OBJECTIVES & KEY RESULTS
Objectives and Key Results (OKR) is a method to manage goals and performance. It is a framework that combines strategies and results and helps to optimize processes, promote employees and drive change. When the company´s objectives (qualitative and ambitious) are defined, measurable results indicate how this objectives can be achieved. The basic framework suggests to use a setting (meetings, graphics, rules, accountability) in which people adhere and commit to objectives as well as the review of objectives using measurable results. Johannes Müller (founder and CEO of Workpath) once called it "the operating system for an agile network organization with autonomous teams".
At the heart of its invention is the typical situation where teams lack to achieve their objectives, partly because there are too many objectives or because they are too short term, partly because they are not ambitious enough to receive priority or because the objective is impossible to achieve. When things don´t get achieved, you´ve got to ask yourself the question: "why did we agree on such objective in the first place?" But many times, instead of thorough re-evaluation, the blaming game starts. Nobody wins.
In this regard, OKR can be seen as a bit of project management mixed with a bit of psychology and lot accountability.
How did OKR come about?
In 1954 Peter Drucker developed the management by objectives system (MBO). In 1968 Andrew Grove uses MBO to develop the Objectives and Key Result system at Intel. In 1974 John Doerr starts working for Intel and takes over the OKR method. In 1999 John Doerr invests in Google and establishes the OKR method amoungst teams. Since 2018 OKR is recognized as a key factor in Google’s success. Today, many companies - amoung them amazon, accentrue, Spotify, Netflix, GAP, Viacom, Adobe and others - use OKR.
It is safe to say, that OKR didn´t fall out of the skies. Its precursor were methods like Management by Objectives (MbO), S.M.A.R.T and any streamlined approach that would use KPIs (Key Performance Indicators). If anything, the Balanced Scorecard approach by Kaplan and Norton could be viewed at aiming at something very similiar: align the organization to (strategic) objectives.
Many such methods share intentions like:
- Combine vision, mission, values and strategy with day-to-day work
- Establish objectives and enable the best use of resources
- Help to set and track the right priorities
- Measure success without the pressure to perform
- Create transparency and improve communication
- Encourage an autonomous work environment
OKR and the bigger picture
Like every player and every actor in a football game, so has each and every project in a company its objectives and results. The management and the coaches have their objectives and results and so do the offencse and defense teams. Likewise the PR Team has their objectives and results and so to the Agents, the Media and the Scouts. What is very different in a company however, is that all the players (the employees) aren´t as crazy about the objectives (the superbowl). Ever wondered why that is?
If objectives aren´t motivating and ambitious enough, people end up doing just a job. No wonder nobody wants to be accountable. No surprise that blaming others is typically the end of it. But you hardly ever see that in a football team. Why? Because they are united by their objectives, they know what everyone is accountable for and it is absolutely clear when an objective is achieved and when it´s not.
OKR, in a sense, brings purpose and clarity to the table.
Basics in applying OKR
While the big picture is for motivation, the smaller picture is for getting things done. In contrast to many management approaches, OKR seeks to give every aspect the needed attention: the big picture, the medium term, the short term and the general healt of the project and its team.
With these 4 aspects, OKR drives the commitment and accountability needed to get to the next point. The next point being: the next meeting. OKR is about managing the objectives and assigned key results in a serious of recurring meetings during which each team member gets to present where they are, where they want to be and how it´s going in general.
OBJECTIVES: qualitative objectives like "establish a clear value to distributors as a quality provider" are agreed on, together with Key Results (such as "reorders at 85%" or "revenue up 5%") combined with a confidence level (x out of 10) and a risk factor. The confidence factor is what makes the objectives interesting. Give an objective a high confidence level, it may seem too easy and not get the proper attention, give an objective a very low confidence level, the risk may appear to high and pressure builds up. The smoother the objective goes hand in hand with confidence level and risk factor, the more likely is its achievement.
SHORT TERM PRIORITIES: such priorities come in the form of clear cut goals that are measurable with precision. Closing a deal by Friday, having the new online ordering system online by Thursday or getting a new IT guy to sign up by Wednesday are such goals. These are the things people need to focus on. These are the things people will also have to share the results for, during the next meeting. Goals come with verifiable measures that indicate exactly when the goal has been achieved. Goals can be timely, quantitative, qualitative, discrete events or budget related. Goals also come with a responsibility and an accountability.
MID TERM PROJECTS: these are things that either come next or represent an overall achievement, like an increase in online sales by 40% compared to last month or new product shipped and billed by date xy. These projects need to be on everybody´s radar, but they are not yet subject to scrutiny and review. It is exactly therefore, that OKR meetings can be kept concise and short, rather than become lengthy all-encompassing discussions. Objectives are for discussion, because they need buy-in, Short Term Priorities need commitment, but Mid Term Projects are just a heads-up.
HEALTH STATUS: sadly enough, whether a team is doing alright or not is typically not any dashboard, chart or in any project report. Whether a customer is satisfied gets mentioned more often, but is also not looked at with consequences following. The health of the eco-system in which a team operates is however key to its durability, stamina and effectiveness. A team that has been worn out, a customer who is already talking to our competition, a supplier who gets a better response from other buyers ... all these are health questions that need to be addressed. But they hardly ever aren´t. While we are busy getting things done, many envirionments have accepted the faster, greater and more paradigm. With attention to the health status of each player in the eco-system, at least bigger desasters can be spotted on time and avoided.
An example of running OKR
In her book "Absolute Focus" Christina Wodtke introduces us to a team that decides to have meetings on Monday mornings and Friday afternoons. The general idea is to have Mondays for promises and Fridays for winners. During the monday morning meeting, the 4 aspects are looked at, changes to any objectives are discussed, priorities are updated, long-term heads-ups are presented and the health status is checked.
There are many tools around and methods available to achieve similiar things. From S.M.A.R.T. to the Minto Pyramid, from RACI to MECE, and more, we already have wide range of help. But OKR is different. OKR focuses on the two things that matter the most: motivation (due to ambitious and attractive objectives) and commitment (using precise goals assigned to accountable and responsible people).
To illustrate the simplicity of this approach, a single sheet, separated into four quarters is used to run the Monday and Friday meetings. The four quarters represent the aforementioned aspects. In eliminating the usual noise and chatter, but instead focusing on whats important, OKR allows to spend more time on the doing than on the talking.
(picture taken from the book "Absolute Focus" by Christina Wodtke)
Streamline your management process with OKR
Rather than missing the next deadline, exceeding budgets and loosing the hearts and minds of team-members, start focusing on what gets things done. We can help establish the necessary process and assist you in making the first steps in applying OKR within your company. We will start with one team and later roll this out to others. OKR can also be combined with a KPI project, that starts at the top and intends to break the KPIs down to hte shop- or production floor, thereby linking strategy to operational goals.