Are you a manager or HR manager wondering what OKRs are and how to use them? Look no further! In this blog post, we will introduce the concept of OKRs and discuss when and how to use them effectively. So next time someone asks you – what are OKRs, you’ll be able to give the perfect answer.
OKRs, or Objectives and Key Results, are goal-setting guidelines that have become incredibly popular in recent years. They were first introduced by Intel and have since been adopted by companies like Google, Amazon, and Netflix. So why have OKRs gained so much attention? Well, they offer a coherent and completely attainable approach to goal setting that ensures everyone is aligned and working towards the same targets.
What are OKRs?
You’ve been asked: “What are OKRs?” and it’s your time to shine. Here’s a super quick explanation.
OKR stands for: Objective and Key Results.
Objectives: These are goals or intended achievements that an individual, team, or company wants to deliver. People sometimes refer to them as ‘stretch goals’ because they encourage you to make the goal challenging.
Key Results: These are specific, measurable, and time-bound metrics that indicate progress towards achieving the objective. Key results provide a way to track success and ensure alignment with the overall mission.
In plain English: Start by defining an objective and then create key results that, once delivered, achieve the objective. Employees work on these key results.
Here’s a simple example OKR to illustrate the point:
Increase customer satisfaction.
- Reduce customer support response time to under 2 hours.
- Achieve a Net Promoter Score (NPS) of 8 or higher.
- Increase customer retention rate by 10%.
How to write an OKR
Let’s explore how to write an OKR.
First start with the objective. Your objective should be challenging, often referred to as a “stretch objective”.
For example, let’s say that as an organisation, we have good brand awareness in the UK. But no brand awareness in Europe and we want to fix that. So, our objective could be “Increase brand awareness in Europe”. Simple enough.
Now, we move on to the Key Results. You should look to create 3 to 8 key results that, together, will attain the objective. The key results for example of “Increase brand awareness in Europe” might be:
- Expand Marketing Efforts: Launch targeted marketing campaigns in 5 key European countries, reaching at least 10 million potential customers by the end of Q3.
- Build Retail Presence: Establish partnerships with 20 major retailers across Europe to carry your products within the next 6 months.
- Engage with Influencers: Collaborate with at least 10 prominent European influencers in your industry for product endorsements and content creation within the next quarter.
- Attend Industry Events: Participate in at least 3 major industry trade shows or conferences in Europe within the next year.
- Increase Online Engagement: Grow European social media followers by 25% and achieve a 15% increase in website traffic from European visitors within the next 6 months.
- Measure Brand Recognition: Achieve a 10% increase in brand recognition in targeted European markets as measured by a brand awareness survey by the end of the year.
There, we now have an OKR!
More Example OKRs
Example OKR 1
Objective: Establish ACME Inc as a Leader in ecologically friendly products
Key Results :
- Increase Eco-Friendly Product Line: Launch 5 new ecologically friendly products that meet recognised sustainability standards by the end of Q2.
- Sustainability Certifications: Obtain relevant sustainability certifications for at least 80% of the product line within the next 6 months.
- Educate Consumers: Implement an educational marketing campaign reaching at least 1 million consumers about the benefits of using ecologically friendly products within the next quarter.
- Reduce Environmental Impact: Decrease the company’s overall carbon footprint by 15% through improved manufacturing processes and supply chain management within the next year.
- Partnerships and Collaborations: Engage in at least 3 strategic partnerships or collaborations with environmental organisations or other eco-friendly brands within the next 6 months.
Example OKR 2
Objective: Drive Innovation and Product Development
Key Results :
- Launch New Products: Develop and launch 3 innovative products that align with market trends and customer needs within the next two quarters.
- Invest in Research & Development (R&D): Increase R&D spending by 20% and establish 2 new partnerships with research institutions or startups within the next 6 months.
- Implement Agile Methodologies: Train 80% of the product development team in Agile methodologies and complete at least 4 Agile sprints within the next quarter.
- Enhance Collaboration with Customers: Conduct 10 customer focus groups and integrate feedback into product development processes within the next 3 months.
- Secure Intellectual Property: File for at least 5 new patents related to innovative technologies or processes within the next year.
- Measure Market Impact: Achieve a 15% increase in market share for the newly launched products within the first 6 months of launch.
Exploring the Benefits of OKRs
The adoption of OKRs brings several benefits:
- Increased focus and alignment: OKRs provide clarity and ensure that everyone is working towards common goals. By aligning individual objectives with the company’s mission, OKRs create a sense of purpose and collective effort.
- Improved transparency and accountability: OKRs simplify the tracking of progress and the holding of individuals accountable. When metrics are clearly defined, everyone understands their expectations, which creates a transparent work environment.
- Foster a culture of continuous learning: OKRs encourage employees to push their boundaries and step out of their comfort zones. It promotes a growth mindset and encourages an appetite for learning from both successes and failures.
- Enhanced collaboration and communication: By aligning objectives across different teams, OKRs facilitate cross-functional collaboration and communication. This ensures that everyone is working towards the same shared goals, reducing silos within the organisation.
- Effective tracking and evaluation: OKRs allow for regular check-ins and feedback loops, enabling team leaders and managers to monitor progress effectively. This helps identify areas for improvement and make necessary adjustments.
Real-life examples have demonstrated the positive impact of OKRs. Google, for instance, attributes its success to the adoption of OKRs, which facilitated the company’s growth from a startup to a global tech giant.
Pitfalls of OKRs
Implementing OKRs can provide a structured framework for setting ambitious goals and measuring progress. But, it is essential to be aware of the potential pitfalls and drawbacks.
One common challenge is the risk of setting goals that are not attainable or coherent with the overall strategy. In fact, John Doerr’s book “Measure What Matters” actively encourages the creation of ‘stretch goals’. By doing that, you make the objective more aspirational and expect the delivery of only 80% of the key results. In fact, people would consider 80% delivery to be good.
This can lead to teams feeling lost and overwhelmed, as they struggle to understand how their individual objectives contribute to the bigger picture. Additionally, OKRs can become forgotten or lost in the midst of daily tasks and responsibilities, resulting in a lack of focus and alignment. Without proper guidance and support, the implementation can be confusing and hinder progress.
Another pitfall to look out for is how you are going to keep track of OKRs. There are software and tools out there, but they can sometimes be overly complex and difficult to navigate. This makes it challenging for individuals to track their progress effectively.
Therefore, it is crucial to approach OKRs with caution and ensure that all components and elements are well-defined and understandable for everyone involved.
When to Use OKRs
OKRs can be effective in various scenarios:
- Strategic planning processes: OKRs provide a structured framework for setting strategic goals and objectives. During the planning phase, organisations can utilise OKRs to ensure alignment from top to bottom.
- Organisational change or restructuring: OKRs help navigate through change by providing a clear path and metrics for success. During periods of transition, OKRs facilitate a smooth transition and ensure everyone remains focused.
- Employee engagement and motivation: OKRs give employees a sense of purpose and direction, increasing engagement and motivation. They provide a framework for setting personal goals and allow individuals to see their contributions to the overall organisational goals.
- Improving communication and collaboration: OKRs can break down silos between teams and promote cross-functional collaboration. By aligning objectives, different departments can work together towards a common vision.
OKRs can be centralised within your organisation, ensuring that everyone is working towards the same set of goals and objectives. This alignment prevents conflicting priorities and disjointed efforts.
Now, we’re all about employee performance management here at Cogendo, so should you use OKRs for performance management?
We think the short answer is no. You can read why in our discussion article “OKRs vs SMART Objectives“.
Steps For Implementing OKRs
So how do you implement OKRs effectively? Follow these steps:
- Educate employees: Start by sharing the principles and benefits of OKRs with your teams. Explain how alignment can lead to increased productivity and success.
- Facilitate meaningful conversations: Encourage teams and individuals to collaborate and set their objectives and key results. This collaborative approach fosters engagement and ensures buy-in.
- Provide resources and support: Support employees in achieving their OKRs by providing necessary resources and addressing any obstacles. This support empowers individuals to take ownership of their goals.
- Regular review and adjustments: Continuously review progress and adjust OKRs as needed. Regular check-ins allow for agile adjustments and keep everyone on track.
- Ongoing communication and feedback: Foster a culture of open communication and provide regular feedback. This encourages collaboration and allows for course correction if needed.
OKRs are a powerful goal-setting methodology that helps organisations align objectives and drive success. By using OKRs, you can create focus, transparency, and accountability.
Implementing OKRs provides a structured framework for individuals, teams, and organisations to set ambitious goals and measure progress effectively. So, why not give it a try and unlock the true potential of your organisation?
But be wary that you might be overcomplicating things!
References / Further Reading
- John Doerr, “Measure What Matters: How Google, Bono, and the Gates Foundation Rock the World with OKRs”
- Hiten Shah, “Why OKRs Are A Better System For Startups Than Traditional Goal Setting”
- John E. Jones, “The Essential Guide to OKRs: Set Goals Like Google”