“OKRs”, created by Andy Grove of Intel, is defined as “Objectives and Key Results.” It is a collaborative goal-setting framework for defining and tracking objectives and their outcomes. OKRs enable you to track progress, create alignment, and encourage engagement around measurable goals – with two key components:
- Objectives: What is to be achieved.
- Key Results: Clear steps to achieve your objective
OKRs focus on the most important priorities. With a clear objective and measurable key results to track towards completion, you are positioned to achieve your goals successful.
OKRs are becoming very popular globally with Google being the one of their adopters in 1999. See the video below from John Doerr, famous author of Measure What Matters, on why the secret to success is setting the right goals.
John Doerr’s formula for OKRs is:
I will (Objective) as measured by (set of Key Results).
Check out the OKRs Videos including an interview with John Doerr.
Video on OKRs:
What are OKRs?
OKRs are composed of Objectives and Key Results.
Objectives define where you want to go. Objectives should be realistic but ambitious. While choosing the right objective is one of the most challenging aspects of this practice, when you do it correctly you’ll be able to tell if you have reached the objective.
- Increase revenue by 30% in 2021
- Key Results are the deliverables that you define for each objective so that you can measure your progress toward achieving that goal. Each objective should have two to five key results. And all key results need to be measurable.
Example key results:
- Reduce production costs by 10% for current year.
- Implement new HR software by March 2021.
When your organisation is looking for a way to set goals, you might want to consider the OKR (objectives and key results) process that Google, Twitter, LinkedIn and other high-achieving companies use. It is a simple management framework that helps everyone in the organization see progress toward common goals.
Organizations of every size and representing every industry are always looking for ways to drive performance. It’s been a widely accepted practice to set organizational, department and individual goals to plan where you want to go, but many organizations practice a top-down goal-setting framework that often ends up getting stuck in the phase of figuring out what goals to set rather than moving through to achieving those goals. The Objectives and Key Results (OKR) framework offers an effective alternative that’s used in practice by Google, Spotify, Uber, Twitter, Airbnb and more.
Here is a snippet of an interview of John Doerr.
Why do you think setting goals is important for businesses?
Doerr: The success of companies in this day and age hinges on the ability to execute. Ideas are important, but they are easy compared to execution. Thomas Edison once said “Vision without execution is hallucination.” I’m a big believer in this and I feel strongly that goal setting is the best way to keep the execution machine on track.
Goal setting is important for several reasons. First, it helps the company focus, not on 50 goals, but on the top 5 or so goals that are critical to the company’s success. By going through the process of brainstorming and writing goals, we are assured that the major goals will surface. That’s good discipline.
Goal setting also helps with accountability and coordination between teams. We know what we need to accomplish, when it needs to be accomplished, who is going to own it, and how we are going to work together to get it done.
When done right, goal setting is a very powerful tool. Every team member in the company can link their goals to the corporate goals, knowing that their work is having a direct impact on the success of the company. And corporate goals can be inclusive of ideas that are created at the individual contributor level, which keeps the senior leadership team in tune with the organization.
What kinds of things do enterprises need to do to improve goal setting in the future?
Doerr: There are a few common mistakes that I see with respect to goal setting, and here’s how I recommend addressing those mistakes:
- Goals must be supported by the entire organization. Every team and working group should agree on their goals and priorities.
- Goals must be measurable or have quantifiable targets. Maybe it’s shipping a certain number of products or hitting a release schedule, but in any case, we have to be able to track and measure the goals.
- Goals should be aggressive yet realistic. We want to stretch ourselves and stretch our teams, but not to the point of breaking.
- Don’t tie the OKR goals to bonus payments, except for sales quotas. We want to build a bold, risk-taking culture.
In the next few years, we’ll see new digital technologies that focus on helping companies improve operational excellence and behavior. It’s the simple tools, done right that will help this transition. This is exciting news that Employee Performance platforms can have on other companies, both large and small.