In business, OKRs are used to guide outcome-based success. Using outcomes instead of tasks as a driver, OKRs encourage accountability in every step of achieving success through metric indicators. OKRs are driven by values-based outcomes. So for the sake of our settings we shall be looking at OKR’s in the tech ecosystem(community). We shall try as much as possible to simplify it to its barest minimum.
WHAT IS OKR?
OKR (Objectives and Key Results) is a goal setting system used by Google and other companies. It is a simple approach to create alignment and engagement around measurable and ambitious goals. 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.
Understanding the OKR Components.
John Doerr is one of the most successful venture capitalists of all time. He started his career at Intel and went on to invest in companies such as Google and Amazon. Doerr, who introduced Google to OKR, has a formula for setting goals:
A proper goal has to describe both what you will achieve and how you are going to measure its achievement. The key words here are “as measured by,” since measurement is what makes a goal a goal. Without it, you do not have a goal, all you have is a desire. Doerr’s formula is the best way to explain the structure of an OKR:
I will (Objective) as measured by (this set of Key Results).
So, as the name implies, OKR has two components, the Objective and the Key Results:
Objectives are memorable qualitative descriptions of what you want to achieve. Objectives
should be short, inspirational and engaging. An Objective should motivate and challenge the
Key Results are a set of metrics that measure your progress towards the Objective. For each
Objective, you should have a set of 2 to 5 Key Results. More than that and no one will remember
All Key Results have to be quantitative and measurable. As Marissa Mayer, a former Google’s Vice
“If it does not have a number,
it is not a Key Result.”
OKRS OCCUR RHYTHMICALLY
Following a cyclical planning cadence, the focus of goals moves from tasks to results, keeping priorities and everyone’s thinking disciplined.
A SUPPORTIVE ATMOSPHERE IS CREATED
Success isn’t just about reaching goals, but also about creating a culture of coaching. OKRs enable accurate communication.
EVERYONE IS ACCOUNTABLE
Being more than a declaration to accomplish a project, teams using OKRs figure out what really matters, together.
First of all, we need an Objective. An example might be “Create an Awesome Client Experience.” This sounds great, but how would you know if the experience is awesome? Remember, without measurement you don’t have a goal.
That is why we need Key Results. How can we measure if we are providing an awesome client experience? Net Promoter Score and Repurchase Rate would be two good options. Do our client feel so good about dealing with us that they would recommend us?. But measuring NPS and repeat purchases alone can send the wrong message. It might encourage us to make the customer happy at any cost. Therefore, we can include a countermeasure such as Customer Acquisition Cost. We want to make our customers happy while keeping the costs under control.
Net Promoter or Net Promoter Score is a management tool that can be used to gauge the loyalty of a firm's customer relationships. It serves as an alternative to traditional customer satisfaction research and is claimed to be correlated with revenue growth.
The complete example would be:
Create an Awesome Client Experience
➔ Improve Net Promoter Score from X to Y.
➔ Increase Repurchase Rate from X to Y.
➔ Maintain Client Acquisition cost under Y. (Customer Acquisition Cost is the cost of winning a customer to purchase a product/service. As an important unit economic, customer acquisition costs are often related to customer lifetime value.)
Now consider a team that wants to increase the engagement with a digital service:
Delight our client
➔ Reduce revenue churn (cancellation) from X% to Y%.
➔ Increase Net Promoter Score from X to Y.
➔ Improve average weekly visits per active user from X to Y.
➔ Increase non-paid (organic) traffic to from X to Y.
➔ Improve engagement (users that complete a full profile) from X to Y.
Once more having a set of Key Results helps create a healthy, sustainable OKR. We want
to increase the weekly visits, but we want it to be organic, not through an expansion of
Key Results are crucial. Most of all, they define what we mean by “Delight our customers.”
A second team or company could use the same Objective with different Key Results.
What’s unique about OKR?
There is not a single way to use OKR, each company or team can adapt and tweak it, creating different versions of it. But there are some core concepts:
Instead of using annual static planning, OKR takes an agile approach. By using shorter
goal cycles, companies can adapt and respond to change.
Using OKR is straightforward, and the OKRs themselves are easy to understand. Intel’s
original model set goals monthly, which required a lightweight process.
Companies that adopt OKR reduce the time spent setting goals from months to days. As
a result, they invest their resources in achieving their goals and not on setting them.
The primary purpose of OKR is to create alignment in the organization. To do so, OKRs are
public to all company levels — everyone has access to everyone else’s OKRs. The CEO’s
OKRs usually are available on the Intranet.
OKR understands that strategy and tactics have different natural tempos since the latter
tends to change much faster. To solve this, OKR adopts different rhythms:
➔A strategic cadence with high-level, longer term OKRs for the company (usually
➔ A tactical cadence with shorter term OKRs for the teams (usually quarterly).
➔ An operational cadence for tracking results and initiatives (usually weekly).
Bidirectional Goal Setting
Instead of using the traditional top-down cascading model that takes too much time and
does not add value, OKR uses a market-based approach that is simultaneously bottom-up and top-down. From the company’s strategic OKRs, teams can understand how they can contribute to the overall strategy. In this process, around 60% of the tactical OKRs are set by the teams in alignment with the company goals and then contracted with the managers in a bubble-up approach. This model creates engagement and a better understanding of the strategy while making the process simpler and faster.
The philosophy behind OKR is that if the company is always reaching 100% of the goals, they are too easy. Instead, OKR targets bold, ambitious goals. Besides aspirational objectives, OKR believes in enabling the team to set challenging goals. Goals that make the team rethink the way they work to reach peak performance.
Separating OKRs from compensation and promotions is crucial to enable ambitious
goals. Employees need to know they will not lose money if they set ambitious goals. It is
hard to set ambitious goals when you need the bonus to pay for your kids’ college tuition.
OKR is a management tool, not an employee evaluation tool.
BENEFIT OF USING OKR
The main advantages of using OKR are:
Shorter goal cycles enable faster adjustments and better adaptation to change,increasing innovation and reducing risks and waste.
Alignment and cross-functional cooperation
The use of shared OKRs improves collaboration among different teams, solving interdependencies and unifying competing initiatives.
Reduced time for setting goals
OKR simplicity makes the goal setting process faster and easier, drastically reducing the
time and resources spent on setting goals.
Transparency and simplicity enable the team to understand the goals and priorities of the
organization as well as how each individual can contribute.
OKR bottom-up approach for goal setting connects the employees with the company’s objectives, increasing engagement.
Autonomy and accountability
Teams receive a clear direction and are free to choose how to achieve their OKRs. They become responsible for their objectives, with clear success criteria known to the whole
company, creating mutual obligations.
Focus and discipline
The reduced number of goals creates focus in the organization and more disciplined efforts and initiatives.
Decoupling OKRs from compensation and using stretch goals, even partially, enable the team to set ambitious, challenging goals.
So, Technically, OKR helps you set company, department, team, and personal goals. You connect each goal with 3-5 measurable results. As you achieve those results, the percentage of the entire Objective increases, so you can see the progress towards your aspirational goals and know if you are getting better or worst.
'Focus' is the most important step. You should only have 3-5 Objectives,as having more will make it hard for you to track you successes. Therefore, OKRs help you figure out what's most important (priorities items for you) and how work at every level connects to your most important goals.
So, i hope this article have given you a little push when next you have a project or your team needs to meet a specific objectives, you now know how to achieve it better and stronger.