What is the meaning of the OKRs, the Objectives and Key Results? Furthermore, how Intel’s examples illustrate them? At last, what are the benefits of applying the OKRs?
- What are the OKRs? What is the meaning of the Objectives and Key Results?
- What are the benefits of the OKRs?
- What’s next? Learn more about OKRs and discover Strategy and Competition
- Do you want to learn more about the OKRs? Here are some valuable references
What are the OKRs? What is the meaning of the Objectives and Key Results?
OKRs are much more than a goals and objectives setting framework. Nevertheless, it does not replace the critical step of defining a strategy even if it enforces its implementation in many ways.
Andy Grove CEO of Intel created the OKRs in the 70s. Indeed, he described them in 1993 in his book “High Output Management”. Furthermore, John Doerr who was a salesperson in Intel, discovered OKRs at this point called “iMBOs” for “Intel Management by Objectives.” He later introduced them in Google to support their growth through the venture capital firm he was working for at that time. John Doerr also published in 2017 a book about the OKRs, “Measure What Matters“.
In Google, OKRs quickly became central to make sure efforts from all parts of the company focus on the same important matters.
OKRs have helped lead us to 10× growth, many times over. They’ve helped make our crazily bold mission of “organizing the world’s information” perhaps even achievable. They’ve kept me and the rest of the company on time and on track when it mattered the most.
Since Google success with OKRs, many successful and fast growing companies of the new economy have adopted them as a central framework for their development like LinkedIn, Twitter and Uber.
In short, as the detail name stresses it, there are 2 parts in the Objectives and Key Results:
What is to be achieved, nothing more or less:
- They are significant and long term but concrete and action oriented.
- They should also be inspirational.
- Objective example from Intel’s OKRs: “Demonstrate the 8080’s superior performance as compared to the Motorola 6800”.
How to get to the objective:
- They support the objective they are related to.
- Key Results are more ground-based than objectives and are metric-driven.
- They are SMART:
- Measurable therefore verifiable
- Action oriented
- Realistic but aggressive
- Key Results example from Intel’s OKRs:
- “Deliver five benchmarks.”
- “Develop a demo.”
- “Develop sales training materials for the field force.”
- “Call on three customers to prove the material works.”
Overall value of the OKRs
OKRs clarify objectives and this creates alignment and engagement. On the contrary, when people have conflicting priorities, unclear or arbitrarily shifting objectives, they become frustrated and demotivated.
People need more than milestones for motivation. In addition to the what, explanation of the why is mandatory. Truly, they are thirsty for meaning, to understand how their objectives relate to their mission. So the connection between OKRs and mission should be clear.
For medium-size, rapidly scaling organizations
- OKRs are a shared language for execution.
- They clarify expectations: what needs to be done and who’s working on it?
- They keep employees aligned, vertically and horizontally.
In larger enterprises
- OKRs are neon-lit road signs.
- They break silos and build connections between contributors.
- They enable creative new solutions by enabling front line autonomy.
What are the benefits of the OKRs?
Cooperation and social contract
OKRs promote cooperation in the way they are defined, revised and used as steering tool:
- Firstly, OKRs are a cooperative social contract to establish priorities and define how to measure progress.
- Secondly, even after company objectives are closed to debate, their key results continue to be negotiated. Indeed, collective agreement is essential to commitment.
- In addition, to promote engagement, management should encourage teams and individuals to create about half of their own OKRs with their consultation.
- At last, if the context has changed, the team can modify or even discard mid-cycle key results after a discussion with managers.
Focus and commitment to priorities
Time-boxing supports commitment
- Clear time frames increase focus and commitment: really, nothing steers more forward than a deadline.
- Moreover, quarterly OKRs review is usually a good rhythm to keep pace with today’s fast-changing business environment.
Less is more focus
- In most cases, the optimal number of quarterly OKRs is between 3 and 5.
- As a matter of fact, a few well-selected objectives send a clear signal about what to say “yes” to and what to say “no” to.
- By contrast, too many objectives can fog the focus on what counts or distract into chasing the next shining topic.
Innovation means saying no to one thousand things.
Quality should remain a focus
To secure quality while pushing for quantitative deliverables, one solution is to pair key results with the quality dimension impacted.
Alignment and connection to teamwork
Lack of alignment is the main obstacle between between strategy and execution.
Breaking the silos
Positively, OKRs make it possible to break silos and enhance top down communication on the vision:
- First, they neutralize organizational toxic behaviors like suspicion, sandbagging, politics.
- Then, thanks to transparency they require and support, OKRs are open and visible to all parts of an organization whatever level or department:
- They can be shared without cascading them in lockstep. When they fulfill wide purpose, multiple levels of hierarchy can be skipped over.
- They enable networking cooperation across silos.
Note that there should be OKRs for all important activities for a given team.
Coordination and alignment between teams
Unacknowledged dependencies stay the first reason for project drifting. Therefore, the solution is lateral, cross-functional coordination between peers and teams. As a matter of fact, OKRs create networks around critical works in all direction: vertical, horizontal and diagonal.
When employees align with a company’s top objectives, their impact is magnified. Therefore, they stop duplicating efforts or working against each other.
But you should balance alignment and autonomy to reach the optimal equilibrium:
- Alignment brings common purpose and amplified effect of all actions going in the same direction.
- Autonomy carries innovation and commitment.
To support engagement, OKRs framework frees contributors to set at least some of their own objectives and most or all of their key results. Another point regarding commitment is that even if employees need clear performance standards and high objectives, how they work should remain their responsibility.
Connection of OKRs to the company’s and the teams’ missions
Coursera have linked its OKRs explicitly to the company’s values and mission statement.
In our open-sourced, hyper-connected world, behaviors define a company more than products or services it delivers. Leveraging the culture is all the more important that it is the very part of a company that other companies cannot copy or become a commodity.
Tracker for accountability
A tool not a weapon
Firstly, let’s start by stressing that OKRs are a tool not a weapon. The truth is that they are a chronometer for employees to keep an eye on their own performance. Truly, they are not a contract on which to base a performance review. Actually, you should keep separate OKRs and bonuses.
Secondly, the greatest motivator is making progress in one’s work. It makes people feel more motivated and committed.
OKRs are adjustable
They can be revised or adapted as circumstances impose. Unlike traditional, frozen, business objectives OKRs are living and dynamic.
There are 4 options when reviewing OKR at any point in the cycle:
- Continue, green zone: the objective is on track and is achievable even if challenging.
- Update, yellow zone: the objective needs attention as key results or the objective itself require to be adjusted to meet changes in the company or in external environment.
- What could be done differently to get the objectives on track?
- Does the timeline need to be revised?
- Do we pause other initiatives to free up resources for this one?
- Start: launch a new set of OKRs mid-cycle whenever needed.
- Stop, red zone: the objective is at risk. It is no longer relevant and the best option may be to drop it. While OKRs are first a positive force to surpass oneself, they also prevent from continuing in the wrong direction.
Structured learning enabler
OKRs do not terminate with completion of the work. As in any data-driven system, amazing value can be get from retrospective evaluation and analysis at the level of the team and between manager and managee.
OKRs wrap-ups consist of 3 steps:
In scoring OKRs, people note what they’ve achieved and think how they might do it differently next time. As a consequence, a low score requires reassessment:
- Is the objective still worth pursuing?
- If so, what can be changed to achieve it?
Google uses a scale of 0 to 1.0:
- 0.7 to 1.0 = green, delivered
- 0.4 to 0.6 = yellow, progress achieved, but fell short of completion
- 0.0 to 0.3 = red, failed to make real progress
In evaluating OKRs performance, objective data is improved by the objective setter’s thoughtful and subjective judgment:
- For any given objective in a given quarter, there may be mitigating circumstances.
- A weakness stressed out by the numbers may hide a strong effort.
- A strength one could be artificially exaggerated.
Learning from direct experience can be more effective if paired with reflection: an intentional attempt to synthesize, abstract, and articulate the key lessons taught by experience.
Here are some reflections for closing out an OKRs cycle:
- Did I accomplish all of my objectives? If so, what contributed to my success?
- Otherwise, what obstacles did I encounter?
- If I were to rewrite an objective achieved in full, what would I change?
- What have I learned that may alter my approach to the next cycle’s OKRs?
Stretcher to reach the stars
Shoot for the moon. Even if you miss, you’ll land among the stars.
Google divides its OKRs into two categories:
Committed objectives are connected to Google’s metrics: product releases, hiring, customers. Management sets them at the company level, employees at the departmental level.
Usually, these committed objectives, such as sales and revenue objectives, are mean to be achieved totally (100%) for the related time period.
Aspirational also called “stretch” objectives
- They support more long term, daring and higher-risk ideas.
- By definition, they are challenging to achieve.
- Failures in Google for this category of objectives is an average rate of 40%.
Good practice for stretch objectives:
- To succeed, a stretch objective cannot seem like a long way to nowhere.
- Nor can it be imposed from the management without taking into account the reality of the ground.
- If you stretch your team too fast and too far and it may burst.
If set properly Stretch objectives make employees are more productive and more motivated.
What’s next? Learn more about OKRs and discover Strategy and Competition
Read my second post about OKRs:
- How to integrate OKRs in the day-to-day management?
- How the culture impacts OKRs?
Check also my post about Agile at Scale and how the Strategy and the OKRs are cascaded and implemented through Agile at Scale Project Portfolio Management and at the level of a Tribe with the Product Management Team (PMT).
Do you want to learn more about the OKRs? Here are some valuable references
Reference books about OKRs