What’s Are OKRsOKRs (Objectives Key Results) is a goal setting framework that is used by some of the world’s largest and fastest growing companies, like Google, DropBox and Slack. While simple, it’s proven to be effective at aligning the high level objectives of an organization, while connecting them with the goals and ambitions of individual teams and employees. OKRs are collaborative in nature. They challenge teams and individuals to set and reach ambitious goals by clearly defining objectives and how to track and measure results.
How Do OKRs WorkThe OKR framework has two key components:
Objectives: define what is to be achieved.They are aspirational, significant and concrete. As John Doerr (the "founder") of OKRs says "they’re a vaccine against fuzzy thinking—and fuzzy execution".
Key Results: are often the measurable results you'll need to reach to achieve your objectives. They have a few important traits; key results are simple, are completed within a certain timeframe, ambitious and quantifiable. When created properly, there is no grey area - you either successfully hit your key results or you didn't.
A Brief History of OKRs
Management By Objectives
OKR methodology is derived from famed management consultant Peter Drucker’s MBO (Management By Objective) framework, developed in the 1950s.
Drucker’s approach took root at the dawn of the Information Age, promoting flexibility, knowledge work and decentralized teams, empowering teams to work autonomously, with a focus on innovation.
The Birth of OKRs at Intel
In the 1970’s, Intel was transitioning from a memory company to a microprocessing company, as the use and application of computers grew in the business world.
Andy Grove, who later became Intel’s long-serving CEO, used the concept OKRs to underpin this transition with the development of the 8080 8-bit microprocessor, challenging his teams to innovate at breakneck speeds.
Andy Grove later published the concept of OKRs in his seminal business management book “High Output Management”, highlighting the importance of connecting key results to specific objectives.
SMART goals (Specific, Measurable, Achievable, Results-focused, and Time-bound), developed by George T. Doran, a consultant and former Director of Corporate Planning for Washington Water Power Company, came along in the 1980s.
Like OKRs, SMART goals provided a clear and simple framework for goal setting. SMART goals popularized KPIs (key performance indicators), which helped to evaluate performance and quantify success management.
John Doerr Introduces Google To OKRs
Legendary venture capitalist John Doerr worked with Andy Grove early in his career at Intel and took notice of OKRs.
Later, as an investor at Kleiner Perkins, he famously advised Google co-founders Sergey Brin and Larry Page to adopt OKRs when their 100-person team was on the cusp of transforming how the world finds and accesses information on the internet.
The rest is history. To this day, OKRs are the cornerstone of Google’s goal management and an intrinsic part of their philosophy. Many of the world's most successful companies, like Amazon, Spotify and Microsoft use OKRs.
What Makes OKRs Different
OKRs have a couple attributes that make them unique. These attributes make them an effective and help them stand apart from other approaches.
OKRs Are Bi-Directional. They Should Never Be Top Down
Goals are often handed to individual teams and employees from management, with an expectation of militant adherence.
Not only does this process take a long time, it fails to consider the individual goals and objectives of a team. It constrains productivity and innovation because these goals leave little room for teams to be creative or find solutions unique to their specific objectives. It blindly overlooks how teams can collectively contribute to an overarching strategic goal.
By nature, OKRs are bi-directional, meaning they are both created top-down and bottom-up. Teams and individuals connect their goals and objectives an organization’s, while dialing in OKRs to fit their unique needs. Managers help to align a team’s objectives with the organizations.
The democratization of team and individual goal setting is much faster than formulating a top-down plan because it happens in parallel. It is far more agile than cascading goal setting because teams are constantly course correcting.
OKRs Stretch. Goals Are Achieved
With OKRs, there is no grey area with success measurement. Graded on a scale, there is little ambiguity about performance - you either hit your KRs or didn't.
You shouldn't hit your key results 100% of the time. That means you're not reaching far enough.
The goal is to set objectives that make you stretch what you thought was possible. When correctly set, OKRs will take you out of your comfort zone - somewhere you never thought you could reach. This is where innovation and progress comes from - and its the beauty of OKRs.
As a rule of thumb, the sweet spot is a 60%-70% success rate. It seems a bit unconventional - after all 60% is a failing test grade in school. Imagine it was a really hard test.
With each cycle of OKRs, you stretch further and further - pushing the boundary of your limits. What you thought wasn’t possible a year ago will be far in the rearview.
What Are The Benefits Of OKRs?
Fortunately, the OKR goal setting framework solves for these common issues. John Doerr lays out the benefits of OKRs in a simple and memorable acronym, F.A.C.T.S.
OKRs work because you only set and focus on a handful. According to John Doerr's best practice, you should set no more than seven OKRs. The optimal number is 4 or 5.
With so few objectives, it’s easier to determine what objectives should be prioritized. While prioritization itself isn’t so easy when you have a list of objectives (all of them important, of course), it makes sense to ask yourself what you want to achieve in the next few months and what you want to achieve over the next year.
By answering this question, you're anchoring the prioritization and completion of objectives to a timeline, defining what can make an impact today and what can be impactful down the road.
Employee goals are typically set to assess employee performance, which is often tied to compensation and professional advancement.
Oftentimes, there is a disconnect between an organization’s objectives and an individual employee’s goals. Top-down goal setting tends to happen in a vacuum, with inconsistency across teams, departments and business units.
With OKRs, leaders, managers and team members have their own set of objectives and key results that align with the common goal of an entire organization. Check-ins happen consistently, often on a weekly basis.
OKRs are a big deal for any business (or person). Because they are driving an organization and are set both top-down and bottom-up, they have complete buy-in.
This means planning, resources and effort are put against achieving these OKRs. This requires a focused commitment. The type of commitment you can only get if there is strict organizational alignment.
OKRs are tracked and transparently shared on a regular basis. This creates a high level of accountability, and with it a high level of commitment to work hard, hit key results and exceed expectations.
The beauty of OKRs is that measuring success is completely objective. Metrics are defined upfront, when you set your objectives and key results.
What you measure and how its being measured is defined. Outcomes are not nebulous. They are either binary or on a scale. If graded on a scale, the gap between failure and successful objective completion is easily understood. You either hit your key results, or you didn’t.
Given that tracking and hitting key results are essential, it’s important to meet with colleagues in a regular cadence to maintain alignment. Typically these check-ins happen weekly. They are structured as simple meetings to review progress and identify and fix blocks or issues.
Setting key results so you succeed 100% of the time does not drive progress, growth and innovation. The concept of stretching means that you set objectives and key results so it’s challenging to achieve them. With 70% being a “passing” grade, you will not hit your OKRs all the time - and that’s not necessarily a bad thing.
Design OKRs so they are reasonably hard to achieve and require you to stretch what you thought was possible to hit them. With a succession of OKR setting, over time, you will build on past key results, pushing yourself further and further.
OKRs are set bi-directionally, top-down and bottom up. This means that every individual is a stakeholder in the outcome - for themselves, their team, their function and their organization.
Traditionally an employee falls in line with an organization's mandated goals and personal contribution is often diluted or even a bit nebulous.
With OKRs, they are set to connect personal OKRs with company objectives. This is empowering. Employees feel like they actually are contributing meaningfully. Their role is clearly understood and the objectively of success measurement helps people understand specifically WHAT they are contributing.
Once you adopt OKRs, setting subsequent ones are easy. They take the guesswork out of setting strategic direction and Key Results objectify success. Grading helps to determine if the OKRs you set are too hard, too easy or just right. With a defined OKR setting cadence, i
The OKR goal-setting framework gives you the flexibility to iterate your strategy and direction faster than traditional goal-setting approaches.While organizational-level OKRs may be long-term in nature, OKRs are typically set in quarterly intervals for teams and individuals. Key results provide objective success measurement, creating a feedback loop that allows you to calibrate your OKRs every quarter to align with shifting objectives.
Transparency & Accountability
With OKRs, there are no secrets. Top-down and bottom-up goal alignment is needed to achieve a concreted outcome. At Google, OKRs are shared and presented at company-wide meetings every quarter, with periodic check-ins to ensure everything is on track.
This transparency helps individuals and teams to understand how their OKRs fit into the bigger picture as well as help outside teams and people understand your role. Sharing OKRs and results also puts positive pressure on performance, because your peers are keenly aware of the objectives you set (this helps to prevent sandbagging - purposely setting easy OKRs) and their key results.