OKR: what are and how to use them in the goal-setting process?

 

In this guide, I dedicate myself to studying a corporate management strategy: the OKRs. Before we begin I would like to make it clear what you can expect from reading. Point by point we will proceed not only to understand the OKRs, what they are, but we will analyze the following issues:

• Characteristics of the Objectives and Key Results methodology
• OKR applications and benefits
• How to Reach an OKR Goal > Examples

 

OKR what they are – Origins

 

To understand what OKRs are, let’s fix exactly what OKR means and what are the origins of that methodology.

OKR meaning – The acronym of Objectives and Key Results identifies a framework used to produce alignment at the organization level and at the work team level, up to the single individual.

Do you know to who we owe the creation of the OKR framework? To Andy Grove, one of the founders of Intel Corporation (of which he was also the CEO for a long time). Under his leadership, Intel initiated the transition from chips to microprocessors, with the result of increasing the power of the PC and decreasing its cost to such an extent that it is a ubiquitous commodity. All to the benefit of revenues which, under Grove’s direction, went from $ 1.9 billion USD to $ 26 billion USD.

These numbers are undoubtedly the result of professional skills and an out-of-the-ordinary vision, but if we attribute part of the credit to Grove’s method, then understanding OKR what they are is even more stimulating.

What are OKRs? They are the post-its on your computer screen or on the office bulletin board that fix the questions you try to answer: what is the goal, how do I get there, how much is missing.

 

 

What are the OKRs – Methodology

 

The OKR alignment method is based on a 3-level structure: for each Objective (O) there are a minimum of 3 and a maximum of 5 Key Results (KR) and related measurement metrics.

By breaking down the concept of OKR into what they are:

• the Objectives are the destination, the goal-setting or the ambition to be achieved
• the Results are the direction to follow, the intermediate steps

Here, however, what the OKRs are not:

• They are not a target to hit
• They are not a tool for defining a bonus
• They are not a means of evaluating the people of the team

 

Considerations on the OKR Method

 

At the end of this first introductory part, I focus on the points that emerge so far with greater evidence in the OKR Method.

A limited number of goals: setting a number of goals is an act of intellectual honesty and awareness of one’s resources. Whenever we make a commitment, saying “Yes” to a project, we are deciding not to allocate our commitment and our concentration to something else. If we try hard to focus on everything, we will ultimately fail to focus well on anything.

“The main tool an OKR should provide is concentration. And this happens only if we keep the number of objectives low “(cit. Andrew Grove)

Transparency: being a shared alignment framework, the OKRs are transparent at every level of the work process and of the organization. Each individual can connect their goal to a business goal, coordinating with other teams. To do this, a functional information system is required.

Freedom: Being completely independent of the concept of performance and evaluation, OKRs go beyond the traditional auditing principle and rather aim at continuous management, while leaving full freedom in ambitions. The OKR method provides total freedom to set ambitious goals and also contemplates the possibility of failure.

 

What are OKRs – Practical applications

 

The fields of application of OKR are diversified. After all, having analyzed what the OKRs are and having defined them as a “framework of alignment and strategic growth” (both for the individual and for the organization), it is logical that all companies that use agile methodologies, such as for example Agile Project Management, make use of it.

Next-generation companies, including Airbnb, Facebook, Google, and Spotify (just to name the giants globally), use this framework in their management processes to define “What” and “How”.

• The Objective is the mission, the ambitious goal that answers the question “What?”.
• The Key Results are the intermediate, measurable, and necessary steps to reach the goal and answer the question “How?”.

This structure can be declined from top to bottom: first, the company goals and results are defined, then those of the Team, and finally those of the individual involved in the process. Maximum transparency and sharing must be guaranteed at every stage.

Teams, collaborators and Project Owners (role that can be played by the CEO, the manager in charge, or the team leader) agree on the OKRs:

1. They set the Objective and establish which Key Results are needed to cross the finish line and how we undertake to implement them.
2. They proceed independently and with self-management throughout the entire process.
3. They plan any intermediate alignment follow-ups.
4. They measure the achievement of the Objective.

 

OKR what are they – Features

 

Below we are going to delimit more specifically the characteristics of the Objective and Key Results.

If we measure the Objective on a scale from 1 to 100, reaching 70/80% can already be considered (on average) an excellent goal. In this perspective, we must evaluate the margin that separates us from fully achieving the goal as our opportunity for growth. If we hit 100% of the goal, it could mean that we have set a mission that is not sufficiently ambitious, or that we have set a Committed OKR (more on this below).

The Key Results, measured with real numbers and data, must be achieved 100%, since they represent the milestones of work and make it clear if the road taken is in the right direction and at what exact point each team / collaborator is.

 

 

I propose a logical-cognitive recap relating to the evidence that has emerged so far on the OKR methodology.

• Start from the end: in OKR I first establish the goal and then indicate the Key Results. The Objective gives me direction and forces me to plan the actions and tasks to be completed, in relation to the set goal.
• Align the vision: the sharing between the different levels of the organization and the complete transparency of the OKRs prevents problems related to the lack of communication or its inefficiency.

In particular, the alignment prevents individuals from interrupting the workflow, since everyone knows exactly where their work and that of others are in relation to the goal.

I dwell on this aspect and clarify it with a practical example.

In the current quarter, the team’s goal is to redo the site by optimizing it on the SEO side, the web designer could have the task (Key Results) of completing the User Interface. It follows that no member of the team would ever think of going to disturb him to plan to fix the e-commerce landing page.

 

OKR what are they – Types

 

We mentioned Committed OKRs. This is one of the two main types of Objectives and Key Results. The other is that of Aspirational OKR.

 

Committed OKR: what are they?

 

Committed OKRs relate to agreed commitments to be reached at the end of a cycle. The Objective in this type of OKR does not imply the assumption of risks exceeding the capabilities of the Team and the people involved. In any case, although the team is called upon not to stray too far from what they know well, without running the risks of leaving their comfort zone, the Key Results must still have a positive impact.

• The success rate should be as close to 100% as possible.
• The resources committed should be commensurate with the fulfillment of the commitment.
• Committed OKRs should fall within the scope of continuous improvement.
• When the Objective of the Committed OKR is achieved and the result obtained is perceived by the Team as an element of the Business As Usual, the OKR ceases to be such.

 

Aspirational OKR: what are they?

 

Aspirational OKRs are about an ambition for change that pushes us to go where no one has gone before. For this reason they are also called Moonshots, because as Norman Vincent Peale said: “Shoot for the Moon. Even if you miss, you’ll land among the stars “.

Aspirational OKRs do not have a clear path, as there is no real knowledge of the resources needed to reach a goal that has never been reached. This does not mean that you have no direction: aiming at a target that is out of range makes no sense and only wastes energy. Conversely, setting something difficult, but not completely impossible as a goal, is a source of inspiration for a constant push of the entire organization towards new horizons.

 

“If you set a crazy and ambitious goal and you miss it, you will still have achieved something extraordinary” (cit. Larry Page)

Aspirational OKRs can be long-term or very long-term and involve a failure rate commensurate with the magnitude of the ambition. Achieving progress equal to 65/70% is already a success, provided that this result is achieved with the maximum thrust of each element involved. It means that 65% will have to be perceived by people as the new 100%: only in this way will the best possible progress be achieved.

 

OKR what they are – Strengths

 

Compared to traditional management methods, OKRs show some breaking points, or rather strengths.

• Trust: the self-management of team members and the organization is one of the characteristics of the OKR Method already inspected. Encouraging collaboration between team members means delegating responsibilities in total trust, so that people independently cooperate to achieve the greatest goal.
• Flexibility: in an ever-changing scenario, even business organizations must adopt flexible solutions and adaptation strategies, without being tied up in too long-term objectives. The OKRs, on a quarterly basis, allow us to keep pace with the emerging needs and new challenges of the market.
• Transparent communication: clarity of purpose and total transparency in communication facilitate the consistency of corporate strategy and organizational management.

Speaking of the strengths of the OKRs, John Doerr summarizes them in the acronym F.A.C.T.S .:

• Focus: OKRs focus on a reduced set of priorities, carefully selected, raising the focus of the team.
• Alignment: OKRs favor the alignment of objectives, based on priorities and the final purpose, at various levels of the organization.
• Commitment: OKRs are based on an individual and collective level of commitment of all parties involved.
• Tracking: OKRs offer the team and the organization the opportunity to monitor their progress towards a goal and to understand in advance when to change tactics.
• Stretching: OKRs are so flexible that they go beyond the concept of BAU (“Business As Usual”) and allow for significant and ongoing changes.

 

 

I quoted John Doerr and I take this opportunity to suggest one of his excellent books on OKRs: “OKR Revolution. Discover the method of objectives and key results, to measure what really matters” (for more information click here).

 

Achieving an OKR goal: examples

 

Let’s do some practice now and see how what we know about OKR translates into concrete examples. I have chosen different types of objectives to show how flexible the OKRs are and how they can be applied to different areas, not only economic and productive.

 

Public sector OKR example

 

The City of Utopia has set a collective goal: “achieve the sustainability of public finances”. To reach such an ambitious goal, the rulers of Utopia choose some measurable goals. Here’s what their OKR looks like:

O = Sustainability of public finances.

KR (1) = Reduce the gap between the overall budget and expenses from 11% to 5%.

KR (2) = Invest 95% of the resources allocated to projects by the end of the fiscal year.

KR (3) = Spend 95% of resources from previous fiscal year grants.

 

Corporate OKR example

 

O = To produce the lowest possible carbon footprint in our industry.

KR (1) = 100% zero waste supply chain and shipping infrastructure.

KR (2) = Pay 100% compensation for all calculated carbon dioxide emissions.

KR (3) = 25% of the material used is compostable.

KR (4) = 75% of the material used is biodegradable.

 

Example OKR cultural sector

 

Let’s assume that a museum’s marketing department wants to increase the visitor base. Audience analysis reveals that the target is mostly made up of people over 50, while those under 30 represent just 15%. To reverse this trend, they try to use this OKR.

O = Attract younger visitors.

KR (1) = Increase our Under 30 signup campaign by 100%.

KR (2) = Acquire mentions on the accounts of 5 local Instagram influencers.

KR (3) = Obtain a response rate of 25% from a mailing campaign targeting several geo-located zip codes.

KR (4) = Attract at least 75 unsubscribers per month to artist events.

 

Personal OKR example

 

OKRs can also be used for personal goals. Let’s say a person decides he wants to run 10 km after a long period of inactivity. Let’s check some good OKRs:

O = Run 10 Km in less than 50 minutes by May.

KR (1) = Go for a run 3 times a week for at least 30 minutes.

KR (2) = Increase the distance traveled by 1.5 km every week.

KR (3) = Increase the speed by 3 seconds per km every week.

 

What are the OKRs – Conclusions

 

If you have followed me up to this point it means that OKRs have taken hold of your mind, thanks to their characteristics and the advantages they offer I will briefly summarize you:

• Cooperation: when the goal is clear it is easier to communicate it. This favors both self-management, which makes the employee independent and responsible, and collaboration between the various members of the Team. Employee engagement becomes more fruitful.
• Ambition: with the Objective, we aim for the Moon to land among the stars.
• Zero failure: the intermediate Key Results, which point in the direction of the macro objective, are still a success for the entire team regardless of the final goal since each Milestone achieved is a result obtained.
• SMART: Key Results are always SMART, i.e. Specific, Measurable, Achievable, Realistic, and Time-bound.

Finally, as regards their effectiveness it is even more remarkable, as it is completely independent of the conventional reward/punishment system. OKRs are not a performance appraisal tool, but a shared compass that helps you realize if you are following a common direction and if that direction is right.

 

 

In conclusion, the OKRs have objectives that encourage the individual and the group to get involved, with a view to continuous improvement and with a mind free from fear of failure and consequent penalties.