OKR is an acronym for Objectives & Key Results. A goal setting framework used by organizations of different sizes – startups, scaleups, established businesses etc.
Read the above sentence once again. OKRs is a goal setting framework – it provides fundamental tenets for organisations to create their own goal structure. It doesn’t limit itself to defining processes set in stone. Teams are free to take it up & flavor it to match their tastes.
Let us look at an OKR example & then address a few important points.
Increase profitability of the company
Revenue from software line of business increases by at least 3%
Operating costs are reduced by 20000 dollars per business unit
2% profit increase by optimizing chip manufacturing process
Starts on 1st Jan 2018 & due by 31st Mar 2018
It doesn’t take a genius to figure out that OKRs are essentially a re-branded & tweaked version of traditional goal setting methods (such as MBOs). But the important aspect of OKRs does lie in what those tweaks are! Otherwise there is no reason for them to be gaining so much of popularity. These tweaks take the best out of traditional goal setting approaches & combine them with the needs of the contemporary workforce. A quick look at the below table & you’ll know what we mean.
Need of the contemporary workforce
Tweak that works in favour of OKRs
Disciplined & structured thinking
In the post industrial revolution world, discipline & structure came from optimised processes & assembly lines.
In the information economy, it is a daunting challenge to put in place all encompassing processes.
Ensuring as much transparency as possible through publicly available organisation goals, OKRs provide a way to always keep the larger picture in sight.
Crystal clear communication
With emails, chat applications & umpteen collaboration softwares running the workplaces, its easier than ever to miscommunicate & misinterpret.
Concise ways to communicate priorities. OKRs recommend not more than 3-5 top priority items to be focused on at a time.
Additionally, alignment brings in the much needed visibility into the bigger picture.
Aligning efforts to reach a shared goal
Before, the shared goal used to be very tangible. An automobile, a mechanical engine etc. Nowadays the shared goal itself can have 100s of manifestations based on personal inferences, perceptions & preferences.
Cross functional collaboration managed through transparency & alignment.
Remove ambiguity by defining measurable success & failure
In the knowledge economy, definition of success & failures become pivotal as these successes/failures are not self evident to the workforce unless they are at a large scale.
Key results. Make every objective measurable by means of key results. No space left for interpretation.
In the ever changing world of technology, if companies do not move at fast pace they will be run over by players disrupting their industry.
Aiming for the moon. OKRs promote setting uncomfortable & stretch targets.
OKRs have been around since 1970s. Andy Grove initiated this framework in Intel at a time when they were transitioning their business to microprocessors, a move that would completely transform the computer industry. It was a massive undertaking, considering it had to be uniform and accepted by thousands of employees located worldwide. The OKR system helped employees see how their individual actions had a measurable impact on the organisation. As a result, they were successful in making Intel a household name with their famous “Intel Inside” marketing campaign.
In 1999, John Doerr implemented OKR framework in Google and to this day everyone from the top management to newest employee successfully uses it. OKR has been very efficient in defining objectives and breaking them down into easily measurable key results. So much so that many Fortune 500 companies such as LinkedIn, Oracle, Twitter, Sears have followed Google and adopted OKR in their organisation.