Objectives and Key Results: Everything You Need To Know About It
Did you know that more than half of organizations report struggling to achieve their strategic goals? To paraphrase the famous phrase, the best-laid plans are just plans without a thorough execution strategy.
Over the years, business leaders have developed dozens upon dozens of frameworks to try to bridge the gap between their organizations’ strategic planning efforts and actually achieving those plans. From SWOT analyses to scorecards, frameworks exist for every kind of visual design, leadership style, and organization type imaginable.
If you’re struggling to find the framework that works best for you, objectives and key results, or OKRs, could be the missing piece you’re looking for. With this model, action steps and execution are baked into your strategic planning from day one.
With an emphasis on both stretch goals and organizational flexibility, OKRs meet your team where they’re at while also pushing you all to achieve your maximum potential.
Sound too good to be true? Keep reading to learn how OKRs work and for some tips to get started implementing them in your organization today.
What Are Objectives and Key Results?
OKRs were first created and implemented by Andy Grove at Intel. The book Measure What Matters by John Doerr lays out the full history of OKRs and how they came to be.
At a basic level, OKRs are a collaborative goal-setting methodology intended to bring your organization into alignment by setting challenging but achievable goals. Each quarter, your organization creates an objective to focus on and three to five key results that help you to achieve that objective. We’ll talk about what this looks like in practice later in the article.
How It Works
All OKRs in your organization should connect with each other. For example, your C-suite may have its own objective with three to five key results, which is distinct from the marketing department’s OKRs or the sales department’s OKRs. However, all of these OKRs should get your company closer to achieving its overall strategic goal(s).
OKRs, like SMART goals, should be specific, concrete, measurable, and time-based. Just by looking at the OKR, it should be easy to tell whether or not you’ve achieved it. The key results should be structured so that once all the key results have been achieved, the objective has been achieved too.
And it’s okay not to achieve all your OKRs in a specific quarter. In fact, this is encouraged! OKRs are aspirational, so if you’re consistently achieving 100% of your OKRs, you probably aren’t challenging yourself enough.
Because of this, it’s important not to tie the achievement of OKRs into compensation. For organizations that are used to awarding bonuses based on goal completion, this will be an adjustment. You may even wonder what will inspire your employees to complete these OKRs if there’s no monetary motivation for doing so.
This is where organizational alignment comes in. When employees understand what they’re working toward and why they’re doing so, they’re much more likely to feel internally motivated to achieve their goals. Giving employees agency over creating their own OKRs will help with this as well.
Benefits of Using OKRs
As mentioned above, the greatest benefits of OKRs are building group cohesion and employee buy-in.
OKRs are transparent by nature; everyone knows about all the OKRs throughout your organization. This means that everyone knows that everyone else is working toward, encouraging transparency and also personal accountability.
The use of OKRs also gives employees autonomy over the work they do and how they do it. This fosters a trusting, creative environment within your workplace.
Additionally, and perhaps most importantly, using OKRs forces your entire team to have a laser focus on your goals and aspirations. When used correctly, each individual should only have one or two OKRs that they’re working toward in each quarter.
Taken at face value, this may not seem like enough to occupy your employees’ time for a whole quarter. However, limiting yourself to one main goal forces you to make that goal as big as possible. It also ensures that you’re spending your time achieving something, rather than splitting it between too many directions and ultimately achieving nothing.
Difference From KPIs
You may be reading this and wondering, “How are objectives and key results different from key performance indicators (KPIs)? I already use those and this sounds very similar!”
OKRs and KPIs are very similar in some ways. They’re both specific and measurable, and they deal with the work you perform on a daily basis. Where they differ, though, is in scope and purpose.
KPIs are limited to the tasks and functions you already perform. They measure tasks and progress that ensure your operations are successful. These are the baseline things you need to achieve at work to make sure your job is actually getting done.
OKRs, on the other hand, are aspirational in nature. They are designed to foster growth and innovation in your organization. They should not be used to track “business as usual” activities.
Understanding these key differences is vital to the success of your OKR strategic planning. While KPIs can be used to support your progress toward achieving OKRs, your OKRs should be much larger in either scale or scope than your KPIs.
Get Started Today
We’ve only scratched the surface of objectives and key results here. This ambitious, measurable, targeted approach to goal setting has helped major corporations to focus their team efforts and achieve more than they ever thought possible. If OKRs sound like they could benefit your organization, do some more research and determine if they’re a fit for you.
Looking for more ways to kick your organization’s strategic planning up a notch? Check out the other business articles on our site to learn more!