That’s just what the world needs; another acronym. Except this one happens to be a particularly useful one, especially at this moment in time. Let’s start by unpicking the jargon. What exactly is the difference between KPIs and OKRs, and why does it matter?
KPIs v OKRs
KPIs (Key Performance Indicators) measure output, whereas OKRs (Objectives and Key Results) assess and evaluate outcomes. A KPI might be to make 100 calls a week. Whereas your OKR would be to convert five of those calls into sales, from however many calls you make.
So the questions they provoke are; what do you want to achieve (Objective), and how are you going to do it (Result)?
The OKR model has been around for a while now. It was first popularized by John Doerr, who developed it from work begun by Andy Grove during their time working together at Intel. That work had itself evolved from Peter Drucker’s seminal ideas around Management by objectives (MBO). And, as Doerr outlines in his book Measure What Matters, its most famous early adopters were the team at Google, who’ve been using the OKR model since all the way back in 1999.
In that book, Doerr sums up OKRs as follows:
“(They) include a meaningful, concrete, clearly defined goal and three to five key results that support that goal. (So it’s) a collaborative goal-setting model used by organizations to achieve challenging, ambitious goals.”
With the emphasis being on ambitious. Because OKRs are meant to stretch you. If each of your objectives has gone green at the end of the (usually) six-month period, you need to start recalibrating your goals.
Those goals operate at an individual level, at group and unit levels, and even at a departmental level. Though obviously, the wider the reach, the closer it gets to conventional strategy.
OKRs in action
What does that look like in practical terms? One of the most extensive surveys into OKRs, and their impact on organizational outcomes, was conducted by Chris Mason for the US retail conglomerate Sears. The result:
“We saw an increase in their average sales per hour from $14.44 per hour to $15.67, or an average increase of 8.5%. This increase is not only statistically significant but practically significant.”
In short, it’s a model that has proved to be extremely successful at significantly improving focus, transparency, and efficiency for all manner of organizations, both large and small.
Work in a post-pandemic world
The place where you’re really going to see OKRs coming to the fore is in the workplace environment. Because if there’s one area, beyond health, that the pandemic has profoundly forced a change upon, it’s when, how, and most especially where we all work.
According to this recent ‘digital.ai’ report, 56% of those surveyed said they expected to be working in a hybrid way from now on, partly at home, and partly at a conventional workplace. 25% envisioned an exclusively remote future. And just 3% believe they’ll be going “back to normal”.
“Transparency seeds collaboration”
So the question is, how do you change the collective mindset from the assumption that work is something that you do for a fixed number of hours, over there, to something that can be done flexibly, right here? And one of the most useful tools for making that change is OKRs.
OKRs let everybody know what everybody else in the group and organization is doing and what they’re working towards. This transparency creates a shared sense of purpose, which will then improve alignment across teams and business units.
Because, as Doerr puts it, “transparency seeds collaboration”. And collaboration is very much the key in this new and hybrid world that we’re all a part of now.
All of which was discussed in-depth and in detail at Envision 2030, which was hosted by John McGrath, and was one of the events organized as part of the International Project Management (IPM) Day 2021. Their wide-ranging talk begins with a deep dive into OKRs. And you can see that webinar here.
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