Andy Grove first introduced the concept of Objectives and Key Results (OKR) at Intel in the 1970s. Since then, OKRs have helped many companies besides Intel, including Google and Amazon, become what they are.
An OKR system is a goal-setting methodology based on two components:
- The Objective is the direction. It indicates what to achieve.
- The Key Results are the steps necessary to accomplish the objective. They define how to achieve the desired goal.
By focusing on these two simple elements, companies can set ambitious goals and break them down into clear and measurable outcomes.
How do OKRs help ambitious strategies to succeed?
OKRs can leverage on three drivers of performance and productivity: Implementation, Ambition, and Engagement.
There are so many people working so hard and achieving so little.
Andy Grove’s quote hints at a central intuition behind OKRs: success is not about increasing activities to carry out; it is about focusing on what matters the most.
An OKR system narrows the focus on few fundamental objectives to achieve (what) and few key results to measure progress (how). This approach helps move from ideas to action, from vague to sound execution.
As John Doerr writes in his book, Measure what Matter,
Ideas are easy. Execution is everything.
To ensure effective execution, OKRs are time-bound and progress on results is regularly assessed. A typical OKR cycle usually lasts between 3 to 4 months. Hence, OKRs have a cyclical short-term nature. Yet, they remain traceable to long-term strategic objectives.
When using OKRs, managers, teams, and employees need to think through what goals are relevant to the company vision and mission, and why. For these goals to be inspirational and ambitious, OKRs should be unrelated to salaries and bonuses. Money is not all that drives performance. When linking objectives to remuneration, the company risks ending up with conservative and stagnant goals. The inability to challenge the status quo and dare can hinder business growth. Instead, by working on stretch goals, even a partial achievement can represent a significant step forward.
With OKRs, leaders can deploy a tool for employee engagement.
First, the OKR definition is supposed to be inclusive. The company management should not merely trickle down objectives from the top. Of course, managers can assign objectives to their team members with a top-down approach. Yet, employees should actively engage in the process of drafting their OKRs and presenting them to their leaders in a bottom-up fashion. A more participatory definition process as such promotes a higher level of commitment to shared goals.
Second, OKRs should align with the team and company goals. Alignment makes everyone aware of being part of a bigger picture. It helps employees understand: first, why what there are working on is meaningful; second, how they do support the company strategy.
Third, it follows from the above that OKRs should be public. Transparency is necessary for alignment. These two factors can strengthen cooperation among people and across teams. Moreover, when goals are public, it is possible to link them to continuous feedback and social recognition tools. On the one hand, sharing timely feedback on public objectives makes it is easier to course-correct what can be improved. On the other hand, public objectives offer an opportunity to detect and praise talent. These practices can foster performance even further.
By stressing the importance of execution, fostering productivity with inspiring objectives, and engaging employees, OKRs represent a promising business tool for managers to create, manage and nurture high-performing teams.
How to implement an OKR system?
PatPat360 precisely serves this need. The Objectives Cycles module can help companies effectively align the business, team, and individual objectives. It gives managers and employees a tool to break down their objectives into key results, keep track of progress, and focus on what matters for being successful.