OKRs have already helped companies like Google, YouTube, Zalando, and Intel to grow many times over. Regardless of whether it is a large corporation or a small start-up – OKRs contribute to efficient and effective corporate management. But what is the secret of the success of this management tool?
OKRs are agile and ensure short-term responsiveness, they are transparent, trend-setting, and extremely motivating. They get employees to perform at their best and manage to use all of a company’s resources profitably. In the following, you will find out which elements the OKR method contains and how you implement and use them in your company.
Objectives and Key Results, OKR for short, represent a management method that helps to focus the resources of all employees on the most important corporate goals. The two essential success factors of the OKR method are its simplicity and transparency. Everything revolves around two simple questions: “Where do we want to go?” (= Objective) and “How do we measure progress?” (= Key Result).
You should communicate all defined objectives and key results transparently so every employee can see them. The method thus creates a framework for employees, within which everyone works on their own goals in an organized manner and thus helps the company to achieve its strategic goals in the long term. To give you a better overview, we will answer these questions about the “OKR method” in this article:
- What is the OKR method and what are the Objectives and Key Results?
- How does the OKR method work?
- When was OKR invented?
- How to formulate OKRs correctly?
To ensure agility, OKRs are set at short notice, usually every quarter. Nevertheless, the strategic orientation of the method should not be neglected. A long-term view is extremely important for basic control. So before you start planning and formulating the objectives and key results, you have to follow three steps:
- Development of a company mission statement: vision, mission, values
- Corporate strategy planning
- Definition of strategic (medium and long-term) goals
The mission statement and corporate strategy form the basis for the OKR process. The quarterly targets can be derived from the medium and long-term company targets. I encourage you to read more about this blog here: Why Women Are Less Likely To Start A Business Than Men
The OKR Cycle
The OKR cycle is a quarterly control cycle consisting of several OKR events. Each company can determine the length of the cycle individually, but you should take into account that agility decreases with increasing duration.
EACH CYCLE GOES THROUGH DIFFERENT EVENTS
- OKR Planning: In this phase, the management defines the company’s OKRs. The individual teams discuss together how they can support the company in achieving its goals and define team OKRs accordingly. Finally, each employee determines their OKRs by considering what contribution they can make to the team OKRs.
- OKR-Weekly: All employees meet weekly with their manager individually or in a team to carry out a status update. Here you primarily discuss the progress of the individual key results (you should document this as a percentage). Furthermore, the employees assess their confidence level. It indicates the probability that an OKR will be achieved in this cycle. In addition, learning experiences are exchanged and causes of resistance are determined. Finally, it is clarified what will be tackled next.
- OKR-Review: The review takes place at the end of the cycle and is purely about the evaluation of the past quarter. An evaluation is made on all three levels of how much of what has been undertaken has been achieved. The key results provide information about the degree of achievement of the objectives.
- Retrospective: The retrospective also takes place at the end of the cycle and promotes the continuous improvement of the OKR method. Depending on the size of the company, the retrospective can either be carried out across departments or in teams. When carried out in teams, a cross-departmental exchange should nevertheless be ensured, since the employees benefit greatly from the learning experiences of others. The retrospective event goes through the following steps: The participants collect positive and negative aspects of the past cycle and present them, the collected points are clustered and discussed, measures are developed that contribute to improving the OKR process, and it is agreed which Actions to be implemented next. It is important not only to uncover and eliminate resistance,
Formulation Of The Objectives
The objective defines what is to be achieved in the following cycle. It is ambitious, qualitative, and sets a clear direction. Objectives describe a desirable state in the future and are intended to motivate people to work towards it. All team-level objectives contribute to company-level OKRs. The objectives at the individual level in turn contribute to the OKRs at the team level.
It is also important to ensure that all OKRs at the company and team level are taken up and processed in the levels below if the managing directors are not directly at this level or team leaders deal with it. In principle, a maximum of four objectives with a maximum of four associated key results are formulated at each level. If you exceed this number, the focus is usually lost.
Use Whole Sentences
It makes sense to formulate OKRs in full sentences. The more specific the goals are, the less room for interpretation there is. After all, all employees should focus their activities on the same goals. An adjective often makes the objective sound even more inspiring and ambitious. The objectives should be achievable in the defined cycle.
However, so-called evergreens should be avoided. This refers to goals that are not completed after three months but should be processed at any time. An example of this is increasing customer satisfaction – a perennial favorite. When formulating their goals, employees must also remember that they are not just additional tasks to their day-to-day work. This usually leads to
Objectives At A Glance
Here is an overview of the most important points to consider when formulating the objectives:
- Maximum 4 lenses
- Qualitative (without key figures)
- Ambitious but achievable
- Give a clear direction
- Pay into the OKRs of the level above
- The formulation in full sentences (ideally with an adjective)
- No evergreens
- Mainly reflect day-to-day business (not just additional tasks)
Formulation Of The Key Results
The key results indicate how we achieve the objective. They represent measurable key results that indicate the current progress towards goal achievement as a percentage at any time. A meaningful measurement method is therefore defined for each key result. To do this, each key result must contain a key figure that can be influenced, such as sales, days, percent, or index.
However, no more than one key figure may be included for each key result, otherwise, the progress cannot be measured. It is also important to always name a base value that your team should increase or decrease. The key result could therefore be: “The cancellation rate has fallen from 10% to 7%”.
Binary Key Results
In rare cases, you can also define binary key results, the result of which is only “satisfied” or “not satisfied”. This makes sense, for example, if there is no base value yet. In this case, the key result could be: “A measuring instrument was introduced that determines the value of the cancellation rate”. Key results are success drivers for objectives. They are also not to be confused with KPIs, which represent an indicator of goal achievement. Key results, on the other hand, increase the probability that the objective will be achieved.
The wording is as specific as possible. Vague words like “implement” should therefore be avoided. Also, they represent deliverables, not milestones or tasks. In addition, the key results must not overlap in terms of content. Here is an example: KR1 – The number of followers on our Instagram profile has increased from 10,000 to 12,000, KR2 – The weekly Instagram posts have increased from the previous average of 3 to 4. In this case, KR2 is just a task that leads to reaching KR1.
Key Results At A Glance
Here is an overview of the most important points to be considered when formulating the key results:
- Maximum 4 key results
- Quantitative and measurable
- Influenceable indicator
- Measurement method that determines the progress as a percentage
- No more than one metric per key result
- Integrate the base value as a benchmark in the key result
- Not too many binary key results
- Deliverables (no milestones or tasks)
- Specific wording (avoid vague words like “implement”)
- Success drivers for objectives (increase the probability that the objective will be achieved)
- No indicators for objectives (but drivers of success)
Objectives And Key Results Examples
The following OKR examples show objectives and key results from companies that work successfully with the method.
- Search Engine Team + Main App (+x%), Living Room (+x%)
- Increase in retention and watch time in video games (x hours of watch time per day)
- Introduce the YouTube Virtual Reality experience and expand VR selection from x to y videos
Objective: To proactively integrate a broad range of African perspectives into ONE’s work, align more closely with African priorities, and share and leverage ONE’s political capital to achieve political change towards Africa.
- Successful recruitment of three employees based in Africa
- African Advisory Board was established and convened twice
- Established relationships with at least 10 leading African thinkers who actively and regularly question and accompany ONE’s political position and external work
- carried out four participatory trips to Africa
Objective: Deliver great people technology solutions and strategies
- Implementation of a pilot for the first 100 users
- Completion of BlueJeans rollout to end users
- Transfer of the first 50 Google personal account users to corporate account users
- Finalize the Slack contract and complete the company-wide rollout
Frequently Asked Questions (FAQ) About OKR Method
What does OKR mean?
OKR stands for Objectives and Key Results. It is a management system for targeted and modern employee management. It is a framework for setting goals and measuring results metrics.
How do I formulate OKRs?
OKRs should be formulated as precisely and understandably as possible. A lens should not be overloaded, but as short as possible. Terms should also be used that are familiar to everyone involved.
What Is OKR Software
The best OKR software is implement and use allows any team member to track their progress over time. You’ll no longer have to input data in complicated spreadsheets in order to track your results.
When was OKR invented?
The OKR method was initially based on methods that had already been developed, including MbO. But finally, through John Doerr, Google came across the new approach, developed it further, and introduced OKR in its own company in 1999. This is how OKRs became known.
With OKRs, companies can easily set the right focus – that is the greatest added value of the method. We can quickly say goodbye to lengthy strategic planning processes. The OKR method helps to quickly gain clarity about the most important tasks of the company. When used correctly, the method also promotes team cohesion, improves communication, and speeds up meeting and coordination processes.
It is crucial for success that all employees are enthusiastic and involved. To do this, management must set an example of the method with full conviction. If you plan to implement OKRs in your company, don’t be afraid of making mistakes, but treat it as a learning process. With each cycle, you will better understand what works, where there are problems, and what tricks you can use to make the method even more successful in your company.