OKRs have been described as the link between strategy and execution.
OKRs are public: everyone becomes aware of the organization's core strategy – the key things that the organization wants to achieve.
The team and individual OKRs that are then set throughout the organization must clearly contribute towards achieving these overall objectives. The importance of everyone’s initiatives becomes obvious – no one is in any doubt about why they are carrying out a particular initiative. This aligns everyone’s activities with the organization's goals and provides focus.
Startups have seen huge success with OKRs because it’s the most efficient form of communication between strategy and execution within an organization. OKRs are the most transparent way to align a company in one direction, focus on the value created over actions taken, and create commitment and ownership to each persons’ role.
What OKRs are
Objectives and key results (OKRs) are a goal-setting tool that grew out of management guru Peter Drucker’s Management By Objectives (MBO).
MBO was arguably the first modern management system.
What OKRs are NOT
Key results are not tasks (“Make 50 new business sales calls”), rather they are the relevant bottom-line results (“Close 5 new business deals”). The things that need to be done in order to achieve a key result are usually described as “initiatives”.
OKRs should only be set for the most important objectives; the things that really matter. They are not meant to be used for everything an organization does: OKRs are designed to drive growth, change, and innovation. Having a numerical objective is not inspirational for most people; it can also be limiting.
At an organizational level, OKRs define the few things (between 3 and not more than 5) that matter most; the things that would define success.
The defining aspect of OKRs is the combination of the objective with the key results that will prove that the organization has achieved that objective. John Doerr sets out this essential aspect of an OKR as “We will… (achieve this objective) as measured by…. (these key results).”
Key results should, again, be limited in number – between 2 and 5 key results is recommended. Having too many key results becomes confusing and is hard to remember; there should always be a relatively small set of results that will demonstrate whether the individual, team, or organization is on track to achieve its objectives.
Setting inspirational OKRs
A good example of what makes an OKR effective and inspirational is given by the head of a leading OKR consultancy. He compares two objectives: “Deliver a presentation at Conference” and “Deliver a great presentation at Conference”. The first is not qualitative, it is a description of an action. The key results that would be attached to that objective might be these:
Deliver a presentation at Conference
- Finish presentation text by the end of week 2
- PowerPoint with images completed end week 3
- Rehearse presentation three times in week 4
Deliver a great presentation at Conference
- Receive 2 minutes of applause
- Get at least three big laughs in the course of the presentation
- Score an average of 80% for ‘Content’ and ‘Delivery’ in post-Conference audience feedback