Although the big hype around Objectives and Key Results (OKRs) from a few years ago seems to have receded a bit, many companies still deploy OKRs to manage their organization. Many seem to consider this the “agile” way to set targets. I am not sure I have ever understood what makes OKRs all that special.
OKRs were initially created by Intel. From there, the method took over many companies in Silicon Valley. Google famously uses it and seems to credit much of its early success to the use of the method. This and the successful book by Jon Doerr, Measure What Matters, made OKRs famous in companies across industries all over the world.
I first encountered OKRs when being asked to set them up for a product I was responsible for. I read up on the method. With that limited amount of time studying OKRs, it seemed like I was simply being asked to define goals for our product. So this is what we did. It worked really well for us but I never saw the magic of OKRs. I felt like I never fully understood them. Why are OKRs better than regularly setting (SMART) goals?
Since I am now again setting up OKRs for a product, I am going to try and collect my thoughts on the topic here.
First of all, what are we even talking about?
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What are OKRs?
Two components make up the OKR, an objective and up to five corresponding key results.
According to the official website they are defined as follows.
“An Objective is simply what is to be achieved, no more and no less. By definition, Objectives are significant, concrete, action oriented, and (ideally) inspirational.”
“Key Results benchmark and monitor how we get to the Objective. Effective KRs are specific, time-bound, and aggressive yet realistic. Most of all, they are measurable and verifiable.”
We can also write OKRs as follows. We will [achieve my objective] as measured by [my key results].
OKRs are essentially goals with up to five measures that are constantly monitored. Once we achieve the target state of our measures, we should have achieved our goal (assuming we defined the correct measures). Or to flip it around, once we meet our key results, we should have achieved our objective.
Ideally, the entire company uses OKRs. They are first defined for the overall business and then broken down from the very top through divisions, business units, and departments all the way down to the team level.
In the end, each organizational unit has a small set of OKRs that it strives to achieve. Those OKRs are directly linked to the ones one level higher. Therefore, every team can directly trace how its actions affect the overall progress of the company.
Setting Objectives and Key results for the entire organization is done in fixed planning cycles. Often, the company objectives are set yearly. The lower levels frequently create or update their OKRs quarterly.
Is OKR just a rebranding of management by objectives?
Using OKRs seems like a perfectly reasonable approach to leading a company. It’s a very clear system that shows how my actions in a team are connected to the company’s goals.
Nevertheless, I am still having trouble understanding what makes it unique when compared to leading with goals or Management by Objectives. It feels like it is the same thing but with better marketing.
Maybe OKRs inherently include the definition of more aspirational goals compared to conventionally setting goals? Maybe the linking of OKRs between hierarchical levels is what makes them special?
I would argue that properly setting goals for organizational units should also mean making them aspirational and connected to the bigger picture – with or without using the term “OKR”.
So, that can’t really be what sets them apart.
The special thing about OKRs is the small number of objectives
I am now coming to the conclusion that OKRs are slightly different from traditionally setting goals for an organization due to the limited number of objectives to set. The method explicitly encourages limiting the sets of OKRs to only a handful.
This surely has the effect of tightly focusing the entire company on a few outcomes to achieve. Many companies do too much and nothing properly. Multitasking never works out in the end, regardless if on the individual, team, or company level. Using OKRs overall probably leads to doing less and those few things with higher quality.
OKRs, if used in an entire company, seem to encourage exactly that.
It’s still important to the define the objectives in the right way
Whether using OKRs or simply defining goals for teams, the hard part is actually defining the objectives and key results in the right way. Compare the following examples, again from the official website of the book.
Objective: Scale Services to Improve Margins.
- Key Result 1: Delight our broker partners with our product and service.
- Key Result 2: Increase efficiency of new broker acquisition.
- Key Result 3: Launch a new dental benefits product.
Objective: Collaborating neurology teams treat strokes more efficiently.
- KR 1: X% decrease in morbidity rate.
- KR 2: X% decrease in time from door to treatment.
- KR 3: X% increase in patients being seen during viable “treatment window.”
- KR 4: X% decrease in 30-day stroke patient mortality.
What a difference!
The first one illustrates the problems we often have when setting targets, if we call them OKR or not. The key results are vague, focused on outputs over outcomes, and no target measures are provided. The second example is much more specific in the targets, and completely leaves aside how to achieve the target state.
That’s the most important thing. It doesn’t matter if you are using OKRs or setting targets for teams in some other way. You need to do it right.
Define a goal to work towards, an outcome you want to achieve. Leave it up to those doing the work to define how they want to achieve the goal. So, make sure neither Objective nor Key Results define how to achieve a goal.
Then, define some measures that signal if you have reached the goal and define the target range. This is the hard part. Understanding how many and which numbers we need to define and monitor in achieving our goal can be tricky.
We are basically making a hypothesis. During execution, it’s therefore imperative to constantly question if the hypothesis is correct if the numbers are actually corresponding to us moving towards our goal.
OKRs are a great way to define the outcomes
I hope I didn’t come across overly negative towards Objectives and Key Results in this article. I have never understood the hype and am simply trying to fully comprehend the method.
For a long time, I honestly thought I was missing something important. Now, I don’t think I was. (Please let me know if I still am or have misunderstood something).
Don’t get me wrong. I truly enjoy working with OKRs. I have used them in the past and will do so again. The level of focus they bring to an organization can be a real game changer, as long as they are defined in the right way.
Regardless, in my mind OKRs still remain Management by Objectives with better marketing 😉.
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