What Is OKR?
Setting Objectives and Key Results (OKR) is a great tool for clarifying your organization’s strategic goals and seeing metrics and targets to measure progress. OKRs allow you to ensure alignment within your organization, keep your team focused on measurable goals, and track progress.
OKRs can be used to measure key performance for teams and individuals for both short-term and long-term planning.
What Is the OKR Formula?
The OKR formula includes two distinct parts, objectives and key results, and is typically expressed in a sentence like this:
We will achieve (Objective) as measured by (Key Results).
There should be one measurable goal and 3-5 key results to track progress for the team or company.
Objectives: What You Want to Accomplish
OKR Objectives are what you want to accomplish and should be action-oriented and significant. The clearer the objective is, the easier it will be for people to focus on reaching it. When setting goals, your goal setting framework needs to create quantifiable metrics so that they are measurable.
Key Results: How You Will Measure Accomplishment
Key results will monitor progress against benchmarks in attaining objectives. OKR planning should include key results that are time bound to keep employee engagement high during the period. Ambitious goals should be set along with stretch goals as part of your key methodology.
The OKR Methodology
Andy Grove at Intel first developed the OKR concept. One of the people he mentored was John Doerr, who implemented OKR strategies at companies like Apple and Google.
The origins of OKR are routed in Peter Drucker’s Management by Objectives (MBO) philosophy. While MBOs are measured annually and tied to compensation, OKRs are typically measured quarterly and are separate from compensation.
Doerr used the OKR approach in laying out his goals for presenting the concept to the Google team. Here was his OKR PowerPoint presentation to the leadership team at Google:
- O: Building a planning model for their company, as measured by three key results.
- KR1: I would finish my presentation on time.
- KR2: We’d create a sample set of quarterly Google OKRs
- KE3: I’d gain management agreement for a three-month OKR trial.
Google agreed to the trial, set its strategy in line with this management framework, and grew from there.
The Different Types of OKRs
OKRs can be used in different ways, depending on the team and company goals. They generally fall into one of three types:
- Committed: Company-focused goals that will be completed by the end of the period measured.
- Aspirational: These are new goals or stretch goals that may be longer-term.
- Learning: There are times when the pathway isn’t clear, so OKRs focus on learning the key information needed to set clear objectives.
The Benefits of Objectives and Key Results
In discussing his book, Measure What Matters, Doerr outlined what he sees as the benefits of using OKR, which he calls FACTS. FACTS is an acronym for:
- F = Focus: Allowing team members to focus on a specific objective with clear priorities
- A = Alignment: Keeping team members aligned to a measurable goal across the entire organization.
- C = Commitment: Demanding a collective commitment to stay the course based on company objectives and priorities.
- T = Tracking: Tracking progress towards an established goal and finding alternative approaches if success is not achieved.
- S = Creating stretch goals that go beyond business-as-usual to make meaningful and lasting change within an organization.
Doerr says it’s important to remember the FACTS when setting goals and strategies. OKRs are focused on making a change and need to rise above the current methods for doing business. They are also meant to stretch a team’s thinking, so they need to work to meet goals and not just present what’s expected.
For example, a sales team may have a monthly revenue budget that they are expected to hit. That would not be an objective, since it’s an expectation. A stretch goal would be to exceed the budget by a fixed amount over a fixed period.
OKRs vs KPIs
You may be thinking about what the difference is between Objectives and Key Results and Key Performance Indicators (KPIs). While there are some commonalities, there are key differences in the intention of the goal setting.
KPIs are typically obtainable and represent the outcomes of established processes. KPIs measure the success of meeting goals based on current business practices and measures for health.
OKRs are slightly different. They strive for measurable change. As such, OKR goals are more aggressive and ambitious by nature. OKR goals should be bold and push team members to improve performance, but they should also be attainable.
If you are trying to measure performance or improve the performance of a plan or project that’s in place, you may be better off using KPIs. KPIs allow you to measure the progress of ongoing processes. If you want to change your direction or evolve your thinking, OKRs allow you to stretch further and move beyond the way you’ve typically done business.
Regardless of which method you choose, you can’t manage what you can’t measure. The only way to assure improvement is to set goals, measure performance, and review regularly.
If you’re looking to get started with OKR, there are several OKR tools available. There’s a free Google Doc template you can use to create a simple OKR framework. This works well for personal OKRs or to create your objective and key results for small teams. It will not, however, provide any tracking method.
There are also several other OKR templates and paid services available online.
Plan and Implement Strategic Project Management
OKR strategies are one part of a comprehensive way to plan and implement strategic objectives throughout an organization. It gets a little more complex when you are managing multiple OKRs within a project and especially when you are managing a portfolio of projects across a company.
While OKRs will help measure progress, it doesn’t help you evaluate and compare projects to make decisions about what you want to fund. For that, you need more robust strategic project portfolio management and strategic portfolio management tools. Centralizing all of the project management across lifecycles lets you plan, prioritize, execute, and evaluate all of your project portfolios in one place.
Contact the project management experts at Cora Systems today for a personalized demo.