OKRs are seen as the solution for all kinds of inefficiencies that creep up over time in organizations, and this behavior can set them up for failure. The other side of the coin isn’t rosy either – organizations that are afraid of the effects of OKRs also fail to make the most of the framework.
High expectations can be tempered by studying the prerequisites of OKRs, but that does little to assuage the fears some organizations might have. Going through OKR case studies of organizations that have successfully used the framework can highlight the best practices, and drive the fear away. Their questions about prerequisites and implementing Objectives and Key Results can be answered by steps taken by organizations who have succeeded in using OKRs.
OKRs are becoming one of the most important ways for goal setting and performance management, as they are flexible enough to work for small and large businesses alike.
OKR case studies: 5 businesses who successfully use OKRs
The 5 case studies presented below demonstrate how the performance of leading businesses was impacted positively by using OKRs.
Microsoft has used OKRs in the recent past to align strategic priorities between and within different teams. The emphasis of the OKR practice at Microsoft is to localize objectives and key results (OKRs), identify opportunities quickly and address gaps in communication and resource requirements.
The organization uses OKRs to measure what really matters in the current cycle. Managers chart, calculate, and share progress on key results and metrics that define success.
The team made full use of Teams – Microsoft’s collaboration and chat tool – to bring strategic priorities into regular conversations. This ensured important and urgent tasks stayed in the line of sight of all stakeholders, and the efforts every day reflected the same. The adoption did not reduce even during the work from home phase, where distributed teams could access the objectives and expected key results, and compare them with actual results. This led to a near-real-time update of KPIs, with the simplicity of Teams chat.
Teams at Spotify use a time-boxed agenda to stay on track – where topics are outlined at the beginning of the session, along with activities that will be covered. The duration of every task and the desired outcomes are glanced over too.
There are a few ground rules that help the currently distributed teams to function efficiently – like outlining the rules and expectations beforehand. They also have a dedicated Slack channel to post questions that are then addressed during the discussions – which are held with the cameras on to add that human touch.
If that explains the smooth running of the meetings, the preparations that happen beforehand provide the basics. Team members review the OKR structure with the team, and OKRs start at the very top with the company vision. This vision defines key focus areas resulting in the setting of yearly objectives. These in turn allow teams to define their own team’s quarterly goals, which are converted into team OKRs.
The Team OKR setting sessions Start with icebreaker events, and then key results are prioritized via brainstorming. Everything goes here, and ideas are evaluated by the team in a democratic fashion. The ones that seem promising are stickied, and the collective KRs are brought down to just three to five items. The teams reconvene into a larger group and present their outputs to everyone – and the larger group then finalizes their quarterly KRs.
Google has been a proponent of OKRs since 1999 when it was a company of 40. One thing that has stayed in its phenomenal growth to 60,000 people is their reliance and belief in OKRs. The leaders set ambitious objectives, and key results are graded on a scale of 0.0-1.0 at the end of every quarter.
One of the highlights of Goole OKRs is that they are transparent – that means any employee in the organization can see what their colleagues are focusing on. OKRs between 0.6 to 0.7 is considered successful at Google: for good reasons too, because OKRs are designed to push the team to be a little better in the current cycle than the previous one. They also don’t consider low OKRs as a cause of concern, as they believe low scores indicate there is room for improvement. These low score OKRs are used as learning opportunities for the next OKR cycle (in Google’s case, next quarter).
LinkedIn CEO Jeff Weiner believes that the business is responsible for providing clear directions to the leaders of the organization, as making informed decisions helps in staying on track of the vision and mission. The CEO believes that good leaders can lift their surroundings (in this case, team members) through different modes of activity like coaching, strategy planning, defining objectives, and measuring the right results. The belief in the organization is to complete OKRs in a limited time period, and hence 3 to 5 objectives in a quarter are enough.
OKR progress is tracked at LinkedIn through regular meetings with employees, which can take the entire day.
These meetings keep the CEO and the rest of the leadership team updated on how the employees are contributing towards the business objectives of the organization. Employees share their views on the success and roadblocks so that they get recognized for the good work done and request help in areas they are slower than average.
One of the leading telecom organizations in the world, Huawei, moved to OKRs from KPIs to take their business practices a notch above. The leadership team at Huawei was unhappy with the KPI system that was in use, as it could only use goal setting as the process starting point and performance evaluation as the end – but didn’t provide any avenues for the employees to clearly understand the need or importance of the goals set. The process was mechanical and did not add much to the upward curve the organization was aiming for.
In 2019, the leadership group decided to adopt OKRs. OKRs were used to set goals for the team members, who could clearly identify and understand the importance of goals set for them and how they contributed to the overall growth of the organization. The process boosted the performance of their business, as aligning the goals of employees led to an increased collaboration which resulted in the completion of business goals in a collective manner.
Sears holding company started using OKRs in 2013 for all of its 20,000+ salaried employees – but the expected changes did not happen even after a year of using the framework. This led to some necessary changes being made, where teams of outbound call agents at different locations were allotted different objectives based on the data accumulated. The focus was diverted to add-on sales that were measured using hourly calls and hourly sales data. This refresh brought the desired changes, as the sales figures increased by 8.5%. Average sales figures jumped significantly and increased to $15.67 per hour – a marked rise from the previous $14.44.
Learnings from the case studies
Organizations can start by using the OKR formula to calculate the expected effectiveness – which can be stated in simple terms as below:
[objective] needs to be attended to, and the progress of the process can be measured by [key result 1], [Key result 2] …
Here, the ambitious, concrete goal that the organization wants to achieve is the objective, and the key results are how the accomplishment of the objective is measured. Limiting key results to 3 to 5 items is important, as employees can get bogged down if the number is more than that per objective. This enables the objective to be focussed on the minds of the employees, and they can see how striving to achieve each metric helps them and their organization.
Aligning day-to-day work
As the Spotify and Google case studies point out, having a well-defined OKR can result in the better articulation of the outcome, that can be easily followed and adhered to by employees. As soon as employees can see how their everyday work impacts the overall objective of the organization, their productivity increases. Instead of seeing work as a list of tasks to be completed, they treat them as stepping stones towards achieving their and the organization’s objectives. Regular meetings also help in highlighting issues or new avenues that might be useful in the long run.
Unlocking the potential of the workforce
OKRs provide a robust platform for employees to collaborate and work towards a common objective instead of just finishing tasks on their plate. This focus brought forward by OKRs is essential to keep the remote workforce engaged, as it simplifies collaboration between teams and allows them to stay focused on executing the strategy penned down by the leadership teams. Employees can then plan their business-as-usual activities better, and identify areas of innovation and learning that can help them and their organization stay ahead of the curve. The potential of the workforce increases rapidly because of the clear line of action presented by well-planned OKRs, and results in:
- Speed at which changes can be carried out. Due to increased collaboration between team members and different teams, the time taken to execute important steps are shortened. Individual contributions add up to more than the sum of their parts, and the organization as a whole can move towards being nimble in the face of unexpected changes, without affecting business productivity.
- Priorities can be set based on immediate needs while keeping an eye on the changes that may occur in the future. With constant coaching and one-on-one sessions, both the manager and the team members can grow faster into the roles and contribute more effectively to the overall objective.
- Execution becomes more streamlined as there are other key results that need to be achieved. The continuous feedback cycle which OKRs thrive on, help in identifying and adopting potential changes that might disrupt the market in the near future.
- Alignment of goals and ambitions of employees with that of the organization creates a win-win situation where employees upgrade their skills promptly, which allows the organization to stay ahead of potential challenges from competitors (or market conditions).
More OKR Success Stories
There are plenty of OKR success stories that can be used to understand the effectiveness of the process, but having the basics right is more important for organizations thinking about putting the framework into practice. Without the presence of a strong vision and buy-ins from the leadership team, however, OKRs have little chance of causing any significant improvement to the day-to-day activities of the organization. The clarity and accountability that can be gained from OKRs depend on connecting the objectives of the company and team members into results that can be easily quantified.