OKRs are defined as quantifiable objectives and key results that align to the company’s overall vision and strategy, and that cascade down through the company’s hierarchy to provide direction and motivation to the front line workers.
An OKR, or “Objectives and Key Results,” is a powerful method for setting objectives and communicating how you plan to accomplish them. Large organisations like Facebook, Uber, and IBM use OKRs to establish and implement their strategies. In this post, we’ll define OKRs, outline how they are used, and provide examples of them.
It is a collaborative goal-setting methodology that helps teams and individuals set challenging, ambitious goals with measurable results. You track progress, create alignment, and motivate participation by using OKRs.
OKRs can be used across many company levels, whether for office operations, software engineering, non-profits, or other purposes. They can also be used to set personal goals and even for completing chores at organisations where senior leadership does not employ them.
An OKR consists of objectives and key results
The purpose of OKRs is to set a company-wide goal and then to break it down into smaller, more manageable goals.
An Objective and three to five key results are usually listed as part of an OKR. Alternatively, they can be described as follows:
I want to achieve (objective) as measured by these (key results).
For example: “The customer success team will reduce monthly customer churn by 10% by contacting at least 30 existing customers per month”
An Objective is simply what needs to be accomplished. By definition, Objectives are significant, concrete, action-oriented, and (ideally) inspirational. When done properly, they protect your business from directionless procrastination.
A Key Result should be a stretch to accomplish and should measure how we reach our goal; a KR is certain, time-bound, and aggressive, but also realistic and measurable. You either reach a KR or you don’t; there is no in-between. At the end of each quarter, we evaluate whether our KRs have been achieved.
An Objective can be long-term, with Key Results that evolve as the work progresses. Once all of them are completed, the Objective is accomplished.
Who invented the OKR methodology?
Andy Grove formalised the OKR approach at Intel. Many organisations, including Google, Netflix, Accenture and Facebook have embraced them since then.
John Doerr describes “Management by Objectives” in his book “Measure What Matters”. Peter Drucker and Andy Grove developed the idea of Management by Objectives. In fact, Andy Grove created the notion of OKRs after studying Peter Drucker’s ideas.
Larry Page and Sergey Brin were the Google founders who initially learned about Doerr’s OKR philosophy in 1999. Around a ping-pong table that served as a boardroom table, Doerr presented a PowerPoint on OKRs to the young team, which included Marissa Mayer, Larry Page, Sergey Brin, Susan Wojcicki, and Salar Kamangar.
Afterwards, Google established its company strategy using the management framework, the rest is history.
What are the categories of OKRs?
An OKR can be one of three things: a committed goal, an aspirational goal, or a learning goal.
When graded at the end of a cycle, a Committed OKR is expected to have a passing grade, just as their name suggests.
An Aspirational OKR is often referred to as a stretch goal or “moonshot.” Since no one has ever been there before, the path to an Aspirational OKR is expected to be forged. They may also be long-term and live beyond an OKR cycle or even be transferred between team members to increase employee engagement.
When learning something new is the most valuable outcome for a team in a given cycle, Learning OKRs can be utilised. To determine what the most important thing we want to learn in the next 90 days is, the team might set a Learning OKR. Then, a Committed or Aspirational OKR can be used in the subsequent cycle to inform the results.
Committed and Aspirational OKRs can be learned about.
OKRs provide advantages
Having OKRs offers a lot of advantages, including clarity, better communication, and an organisation-wide strategy that is coherent and transparent. John Doerr always emphasises the F.A.C.T.S. when describing OKRs’ advantages. F.A.C.T.S. stands for:
- Focus: OKRs allow a team to rally behind a small set of carefully chosen priorities.
- Alignment: OKRs provide a method for an entire organization to align its goals at every layer with its top-level priorities and with its ultimate purpose.
- Commitment: OKRs demand a level of collective commitment from the parties involved to choose and stick to agreed-upon priorities.
- Tracking: OKRs allow a team or organization to track their progress toward a goal and know earlier when to change tactics.
- Stretching: OKRs empower teams to set goals that stretch beyond BAU – or “business as usual” – and make significant, meaningful change.
OKRs come with several advantages, described in the F.A.C.T.S.
How are OKRs graded?
There are several ways to score (or “grade”) OKRs, and they should be monitored regularly and evaluated at the end of a period.
Is an “Andy Grove-style” OKR grading approach a simple “yes” or “no” approach sufficient for assessing success? Or do most organisations require a bit more detail in their grading? Many organisations utilise a “Red, Yellow, Green” grading system where red indicates failure, yellow indicates progress, and green indicates success.
Using a percentage scale (0.0-1.0), Google grades each Key Result to provide the most information. The overall score for an Objective is determined by averaging the scores for all of the Key Results.
Learn more about the grading of OKRs.
Where can I get further information?
The best way to get started is to sign up for Zintly and begin creating OKRs for your organisation. Our software guides you through their creation and you can always come back and refine them later.