It doesn’t matter the size of your organization, or your industry of specialization, you are always focused on ensuring that you accomplish your mission and have clarity and alignment on what needs to be done.. The traditional approach to this involves setting individual, departmental, and organizational goals, and most organizations adopt a top-down framework when it comes to goal-setting. Often this approach leaves them stuck, trying to figure out the specific goals instead of working on achieving them. The most reliable alternative to this framework relies instead on objectives and key results (often shortened to OKRs).

This simple management approach encourages every member of the organization to work towards the overall objectives. Thanks to its vast potential and effectiveness, many reputable companies have adopted the method, including Google, LinkedIn, Twitter, Airbnb, Uber, and more.

So what are OKRs and how can this approach benefit your organization?

What are OKRs?

Simply put, objectives and key results is methodology that allows companies to achieve their common goals by creating specific, quantifiable activities. The tool also allows you to communicate and monitor your progress towards the objectives.

Here’s an overview of the two elements that form the OKR structure:

• Objective – This refers to a clear description of the purpose you intend to achieve in the future. The section is usually brief, ambitious, and can be easily adopted. The best objectives don’t necessarily state how exactly something will be accomplished: they are more focused on the deeper “why” of the matter.
• Key Results – The term refers to the specific metrics that you’ll use to show that you are progressing towards a particular goal. All objectives must include two to five Key Results. The KR is neither a strategy nor a move, but a crucial metric to indicate whether you’ve achieved the set goals. KR scores can cover a number of metrics, including percentages, but the most effective compare the present state to the desired state, showing the gap. You can determine the progress of your objectives by calculating the mean of your Key Results progress. The best KRs focus on an actual outcome and measure based on how successfully it was achieved.

While many organizations expect the business to meet 100% of OKRs, others (notably, Google), have adopted an OKR strategy where maximal success is a stretch goal, and aim instead to hit 60-70% of the target metric. This is the more common approach, and the one we recommend.

All the steps that you can take to influence the OKR exist beyond its framework. They are best referred to as initiatives or tasks. The strategy doesn’t involve a list of procedures or plans that you wish to follow. Instead, the approach sets the direction and measures the metrics of how you are progressing towards your goals.

History of Objectives & Key Results

The long successful history of OKRs dates back to 1954, when management consultant Peter Drucker came up with the Management by Objectives (MBO) approach. Fourteen years later, Andy Grove, the co-founder of Intel, iterated on this model and shaped it into the strategy currently used by some of the world’s most successful companies.

From there, the idea was improved upon by John Doer, who joined Andy Grove’s company in 1974. Doer went on to join Kleiner Perkins Caufield & Byers, a major Google investor, and served as Google’s adviser when the company was in its infancy.

Doer introduced the methodology to Sergey Brin and Larry Page, and they implemented OKRs into their operations and management decisions at Google. The effectiveness of the OKR model on Google’s success is unmistakable, and has led imitators and aspiring entrepreneurs of all sorts to adopt the methodology.

The Principles of Objectives & Key Results

Though simple, this methodology has a set of principles that contribute to its uniqueness and effectiveness. They include:

Simplicity & Agility

We recommend that you set your OKRs yearly, semi-annually, or quarterly. This way, the company can be agile enough to adjust and respond to fluctuating circumstances. It should adopt a simple framework that is also understandable and usable. This way, the company can invest the available resources into achieving their objectives. This is better than the traditional process of defining company objectives and sharing them with all the concerned parties

Ambitious Goals

You should come up with bold, elastic goals that are slightly above your team capabilities. These objectives are often called moonshots, or stretch goals. Since the goals are likely to be beyond your staff capabilities, aim to achieve a reasonable completion rate of between 60 and 70 percent. If your employees always score 100 percent, you need to adjust your objectives as they could be too easy.

Measurable Objectives

How do you assess your progress if the objectives can’t be measured?

Your Key Result has to be in the form of a number attached to a tangible milestone. If you cannot measure it, then chances are this may not be a Key Result.

Transparent Processes

Another crucial principle of OKRs is transparency. Your team should be able to view all objectives regardless of their specified department. This way, they can distinguish between the working groups and those that are struggling. Furthermore, transparency can help them ascertain whether or not to synchronize their activities or seek other successful colleagues’ assistance.

Bi-directional Approach

OKRs rely on both the bottom-up and top-down approaches simultaneously, contrary to typical methods of setting and communicating goals. The C-suite first creates strategic objectives for their specific departments. At the same time, team members use these goals to come up with unique aims that are always in line with overall organizational purposes. A good rule of thumb is to ensure about 60 percent of these goals are established bottom-up.

Encouraging Collaboration

With this methodology, it’s easy to acknowledge each team member’s role in accomplishing the strategic objectives and key results. The strategy requires all staff to move forward towards set objectives. It makes it clear that the ultimate goals cannot be achieved as an individual.

Benefits of Adopting Objectives & Key Results

The benefits of OKRs to your company include:

• Strategic alignment – The OKR methodology allows both junior and senior staff to align their roles with the company objectives, and to move in one direction as a unit.
• Focused execution – The strategy encourages the whole organization to focus on essential tasks by prioritizing activities with the most significant business impact.
• Engaged teams – When engaged with a purpose, employees can achieve outstanding results. Objectives and key results aid communication and strategic execution in clear, measurable ways.

We recommend OKRs as the most effective methodology for immediate and long-term success, but you may need time to adopt the approach in your organization or department fully. Not every business enterprise succeeds in the first attempt. You need the patience to continue learning and improving with every passing cycle.

If you’re interested in learning more about how this approach can improve your operations and steer the company toward achieving its objectives, connect with us today!