Objectives and key results is a corporate planning/strategy execution framework being rapidly adopted by companies worldwide to drive business velocity.
The word strategy can be difficult to understand, especially when it comes to front-line teams or early-career team members. More often than not, a company’s strategy is defined by a leadership team. At the end of endless hours of debate and PowerPoint presentations, the leadership team understands the strategy, but lower-level teams might have little or no understanding of how their roles are impacting the organization.
Bridging this gap of mission to metrics is where objectives and key results (OKRs) come in, helping teams (not only leadership or managers, but our front-line teams) to focus on the outcomes that matter most to business.
In this chapter, we’ll quickly review the basics of OKRs in the workplace and why they are needed.
What Are OKRs?
The acronym OKR which is a goal-setting methodology stands for objectives and key results and is mapped to five concepts: objectives, key outcomes, target, focus, and quarter.
OKR key parameters
More often than not, in traditional practices of managing company performance, very little thought was given to setting goals. The methods were ad hoc and push-based and sometimes even templatized. In the past, teams would copy and paste OKRs that were irrelevant and look at them after the fact as a check box during an annual performance review.
Objectives: Objectives are the qualitative statements; interestingly, they have words and no numbers (much unlike what you might have learned in the past). Objective statements must have business value and need to answer the question “What exactly are we trying to achieve in the next 90 days?”
Key results: Key results are the high-velocity metrics. These are not the “business as usual” activities, but outcomes that will effect change. You can think about key results much like a GPS, moving you from point A to point B. So, when you frame key results, they must have the metric you want to measure to improve from A to B to X to Y.
Activities: OKRs makes a clear distinction between outcomes and activities. Activities are the to dos, sometimes the mundane ones. Most of them are needed, but may not add value to business. When you think about activities linked to OKRs, they are experiments in which teams are trying to move the needle on outcome metrics.
Why OKRs?
What’s making thousands of startups, scaleups, and enterprises adopt OKRs? It seems like practically the whole world has gone hybrid post COVID-19. With distributed teams and the need for virtual collaboration, it becomes exceedingly difficult to manage the overwhelming set of tasks being thrown at us.
With scale comes the need to hire new members, and giving them a sense of connection to the company purpose is not effective just through a townhall meeting or a leadership speech. The company’s purpose must connect the dots between what the employee does and the outcomes.
In addition, CEOs are adopting OKRs due to business model pivots that they were forced to make, especially when consumer or customer behaviors have undergone a significant shift.
Many others are looking at OKRs to drive accountability and ownership. Some look at OKRs to bring back agility and innovation, which are required for companies to stay relevant.
Finally, organizations want to bring the intimacy back, be it with people or customers, and are using OKRs to bring in much required clarity on the “how.”
The reality is with business model disruptions and CXOs under pressure to deliver, OKRs are bridging the gap between strategy and execution.
Summary
OKR was pioneered by John Doerr, and this framework pairs the objectives you want to achieve with the key results you’ll use to measure progress. Goals then end up being tied to the day-to-day work. The knowledge of concepts stated in this chapter will be enough to get you starting using OKRs.