OKR is a popular goal setting and management framework that stands for Objectives and Key Results. It helps businesses to succeed in their long term goals, by keeping all their employees on the same page. It brings overall alignment, transparency of vision and increased efficiency that allows all departments to accomplish common objectives together.
The OKR framework consists of 3 parts:
Objectives - An objective defines a goal to be achieved
Key Results - A key result measures the progress towards a particular objective
Note: Every Objective can have 3 - 5 key results
Initiatives - An initiative describes the steps taken to ensure progress on the objective
An objective is a goal that you aim to accomplish. It provides directionality and clarity of vision; like GPS on a car that tells you where to go.
What do I want to achieve?
Increase overall company revenue
A key result is a measurable or quantifiable metric which helps you track and measure progress towards an Objective; like the odometer that tells you how far you have travelled or the speedometer that helps gauge your speed.
Invest more in organic content
Run customer satisfaction surveys
Form a customer success department
Reduce CAC by 20%
Reduce churn by 2%
Improve customer LTV by 50%
What will I do to achieve it?
How do I know if I will achieve it?
An initiative is the sequence of actions that you do to accomplish your Objective; In this case, it would be buying a car, filling it with gas etc.
In 1968, there was a man named Andrew Grover who served as the CEO of Intel. He pioneered the management framework called OKRs, which contributed to the tremendous growth of Intel in that period. Later in 1974, Intel had a new employee by the name of John Doerr, who witnessed OKRs for the first time and went on to become a bigtime proponent of OKRs with his book “Measure What Matters”. Doerr also introduced this framework to Google in 1999 which has become the secret sauce for the company’s fast-paced growth even today.
Set an overall company objective that is responsible for company growth. Define a fixed period of time between 3 months to an year, within which the company can achieve the overall objective. Come up with 3 -5 key results required to accomplish the overall objective.
Divide each of these key-results into smaller ones and let each team derive their individual objectives from each smaller key-result. Let each team define 3 -5 key-results for their objective and take collective responsibility in achieving them.
Optionally, employees can also derive 3 - 5 personal key results to achieve from their team’s specific objective, tie it to a metric and track their progress continually.
The entire workforce meets up weekly or bi monthly within the defined period of time, and gets their key-results evaluated to see if their progress in the current pace will enable them to achieve their objectives. This meeting can also address any roadblocks, or hassles that stop the employees from completing their key-results.
At the end of the defined period (3 months to an year) , the key-results of every employee, team and company as a whole get scored on a scale between 0 to 1.0 based on their progress, output and quality of work. Anything between 0.7 - 0.8 denotes good progress. However If the scores are between 0.5 - 0.6, the company has failed to meet the goals due to some roadblock and these roadblocks weren’t addressed. If it is anything below that, the company has aimed too high for the defined time period. If the scoring is anything above 0.8, then the company has aimed for something too easy and all these mistakes can be corrected for next iteration of 3 months to an year to ensure maximum performance efficiency.
The long term vision of the entire organization
The steps taken towards achieving the objective by every corresponding individual
Set for a 5+ year time period
The short term vision of the entire organization that cascades from the north star objective
Set and reviewed quarterly
Set and accomplished daily
Set for 1 year and reviewed quarterly
Department leaders and Middle-managers
Department-level objectives that cascade from the overall company objective
North Star Objective
Your North Star Objective is typically your organization’s long-term purpose and serves as one common objective to which all other OKRs align.
Become the industry leader in the mid-range mobile phone segment
Company OKRs are the immediate overall strategy that cascade from your north star metric. Nominate 3 top priority objectives that your organization should have achieved by the beginning of the following year based on your long term objective.
Objectives should be in line with the overall company objective and should aid the organization in achieving its north-star metric.
Initiatives are tasks or activities that we do to accomplish an Objective and will take us closer towards the required key-results. They may or may not be directly related to the Objectives.
OKRs and KPIs are similar, save a few differences. OKRs help you navigate uncharted territory with a clear vision. OKRs help you achieve your overall organizational success. However, KPIs are more focused on the end result and help you gauge the quality of the outcomes from activities that are already in place. If you are already using KPIs, you’d be glad to know, OKRs work best when tied to your existing KPIs!
If you come across an Objective that cannot be quantified, the success or failure of the outcome can be set as binary and you can associate quantifiable Key-Results to it.
For Example: If your objective is to increase brand awareness, your Key-Results can be:
In the end, based on the surveys, you can say either your brand awareness has grown or not grown.
OKRs are about the clarity of vision and being on the same page. It is a compass that serves any number of people from 5 - 500 and above.
Though it is not restricted how often you set OKRs, it is recommended you set Objectives for a quarterly or a yearly cycle, and review it on a weekly or bi-weekly period.
An Objective usually has anything between 3 - 5 Key Results.
OKRs are a long drawn process and the improvement is incremental. Most modern teams take anywhere between 3 months to 6 months to adapt to the OKR cycle.
OKRs requires the involvement of the entire organization to be successful.
If your team continually achieves 70-80% of their listed objectives, you are on the right track; If it is higher, you are not aiming high enough.