what are okrs
OKRs is a critical thinking framework and ongoing discipline that seeks to ensure employees work together, focusing their efforts to make measurable contributions that drive the company forward.
What is an Objective?
An objective is a concise statement outlining a broad qualitative goal designed to propel the organization forward in a desired direction. Basically, it asks, “What do we want to do?” A well-worded objective is time-bound (doable in a quarter) and should inspire and capture the shared imagination of your team. As an example, we’re creating a series of collateral materials for our book, and one of our objectives this quarter is: “Design a compelling website that attracts people to OKRs.” The objective is concise (just nine words), qualitative (no numbers here—that’s the province of the key result), time-bound (we’re confident we can create a design this quarter), and inspirational (it’s exciting to engage our creativity in producing a site that people will find both helpful and aesthetically appealing).
What is a Key Result?
A key result is a quantitative statement that measures the achievement of a given objective. If the objective asks, “What do we want to do?” the key result asks, “How will we know if we’ve met our objective?” In our previous definition, some may quibble with the use of the word quantitative, arguing that if a key result measures achievement, then by its very nature it’s quantitative. Point taken, but we want to err on the side of too much information here to ensure that you recognize the vital importance of stating your key results as numbers. The challenge, and ultimately value, of key results is in forcing you to quantify what may appear to be vague or nebulous words in your objective.
Using our example objective of “Design a compelling website that attracts people to OKRs,” we’re now committed to designating what we mean by “compelling” and “attracts.” As you’ll discover with your own key results, there are no given translations of words like compelling and attracts into numbers; you must determine what the words mean specifically to you in your unique business context. Here are our key results (most objectives will have between two and five key results.
- 20 percent of visitors return to the site in one week.
- 10 percent of visitors inquire about our training and consulting services.
The high-wire act you must balance with key results is making them difficult enough to force a good deal of intellectual sweat to achieve, but not so challenging as to demoralize your team because they appear impossible.
What are benefits to OKRs?
The very act of instituting and utilizing a formal measurement and monitoring practice is beneficial, as evidenced by a recent study of 30,000 U.S. businesses conducted by the U.S. Census Bureau’s Center for Economic Studies. According to the authors, companies that had structured management practices focused on performance monitoring and targets had significantly better financial results than those that didn’t use such measures. So simply putting an OKRs program in place is upping your odds of fiscal success. The rewards to your bottom line will justifiably please you, the board, and your bean counters, but outlined next are a number of additional, also critical, benefits you can expect from a well-constructed OKRs implementation.
OKRs Are Easy to Understand—Increasing Buy-in and Use
In California, there is a very popular burger restaurant called In-N-Out. If you’ve ever had the pleasure of savoring their offerings, which are absolutely a cut above most fast food, your mouth is probably watering as you read this. One of the many reasons In-N-Out has captured such a frenzied base of raving fans is the simplicity of the menu, which consists of burgers, fries, shakes, and beverages. That’s it. Not like many restaurants, whose menu boards are so crammed with items you need 20/15 vision just to read them.
Consider OKRs the “In-N-Out of managing your performance.” One of the biggest benefits the framework features is its sheer simplicity, and that begins with the taxonomy. Basically just three words: objectives and key results. Other approaches to managing performance and executing strategy are awash in jargon, which has the potential to confuse employees already under siege from missions, visions, core values, and KPIs, as we noted when discussing execution myth three (Communication equals understanding).
Here’s how Rick Klau of Google Ventures describes it: When OKRs are working well in your company, it’s as if everyone has acquired fluency in a new language. Every employee is familiar with a common vocabulary, and understands how this vocabulary describes what’s most important to the company (and what’s not). After just a couple of quarters relying on OKRs to set and manage goals, people inside a company develop three distinct superpowers: the ability to predict the future, the ability for the company’s founders or CEO to be a part of every important discussion, even (especially) when they’re not there, and the ability to say no.
A Shorter Cadence Fosters Agility and Change-Readiness
While there is room for customization with every implementation, most OKRs practitioners will set goals quarterly. This frequent establishment of priorities is vital. As the pace of change within, and outside, businesses accelerates, it’s essential that new information be captured, analyzed, and transformed into knowledge that can be used to innovate and potentially alter the strategyor business plan. Doing so is immensely difficult if you’re setting just annual goals—There is such a lag between the inciting incident that may have the potential to rock your business to the core, and your reaction to that event, that you’re left completely flat footed and unprepared.
OKRs Demand Focus on What Matters Most
Perhaps the scarcest resource in any company is employee mindshare. Think of the intense competition vying for a chunk of that real estate in today’s 24/7 world: Company goals, unit goals, individual achievement goals, the meeting you’re late and unprepared for, industry trends, career concerns, family issues, social media, the score from last night’s game, etc., etc. No doubt we live in a world of excess access, to everything. But one thing that must rise above the cacophony of competing voices is knowledge and understanding of what’s most important for the company (and each employee’s contribution to that) right now. OKRs demand that you isolate just the most fundamental priorities and dedicate your focus to that limited subset of potential variables involved in running any company.
Transparency Promotes Cross-Functional Alignment
Earlier in the chapter we discussed how organizations are redesigning the way work gets done by vesting small teams with the authority and challenge of overcoming specific problems, and then disbanding once the task has been completed. Regardless of the business problem a team is trying to solve, it’s a virtual guarantee that a potential solution does not reside with just one team, but does in fact depend on the cooperation of another group (or groups) within the firm. Therefore, in our networked world it’s imperative that teams have visibility into other teams’ performance goals. OKRs encourage this transparency throughout the organization. An effectiveOKR program works on severallevels: There are corporate-level objectives and key results in place. Departments or business units (your structure or nomenclature may differ) have OKRs, and individuals may have OKRs.
OKRs Facilitate Focused Conversation and Drive Engagement
There is an oft-quoted career adage that says people don’t leave companies, they leave managers. This has been accepted human resources wisdom for quite some time, and companies have, naturally, attempted to remedy the situation by crafting leadership development programs, offering sensitivity training, and engaging in 360-degree feedback. These and other interventions have been designed to improve the employee-manager relationship and mitigate the risk of talent heading out the door. There’s just one problem. The old adage isn’t true; at least not according to a survey of over 7,000 LinkedIn members across five countries.
OKRs Promote Visionary Thinking
Carol Dweck is a Stanford professor known for her work on motivation, and more specifically, mindset. She posits that people can be divided into two camps. Some individuals believe their success is a result of innate ability, and are said to have a fixed” mindset. Others feel success is a result of hard work, tenacity, and determination. They are said to possess a “growth” mindset. Fixed mindset individuals fear failure because they feel it’s an assault on their basic abilities, while those with a growth mindset embrace failure, recognizing it as a simple data point, and an opportunity for learning and improvement.