A Brief History of OKRs
Andrew Grove developed and implemented a system called Objectives and Key Results (OKR) during his CEO tenure at Intel (the overwhelming success of Operation Crush has been attributed to his use of OKRs). In 1975 an Intel employee named John Doerr took a class on OKRs taught by Grove. John went on to work for a venture capital firm called Kleiner Perkins, which invested in a startup called Google in 1999. John introduced the idea of OKRs to Google’s founders and they have implemented it throughout the company during its first year. Google grew from 60 employees to 100,000 and still uses OKRs today.
What is an OKR?
“It was the best of times, it was the worst of times. It was the age of wisdom, it was the age of foolishness. Was the epoch of belief, was the epoch of incredulity. It was the season of Light, it was the season of Darkness. It was the spring of hope, it was the winter of despair.” That’s the opening sentences of ‘The Tale of Two Cities‘, the greatest novel of Charles Dickens. Indeed, when he wrote these sentences, Industrial Revolution had already begun. Globalization, and strong interaction haven’t gone forward, yet. But, he used such an extreme quotes. Nowadays, we are in more and more different World. As well, this article aims to examine OKR meaning which belongs to the now and future.
The Earth had encountered so many, and unique changings since The Tale of Two Cities. However, the process never ended. And, improvements have remained to move on. Then, just for last three decades, technology has pushed the limits. In such a globalized world, everything can interacts more and more easily with each other. Therefore, trade volume is at the peak volume in its history. Thus, business-men have to promote different approaches in their management life. OKR shines like the Sun, when it comes to develop management system. And, with understanding of OKR meaning, it is beneficial to say how OKR is useful for business and management sytems.
The acronym OKR stands for Objectives and Key Results. Much has been written on the topic over the years yet they still remain a mystery for many. I want to cut out all of the buzzwords and lift the veil on what OKRs are, how they work, why they are good, how to set them and why you actually should use them at your company or startup. Let’s get started.
Larry Page, the CEO of Alphabet and Google, says OKRs helped them grow 10x. Moreover, he says it made the company goals achievable.
OKRs are typically implemented using specialized OKR software.
OKR stands for Objectives and Key Results which is a goal setting framework widely used by many companies. Each OKR consists of one Objective and up to 5 Key Results. In addition, each OKR can also have Initiatives. You can use it to set, track, evaluate your company goals and key results. Furthermore, you can set them weekly, monthly, quarterly, or yearly.
Structure of OKRs
Objectives are defined as the goals to be achieved.
Key results measure progress towards the objective.
Initiatives describe the work required to drive progress on the Key Results.
What is an Objective?
Objectives are mainly the steps you have to take to achieve a goal. Besides, they have a short time frame and a specific definition. On the other hand, goals are the main results that your company wants to achieve. They have a long time frame and a broad definition.
For detailed information you can check Difference between goals and objectives and Goals vs. Objectives.
What is a Goal?
Goals are the main results that your company wants to achieve.
They have a long time frame and a broad definition.
Goals vs. Objectives
- Final results that we want to achieve
- Have a broad definition
- Time frame is usually long
- Generic action is taken towards a goal
- Steps you have to take to achieve the final goal
- The definition is more specific
- Have a shorter time frame
- Specific action is taken
So, you can see the table above breaks the difference down to simple bullet points. To begin, goals are the final results we want to achieve while objectives are the steps taken to achieve the goal. Since the goal is the main target, it has a broad definition which yields a necessity to take generic action. On the other hand, objectives have specific definitions. Therefore, objectives require specific actions. Above all, goals have longer time frames compared to objectives. In conclusion, goals might be seen as the final results we want to achieve while objectives are targets with short frames to achieve the final goal.
Goals and Objectives – 3 Common Mistakes
Goals and objectives are the terms that we use regularly in the business world. A goal is mainly what you want to achieve while an objective is a step that brings you closer to achieving that final goal. Although these terms are used regularly, there are some common mistakes made while defining or determining how to set them. And now we will talk about those mistakes.
Mistake 1: Goals and Objectives should be set at the very beginning of a project
No! It does not have to be that way. You may define them after coming up with the project scope. Actually, after defining your desired outcome of the project, it is easier to define your goals and objectives in this scope.
Mistake 2: Goals and Objectives are not relevant
They are, and they are very relevant indeed. Goals are defined as the main target that we want to achieve while the objectives are the necessary steps to achieve the final goal. We may think of objectives as the short-term targets.
Mistake 3: Losing Sight of Constraints
Time is the most important constraint when setting a goal. Giving too much time to accomplish a goal or an objective may result in underperformance of the team, giving too little time may cause dissatisfaction of the employees.
Budget is another important issue when setting goals and relevant objectives. Underestimation of the total cost to achieve a certain goal or objective may result in severe financial issues.
We are setting our goals in accordance with the time and budget but what about quality? The work should also be qualitatively good. Thus, we should take it into account to add quality constraints.
What is Goal Setting?
Setting goals is a strong incentive power to succeed. Moreover, with this power, you can gain perspective that will improve your performance. So, you can achieve a certain competence within a specific period of time. Setting goals is the basis of development and awareness. This willingness to achieve and create a path helps us to appraise our performance. Setting goals allows you to control the progress of your business. In addition, it provides you with a way to determine how far you have come towards achieving your goals, and if you really are successful.
How to Set Goals?
We should set definable, difficult yet achievable target to be successful. The harder the goals and objectives, the more we try! This way we know what is needed to set a goal and find and develop appropriate strategies. The experience of success and the positive emotions provide self-confidence and faith. We should always protect our urge to overcome obstacles, and stick to the goal. Additionally, unclear or generalized goals are useless because they cannot provide you with a certain aim. As a result, you should define your goals clearly and this will always give you the motivation and awareness you need. By coordinating your employees with OKR Software, working towards the goals you set will always bring you success.
What are Strategic Goals?
Strategic goals are the significant planned objectives that a company aims to achieve. Clearly, these also include Objectives and Key Results (OKRs), a system to measure company’s aim for success over a long, or short period of time. This property of OKR enables companies to progress more systematically. However, before using OKR to achieve your goals, you should really understand what a strategic goal is. Let’s paraphrase this into a question: how does a strategic goal effect a company’s future in a different manner?
Understanding the Necessity of Strategic Goals
A lot of great ideas lack great plans. Without a clear plan we may waste a lot of resources and energy on profitless and unsuccessful projects. To manage a successful company one has to take a different approach. This is where strategic goals come in. That is to say, strategic goals come from the real world and depend on measurable parameters and real needs. All of these features exactly match a company’s charge for growth.
What are the Main Features of Strategic Goals
Strategic Planning with Goals
A goal is a specific aim, an end result or something to achieve. It is the main step in achieving the vision of the company. Let’s talk about strategic planning with goals and objectives. When we want to decide our company goal, we should ask ourselves “What is the place of my company?”. For example, a goal for a football team might be to have 30 qualified players and active coaches. A company may set a few goals which will outline a path to achieving the target. The goal for football team will be an important step to achieve the vision of becoming the best football team in the league. Without strategic planning with goals and objectives, that team has a big risk to fail.
What is the key result?
Key Results are brief statements that are clearly defined, specific, and measurable. Therefore, they make it easier for employees and their leads to monitor progress. For the best results, Key Results must have the following characteristics:
KRs are specific. Organizations that have successfully used OKRs see that they use specific language that is common to all their employees when drafting their key results and objectives.When it comes to setting the Key Results, there are also some crucial points which should be taken into consideration. Truly, Key Results are what makes OKR so effective. The reason is that the Key Results break down the Objectives into smaller, measurable steps.
Key Results are brief statements that are clearly defined, specific, and measurable. Therefore, they make it easier for employees and their leads to monitor progress. For best results, Key Results must have the following characteristics.
KRs are specific. Organizations that have successfully used OKRs see to it that they use specific language that is common to all their employees when drafting their key results and objectives.
Supposing, you set spot-on Objectives. A successful OKR does not stop there. You still have one question to answer – in what way will you be able to accomplish this goal?
That’s where Key Results come in. OKRs should always be measured. For example, if your objective is to increase your profits by 50%, what will be the indicators that you have achieved this goal? One indicator might be a reduction in your operational cost and distribution cost. Another would be doubling your production. Third indicator could be completing 10 more projects than what you usually do. From these indicators (also called ‘milestones’), you can break down your key results into more specific tasks and strategies.
What is stack ranking?
Stack ranking is a system in which the employees’ are evaluated according to their performances. They are mainly sorted in ascending performance order. The main reason behind this sorting is to be able to see which employees are high achievers, who are the mid performers and who is simply laying off.
What is KPI?
KPI, which is an abbreviation of ‘key performance indicator’, is a way of observing your company’s performance, and how it and employees succeed or not in the process. One of the most important point of being successful on the way to the goals is to determine the KPIs correctly by customizing them. What is meant by customizing is that there should be differences between departmental KPIs. Because, for example, the functioning of a marketing department and production department, employees and methods are different. Even within the same department, KPIs must be at different levels. In short, KPIs helps us to monitor the path covered in the success process.
Although KPIs are generally based on numerical data, there are also KPIs that indicate a status like positive or non-positive. In both cases, however, KPIs should consist of measurable and verifiable concrete data.
There are two types of KPIs: high-level KPIs and low-level KPIs. While low-level KPIs are related to the departments within the company, high-level KPIs focus on the company’s total performance.
KPIs are performance metrics that demonstrate how effectively a company is pursuing its key business objectives. KPI goals are obtainable and they measure the process or a project already in place.
OKR vs. KPI
KPI goals represent the results of the efforts made for the projects currently underway. On the other hand, OKRs should be neither too easy nor unreachable. In other words, they are not easy to achieve, but when the goals are reached, they are the factors that trigger growth by increasing the team and company motivation.
OKR has greater depth than KPI and provides a better framework for taking on new projects, ventures, even new directions for your business.
An OKR vs. KPI comparison is as different as chalk and cheese even though they both contain keys, but one is a combination that contains the other. Because of their complementary scope, OKRs and KPIs are natural companions.
To illustrate the difference between KPI and OKR, you can think of KPIs as experiences on the road to success. Suppose you have set up a new start-up. You will have to go and try many ways until you reach your desired growth, and of course these roads can lead to success or failure. However, failures are actually the tools that form the basis of success. But of course, they do not bring it directly. In other words, the ultimate growth is achieved with OKRs based on the experiences stored in KPIs.
Hence, as a result, while KPIs are used to monitor the process, OKRs solve problems by providing accurate solutions.
How to use OKRs?
The ojectives are divided into various groups on a personal, departmental and company based and change over time. If the specified objectives have not timed out, the same KRs may continue to be used. However, if the objectives have changed, OKR can also be shaped according to the purpose as they have a dynamic structure in itself.
Here are some good and bad examples of OKRs (with corrections).
Growing Company – OKR Examples
Introduce Your Company to Other Businesses
Move site to the top 3 by keyword studies
Be more active on social media platforms like LinkedIn to highlight achievements
Prepare newsletter weekly
The OKR exemplified above is not a good one. Why? The objective is not clear enough, so the purpose is not fully understood and not all key results carry numerical data, which is basically the definition of KR. In order to make this a better example:
The phrase in the objective ‘Other Businesses ‘ should be specified as ‘Competitive companies’
Supporting the subjective saying ‘Being more active on social media platforms’ with numerical data would be better. To illustrate: “Be more active by sharing 4 posts in a week on social media platforms like LinkedIn to highlight achievements.”
Product Marketing – OKR Examples
Launch the New Software Product
Give 20 prospective buyers 1 month free use
Use e-mail marketing during pre-pre-launch to get highest click-minimum 35% higher than before
Finalize feature briefs and sales enablements of the new product and add them to social platforms and website before pre-launch
The third key result is not based on quantity. To change it to a good key result:
Finalize at least 70% of feature briefs and sales enablements of the new product and add them to social platforms and website before pre-launch.
read more here.
How to Write Good OKRs?
‘Objectives and key results’ is the answer of the question ‘What does OKRs stand for?’ It is a very beneficial way to encourage employees to be responsible and determined, and that they finish their work on time. In this post we will explain how to write good OKRs, how to implement good OKRs and talk about the steps to determine suitable OKRs.
The most important point in writing the OKR is to encompass the company, its employees and the working principle of the company. This is because the objective is based on the internal requirements and if the internal dynamics are not mastered in the language, the desired results cannot be achieved since the key results on the way to the goal cannot be understood. For example, it is not sufficiently reasonable for a developing company to set access to the top spot in the market as the first target. Instead, maybe for the long-term goals, yes, this is a goal, but first in the market, it should be able to stand next to its competitors. To sum up, objectives have to be prioritized based on what a company needs the most and also, for the teams and individual needs and goals at that time interval.
Benefits of OKRs
- Focusing on the tasks that have the most impact on the business.
- Achieving high impact on the company goals after you complete the objectives.
- Let your employees prioritize the tasks to bring the highest positive impact on the company.
- Setting goals for your company.
- Assigning goals to your employees.
- You can use goal management software to automate the goals and tasks for you.
- Spend your time making plans more effective or more strategic.
Why do we need to use OKR?
Peter Drucker, known as “Father of Management” was a management leader and business strategist who contributed significantly to the foundation of managing a modern business corporation. In one of his books he stated that “If you don’t know where to go, it doesn’t matter where you are”. This sentence summarizes that if you want to arrive at success, you should know which way will take you there. As you set goals you put a target on the top point of the ladder and make your key results the steps on that ladder. Hence, you can check how many steps you need to climb to reach your objective.
Businesses like Google, LinkedIn, Zynga use this methodology since Peter Drucker invented Management by Objectives and Intel converted MBO into a model called OKR. So, its effectiveness has been proven a thousanth time. In addition to these methods you can also use OKR software, like Corvisio OKR, which saves more time than an excel OKR template.
A Clear Vision
The second major benefit of OKRs is that at the end of their time frame they provide a reference to evaluate how well you did in executing the set objectives. Things become clear – what works and what doesn’t. They let you reflect on the progress made and provide you with a clear numerical expression of success.
Because key results and objectives include numbers in their definitions, it is easy to tell whether you have hit the number or not. Hire 25 motivated and aware customer account representatives this quarter? We hired 20. That is an 80% success rate, which is a great indicator that not only we were able to secure 20 new stellar employees, but we were able to move towards achieving the goals we have set in the beginning of the quarter. The total success rate of an Objective is calculated by averaging the success rates of its Key Results. Hitting a 70% success rate and above for objectives is a good indicator of a healthy team or company.
Why you should use an OKR template?
“If you don’t know where to go, it doesn’t matter where you are.” -Peter Drucker
Professionals have been using several methods to set goals and manage their process. For instance, you can use a paper and a pen to write down your objectives and key results and this method may sound like the easiest. But, what if you have a large number of employees and your employees also have a lot of objectives?
Then, you may think to use an excel worksheet in order to shorten time that will be spent for arranging OKR template. OKR template can also be used as a dashboard for keeping track of each of your team member’s OKRs. Therefore, you can still use paper and printer to print company’s OKR, post them to walls to make the walls speak and encourage to achieve key results.
In conclusion, you should use OKR template for:
Keep track for your department’s objective in one place,
Monitor the progress of each key result for each team member,
View actual progress at a glance,
See the total average progress versus desired progress in one single spreadsheet.
However, using an OKR template is still not a best way to save time. Above all, saving time is not only criteria that professionals are looking for. Thus, here is a list of benefits of using OKR software;
You will save your company’s resources: time, money, memory, and even employees.
Online, you don’t need to copy, send or carry folders.
Transparent, everybody on the company can see objectives and progress.
What Companies Use OKRs?
Those would be Google, Intel, Amazon, Uber, Box, Dropbox, Deloitte, Facebook, LinkedIn, Sears, Oracle and Netflix. And many more. Did I mention Panasonic? What about Slack? Yep, they too use OKRs. As you can see, OKRs are used by a wide array of companies which ranges from tech to retail to manufacturing. The reason I mention Google and Intel first is because these two companies are seen as the originators of Objectives and Key Results method. Let’s delve into a brief history of OKRs.
How Google uses OKRs?
Although there are so many way to improve a company’s business status, OKRs have become widely used way day by day. For instance, Google benefits from what OKRs provide to progress, too. But, how does Google OKRs?
Almost 6 years ago, one of the Google’s investors made a presentation and, said that it is the time for beginning to use OKR for reaching Google’s future goals.
According to that presentation, Google operates OKR as firstly set up an objective. Google’s investor indicated some features that should be kept in view:
- is ambitious
- feels a tad uncomfortable
- definitive and measurable
When you set up an objective, initially you should define a goal by a sentence. For example, if the goal is “make my website prettier”, convert it to measurable and numerical parameters. “make my website 30% faster”, or, “increase engagement 20%” may become your objectives.
Advantages of OKR System
- Thanks to OKR, people do their jobs more regularly and employees work together for a common purpose.
- Assigning tasks to your employees.
- Get periodic brief performance reports of your employees and objectives.
- Make sure that for each strategic goal you have assigned at least one employee to own it.
- People achieve outstanding results when they engage in the process with a purpose.
- Use wording that everyone will understand.
- As a result, you can communicate your goals to everyone in the company and receive a deeper engagement.
When to use OKR?
OKRs are simple to use and do not take much time to implement when set up and used regularly. You get better at setting OKRs with experience. Often, it takes just a few times to check and review your OKRs, although you should check them to keep up with progress and mark said progress on a weekly basis.
Getting started with OKRs is easy and simple by following this guideline:
Some Technical Details about OKR
Allright, is it better to say more about the epistemology of OKR? As you know, epistemology means its implementational features. The most important one of these features is the number of key results. Surely, every objective that we choose should define and appoint a problem. Then, we should indicate 3-5 key results for each objective. There may be many key results for an objective as you appreciate. Yet, the effectiveness does not rise to infinity, when the number of key results increases. Due to key results are almost impossible goals, it only results decreasing in success. So, we should specify the most critical key results.
Instead, we can change our objectives or key results during the process. This usefulness due to flexibility of OKR. However, this is not suggested for more comfortable progression. Moreover, it is only effective in an unestimated, or overlooked situation.
OKR Directs Everyone to the Goal in A Company
Finally, it is understandable that every manager wants to delegate aims to each cell of company. If managers can not tell what company exactly goals, some of the source, and time is wasted. Therefore, for a professional business life, using OKR is cruicially necessary. ‘Cause, OKR dashboard shows all of the company objectives to every worker. Thus, all of employees are aware of what they work for.
Consequently, when OKR meaning is clearly understood, and objectives and key results are truly specified, the process goes on. Nevertheless, managers can easily focus everyone on the same goal. It is good to say OKR directs everyone to the goal in a company.
Frequently Asked Questions About OKR
There isn’t obvious differences at first glance. Differences are small but vital.For example, let’s choose a goal, and express it by a sentence like “Increase company’s revenue to $2M.” It can be seen
easily, goal contains both action and target: increasing and $2M. However, for a company, there’re so many components. And, if someone wants to take company where the goal stands, it is not effective to say that our goal is increasing revenue to $2M. That defines only the aim; but what steps should company take, and how these steps should be implemented?
When we look at this perception, it is required that goal should be divided into to pieces. One piece is called Objective. Objective is the point where we wanna go. We may determine an objective like increasing our company’s revenue”.
Then, the other piece contains steps that we should take. Some key results that approaches us to main Objective, such as “making $2M revenue”.
Thanks to OKR methodology, a company’s goal can be analyzed. This ensures convenience of implementing in the real world. Otherwise, there is no way for solving problem in complicated world; without analyzing.
How should I set OKRs?
Ultimately, you’ll need to determine the cadence that will best work for your company. Whether you choose to use OKRs on a quarterly schedule or something shorter like a six-week timeframe, that will depend on your company’s existing rhythm. But after you’ve established a schedule, here are the steps you’ll need to take:
-First, determine the one major priority driving your company right now
-Then, establish 1-3 Key Results that will measure and quantify your ability to reach that Objective.
-Add 1-2 more of such priorities, but don’t overload yourself. Keep in mind that less is more, especially when you’re first starting out with OKRs.
– Once you’ve set a few OKRs at the company level, continue repeating the process so that the company-wide priorities cascade down. Remember that each individual contributor’s OKRs will not be a company-level Objective. But their OKRs should always be supporting, in one way or another, the top-level goals.
– Encourage managers to check in weekly with their employees. This is the critical link that connects execution to goals. When employees create weekly update reports and check in during one-on-one meetings, they’ll review weekly wins, identify any possible bottlenecks, and discuss overall progress towards goals.
How OKR Software Helps to Measure What Matters?
Firstly, it should be known that OKR Software has some important features:
- Automatic prompts and updates
- Sophisticated Analytics
- Reporting tools
- Real-time alerts
- Most importantly, navigate a single dashboard to set, track, manage, and score on your OKRs.
Measuring What Matters
Focus and Commit to Priorities
– “What is the most important thing we can do for the next three months that can truly make a difference?” Initially, focus on this question, and notice your priorities. Thus, place a statement that can truly make a difference.
– OKR leads develop a set of carefully curated initial goals, definitely. Therefore, to help the dissemination of these OKRs, we utilize “Goal Alignment Diagrams”. In this way, these diagrams provide the organization’s top priorities cascade to departments and teams.
Align and Connect for Teamwork
– In addition, to achieve to measure what matters, OKR Software provides visibility for level to level screening of other’s OKRs. After that, it ensures a line of sight for everyone to see department, team, and individual goals. In this transparency, enabled by OKR Software drives higher employee engagement and accountability throughout the organization.
Track for Accountability
– Properly, check-ins are one of the necessities in an OKR impelementation. Therefore, OKR Software provides automated prompts to encourage employees to complete their regularly scheduled check-ins to monitor progress.
– Taking this accountability a step further, OKR Software
prepares Engagement Reports to provide OKR leads with information relative to
– Instead, management can track progress via standart and customized reports, such as Monday Morning Report. Somehow, this report allows to monitor weekly progress.
Stretch for Amazing
-Additionally, Google employs two types of OKR goals: Committed and Aspirational. Committed goals should be realized at 100% achievement, 100% of time. However, aspirational, or stretch goals have very different expectations. These stretch goals tend to be big picture, have higher risk involved, and require the focus and commitment of the entire organization. Furthermore, stretch goals energize motivate the workforce, and can produce amazing results, even if they do not achieve a perfect 1.0 rating.
Should Daily Businesses Be Seperated From The OKRs?
The answer is: definetely not! The so-called-day-to-day operations generally consume the majority of an employee’s available time. So that, his job seems to consist of completing tasks that recur often. A seperation of employee’s main tasks and additional tasks in a form of OKRs hinders the goal setting system to be fully experienced. It can be compared to a full schedule and a to-do list: Taking on the to-do list for that day, which constitutes a full day’s work, when one already has a busy schedule with no connection to the to-do list, will eventually lead to frustration at the end of the day when seemingly nothing was accomplished.
Anyway, the day-to-day operations must represent one of the biggest task bundles in the individual goals.
What percentage of completion makes an OKR a success?
%70 to %80 is the sweet spot. If you are constantly reaching %100 on your OKRs , it shows your goals are not challenging enough.
How many Key Results should my business have?
Every business should have one Ultimate OKR, set a long time period ıf 5-8 years. You should set 3 to 5 business objective annually. Teams or departments should set 3 to 5 OKRs per quarter, aligned to company OKRS.
How many Key Results should my business have?
Each OKR, whether Ultimate, Company or Group should have no more than 5 Key Results.