Objective Key Result Approach (OKR)

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Objectives and key results (or OKR) is a framework for defining and tracking objectives and goals. This approach is trendy in several major IT companies including Intel, Google, LinkedIn, Twitter, and Uber. And at the same time, this has been used in other companies like FlixBus, Spreadshirt, SEMRush, etc. So what does it make this approach so popular and what is it in general. I invite you to find answers together.

Reasons to use

Way to say “YES!”

A unified strategy from CEO to any developer. The vector which is directed at one point. The policy of group goals, which is not limited in the choice of instruments and solutions.

This strategy approach can be used for the maximization of the synergies value and accelerating the development of the entire company or group.
Other pluses are opportunities for implementing new and ambitious plans and using them for prioritization.

Way to say “NO!”

If you are working with ideas and different stakeholders, you probably encounter different positions, interests, and useful suggestions which need your attention. However, it can be a waste of time and effort, because not all good ideas are equally good. OKRs allows you to say “No” for less important ideas, and to be focused on current and important tasks. For stakeholders, it’s easier to accept “No” because this is the rational response which comes from group goals.

Roots of OKR

John Doerr
John Doerr

A popular OKR roots version comes from John Doerr, who brought it to Google from Intel. In John’s book, he calls Andy Grove the “Father of OKRs.” Andy Grove was a significant figure in the IT history, a pioneer in the semiconductor industry. He was the CEO and the third employee of Intel Corporation. In 1997, the Time magazine chose him as “Man of the Year.” In 2004, the Wharton School of Business recognized him as the “Most Influential Business Person of the Last 25 Years.” A colossal figure, with a story worthy of writing a special article.

Andy Grove
Andy Grove

But let me return to OKR. In 1975, Doerr attended a course at Intel taught by Andy Grove, where he was introduced to the theory of OKRs. Grove spoke about the importance of simplicity in goals tracking: “The key result has to be measurable. But in the end, you can look, and without any arguments: Did I do that or did I not do it? Yes? No? Simple. No judgments in it.” After more than 40 years, in 2018, Doerr, who eventually became one of Intel’s most successful salespeople, presented his book  Measure What Matters, the book about goal-setting. Without any doubt, John Doerr brought OKRs to Google and made it part of Google Culture.

Ideas of OKR

Focus effort on the same essential issues.

OKRs are a management methodology that helps companies focus effort on the same essential issues throughout their organization.

To do this OKR must meet some requirements:

  • cascading within organizations, and including few levels. For example the company level, (department level), team level, and personal level;
  • OKR should be clear and understandable to all stakeholders;
  • should provide transparency for stakeholders of each level;
  • should split into short-term (e.g., 3 months) and long-term (e.g., one year);
  • should be regularly updated.

Be out of comfort zone.

Best performance is out of a standard zone
Best performance is out of a standard zone

Another OKR difference from other methods is a level of ambitions. The idea is focused on the big bets and accomplishing more than the team thought was possible, even if they don’t fully attain the stated goal.

Given the above:

  • OKRs are bigger than a shared to-do list;
  • the “sweet spot” for an OKR grade is 0.6 – 0.7 (60%, 70%);
  • if someone consistently gets 1.0, their OKRs aren’t ambitious enough and need to be increased;
  • low grades shouldn’t be punished and should be viewed as data to help refine the next quarter’s OKR;
  • OKRs are not synonymous with employee evaluations.

Objectives recommendations

  • Should be defined from three to five objectives;
  • goals should be significant for the company and stakeholders;
  • should use expressions convey endpoints, states;
  • should avoid phrases that don’t push for new achievements;
  • achieving/failing is evident to an OKR observer.

Key-Results recommendations

  • Around three key-results per objective;
  • key-results should be measurable and easy to grade with a number (0.0 – 1.0 scale to rank each key result at the end of a quarter);
  • key-results are limited in number;
  • key-results are time-related;
  • key-results describe outcomes, not activities (“publish customer service satisfaction levels by March 7th” rather than “assess customer service satisfaction.”)

OKR grading recommendations

  • Remember, that the sweet spot for OKRs is somewhere in the 0.6 – 0.7 range;
  • organizational OKRs are typically shared and graded annually and quarterly;
  • before assigning a final grade, it can be helpful to have a mid-quarter check-in for all levels of OKRs to give both individuals and teams a sense of where they are. An end of quarter check-in can be used to prepare ahead of the final grading.
Sample OKRs Timeline from re:work
Sample OKRs Timeline by re:work

Avoid OKR common mistakes

Mistake Solution
Miscommunicating and the lack of transparency in pursuing company objectives. Be sure that you understand the top level, same-level goals as well as the objectives of your subordinates.
Business-as-usual OKRs. Drop low-priority efforts and re-assign resources to the top OKRs. The key results should evolve to push the team to continue innovating and becoming more efficient.
The absence of business value. Be honest with yourself. Do you have reasons to expend resources for the sake of objectives? Why is it important and for whom?
Key-results weren’t defined right. As with any metrics, you must be extremely careful with the key results definition. Don’t forget that metrics help you, but it’s not a silver bullet.
No time for OKR definition. Start to prepare early. Any planning and strategy thinking can bring benefits only when it is done elaborately, consciously and with a low level of stress around, without haste.

Conclusion

Measure What Matters: How Google, Bono, and the Gates Foundation Rock the World with OKRs
Measure What Matters: How Google, Bono, and the Gates Foundation Rock the World with OKRs by John Doerr

And Doerr wrote in his book (Measure What Matters) “An objective is simply what is to be achieved. Key Results benchmark and monitor HOW to get to the objective.” (Page 7)

But there is no universal recipe from him. Each company or organization should have its own way.

“By definition, start-ups wrestle with ambiguity… You’re not going to get the system just right the first time around. It’s not going to be perfect the second or third time, either. But don’t get discouraged. Persevere. You need to adapt it and make it your own.” (Page 75)

I want to finish my post by Larry Page’s words within the foreword to Doerr’s book: “OKRs have helped lead us to 10x growth, many times over. They’ve helped make our crazily bold mission of ‘organizing the world’s information’ perhaps even achievable. They’ve kept me and the rest of the company on time and on track when it mattered the most.”

Good luck,
Galkinc.

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