is to find an excellent OKR tool. It is one of the critical things that need to be done accurately because if you select the wrong tool, then you can’t get all the benefits that you want to have from these software. There are many software for OKR available, so make sure that you choose a tool that only offers good features but also is easy to use. Top quality OKR tools allow you to discover the previous history so that you can make better OKRs in the future.
3 - Identify Your Objectives
Now, you need to discover all your main objectives so that you can place them in the tool. Make a list of all of them so that you can effortlessly set measurable results with each of them. Don’t mention lots of objectives at a time because it can make things quite difficult.
4 - Set Key Results
It’s time to list down all the key results with your objectives. You can include the results that you are expecting from your objective.
5 - Review and Analyze Results
It’s the final step, which is all about reviewing and analyzing the results of your OKR. These results are very helpful to see either you are hitting your objectives in the right way.
Challenges Faced By Businesses While Creating OKRs
Creating OKRs with perfection is certainly not as easy as it may sound to someone who has studied them. Companies usually have to face certain issues during the OKRs creation process. Some of the general issues are listed below:
• How to measure the Key Results?
• When to measure them?
• How to calculate results that are dependent on multiple teams?
• How to set and track personal goals?
• How much time should be set while creating OKR for long term and short term goals?
• How to create OKR for bottom up and top down teams?
Well, these challenges are normal for businesses that are just getting started with OKRs, and they need some time to effectively overcome these challenges. They will start getting perfection in creating OKRs after spending some time so it is better for them to make short term objectives and key results in the beginning.
The OKR cycle mainly revolves around four key phases listed below:
The planning stage deals with the planning of objectives and key results for the complete cycle. It is an essential phase because without doing the right planning, it will not be possible to get the best results.
The follow-up is all about the meetings that take place once or twice a week to discuss the progress status of the OKRs.
In the review phase, the primary area of concern is to recognize the achievement level by the end of an OKR cycle.
The reflective phase belongs to what you have learned with the OKR process and what steps need to be taken to improve the upcoming OKRs further.
Benefits of Using OKR
There are countless benefits of using OKR from which some of the foremost benefits are given below:
1 - Improves Collaboration
A collaborative environment is a must for the success of any business. It can be achieved effortlessly using OKR because there are some goals that need the involvement of different team members as these goals are hard to achieve for one person who works in the silo. This framework helps to create a collaborative atmosphere and employees work together to achieve a similar goal.
2 - Keeps Everyone Engaged
Keeping employees engaged plays a crucial role in improving their focus on work and keeping them away from various distractions. If your employees have to spend their time regarding what needs to be done next after finishing every single task, then it can waste a significant amount of their productive time. Using OKR, you can keep your employees engaged in the right direction because they clearly know the main objectives of the business along with tasks that requires achieving them.
3 - Improve Clarity
One of the best benefits of utilizing OKR is that it gives a clear direction to all the teammates regarding the common goals of the organization. This clarity is important because it lets every member become aware of the key goals of the business.
4 - Enhance Concentration
When OKRs are set properly, they can increase the focus of your employees at work because they will cross check each activity to ensure if it’s in concordance with their objectives.
5 - Boost Productivity
OKRs also play a significant role in increasing the productivity of the employees because all the goals are clearly defined and employees focus on achieving them rather than wasting their time on figuring out about what needs to be done.
6 - OKR Provides an Agile Framework
The key difference between other goal-setting methods and OKRs is that OKRs gives you the feasibility to review your goals on a short-term basis. It provides you with the facility to make all reasonable adjustments so that the process of adapting the change becomes easy for businesses.
7 - Makes Goals Setting Faster
For any business, it is quite hectic to rapidly set new goals because there are many things that need to be considered while finalizing the right goals for your business. Using OKRs, you have an excellent goal-setting framework in your hands, which speeds up the entire process of setting goals for your organization.
8 - Brings More Confidence to Set High Goals
Confidence is no doubt the key to set higher goals. When you have a system in place that allows you to view the success of your previous goals and achievement then your confidence level is already at the top to set bigger goals for the future because you are well aware based on the data that your team is capable of achieving those bigger targets.
9 - Makes Everyone Accountable
OKRs increase accountability because they are approachable to all the members of the company. This increased accountability also boosts the sense of responsibility in every individual which directly benefits the performance of the overall business.
Best Practices for Creating OKRs
To create OKRs that can help your business grow, here are some of the best practices listed below:
1 - OKRs should be set on a Quarterly and Annual basis
One of the best practices that should be kept in mind is to set the OKRs on a quarterly and annual basis because this timeframe works very well in evaluating the performance of all the teams.
OKRs are very effective when used for a shorter time like three months because it helps in having a focused short time period for certain goals which directly impacts your long term goals. The bigger goals can easily be catered in the annual OKRs setting.
2 - Recommended Number of OKRs
The number of OKRs matter a lot to get the desired results. The minimum is to start with 3 objectives along with 3-4 results attached to each of them. The maximum is to set 5 objectives with 3-4 results against each objective.
3 - OKRs should be Challenging
OKRs that are tough to achieve require everyone to show their best ability and skills. That’s why it is better to create OKRs that are more demanding and pushy, so it can help bring the best out of your employees.
4 - Easily Measurable
OKRs should be designed in such a way that you can easily measure them. The key results attached to any objective should be measurable in numbers, so the results can be accurately acquired.
5 -OKRs should be Visible
OKRs should not be kept secret. They need to be visible so that every employee can easily see the objectives of your organization or team at all times.
Mistakes to Avoid While Writing OKRs
OKRs, if developed perfectly, helps the business to achieve great things, but if they are written poorly, they can seriously create problems for the business. To stay away from the negative consequences, here is a list of mistakes that you should avoid at any cost.
1 - Creating Stretch Goals without Letting Your Teams Know
While creating stretch goals, it should be considered that the teams are properly communicated about them. It is important because if the team misinterpret the goals and they focus more on other goals than the actual ones, then they certainly cannot manage to achieve the actual goals in time.
2 - Business-as-usual OKRs
Business creates OKRs on the basis of what they think they can achieve instead of what their customers expect from them. To confirm that, it is a good idea to compare the efforts of the team in the last project with their performance in the current project. If you do not see any significant difference, then it is highly likely that are business-as-usual OKRs.
You need to ensure that your OKRs are not business-as-usual because they will prevent your employees from doing something new. It can be a huge hurdle in the growth of your team and eventually of your business.
3 - Sandbagging
Teams, who do not require the efforts of all their members in achieving their objectives and still manage to get them on time, are not pushing all the members to work equally. It should be avoided because it can make stretch goals quite challenging to achieve, and even if they get them, then they might have to compromise on the quality of results.
4 - Less Important Objectives
Objectives should be decided carefully. They should be based upon the most important goals that the business is looking to achieve in the in the near future. If you select the objectives that are not really important, then the business can not make the most out of this framework even if they achieve their less important objectives.
5 - Fewer Key Results with Objectives
The objectives should have all the important key results with it and they should be between three to five. It is because if you do not mention all of them with your objective, then your OKR is incomplete. Make sure that you have all the key results linked adequately with your OKRs to get all the desired results.
What makes OKRs unique?
The factors that make OKRs unique from other frameworks are listed below:
1 - Open Source Framework
OKRs provide an open source framework so that the organizations can easily adopt it in every culture and context.
2 - OKRs allow Agile Goal Setting
With OKRs, you do not need to stick with static planning throughout the year because it can work on an agile approach. OKRs allow the business to set short goals so that they can learn and adapt to changes in a faster way.
3 - Simple to Use
OKRs are not only easy to understand but are also less complicated to create. It helps businesses to invest less time in setting goals so that they can spend more time on achieving them.
4 - OKRs allow Bidirectional Goal Setting
Using OKRs, a business can set bidirectional goals . They can effortlessly create strategic OKRs from which every team can derive their tactical OKRs.
5 - OKRs Believe in Setting Challenging Goals
According to OKRs philosophy, if you are hitting all your objectives then it shows that they are effortless. This is why it is believed in this framework that the viewpoint of creating goals should be bold and ambitious, so that they have to put more efforts into achieving them.
Either you are leading a team or working as a solopreneur, setting OKRs provide you with a clear guideline on which things you need to concentrate at a certain timeframe. It is a proven method to bring quality results by aligning company goals and tracking their performances.
So, start implementing OKRs to your business from today and let your organization set the most important goals for the growth of your business with the help of OKRs framework.
FAQs about OKRs
1 - What is the key difference between KPIs and OKRs?
KPI is basically a quantifiable value that shows how successfully a business is achieving its objectives. They are used to determine all the activities and processes that are already prepared. In contrast, OKRs provide the link between ambition and reality that is missing in the KPIs.
View in-depth difference between OKRs and KPIs.
2 - What is the difference between Strategic OKR and Tactical Objective?
Strategic OKR is a long term objective set by companies like an objective with around 1-year time limit whereas tactical objective means all the objectives that are placed for a shorter time like three months.
3 - What is the difference between OKR and MBO?
MBO is the short form of Management by Objectives. It is used to get the comparison among the actual performance along with defined objectives. Whereas OKRs is used to measure the Objectives with respect to the key results associated with each objective.
4 - What is the difference between OKRs and Balanced Scorecards?
The major difference between OKRs and Balanced Scorecards is that OKRs can be altered quarterly depending on the requirements but Balanced Scorecards normally remains the same for almost a year.
While creating Balanced Scorecards, the measurement is done on behalf of four different factors including, Financials, Customers, Internal processes, learning and Growth. On the other hand, OKRs have nothing to do with them because they do not necessarily depend on the mentioned factors.
5 - What is the difference between OKRs and EFQM?
EfQM stands for the European Foundation for Quality Management. It is a framework that is used to assist organizations in recognizing their current performance and then offering them with all the essential tools and techniques that are necessary to track their improvements. Whereas OKR is more focused on the prioritization, measurement and achievement of the outcomes.
6 - What is the difference between Goal and Objective?
Goals are basically the long term objectives which provide a description of the destination, but objectives show the measure of progress that is required to reach the required destination. Objectives can be measured easily but there is no exact way to gauge the goals.
See a detailed comparison between OKRs and Goals.
7 - What is the difference between OKR and stretch Goals?
Stretch goals lay the foundation for accomplishing long term objectives. These goals are the motivational goals that push people to chase them even if they look hard to be chased down whereas OKR shows the connection between motivation and realism.
8 - How to measure the success of an OKR?
If you have successfully achieved 80% of your goals in the required time then it can be considered as a successful OKR, but if you have achieved the complete target then there is a high chance that the targets are not as challenging as they should be.
9 - What needs to be done if your strategy changes during OKR cycle?
It normally happens while dealing with complex challenges but you don’t need to be bothered regarding it because even in established teams, commonly, there is a 25% change in the OKRs. The best possible way to handle this situation is to make necessary adjustments and move on.
10 - With how many people OKR works the best?
A minimum of 20 people are required to see the best impact of OKR otherwise it will be tough to get all the results associated with the OKR.
11 - How many Key Results should a company set with each OKR?
There should be a limited set of key results that need to be linked with an objective. Normally, an objective with up to 5 key results works very well.
12 - Who should monitor the OKR program?
Senior leadership should be in charge of the OKR program in any company because they have the skills that are necessary to supervise them.