Article

OKRs: Providing Your Organization with Purpose

The more successful a company becomes, the more work there is to do. And as the work piles up, strategic planning sessions tend to be postponed or canceled in order to tend to more urgent operational concerns—putting out fires, attending last-minute client meetings, staff call-outs, and solving problems on the fly. Over time, the team separates and disengages from the overarching mission of the organization, and ultimately, everyone loses sight of where the business is going or why: “What are we doing here? Why is this important?”

For most of us, it’s not fulfilling to just show up to a job. We crave purpose, drive, and passion in our work (really, in every element of our lives). OKRs, a.k.a. Objectives and Key Results, is a system that provides that sense of purpose and drive for organizations, their leadership, and their employees. Essentially, OKRs help us clarify where we’re going and what it looks like when we get there.

So, what are OKRs?

OKRs is a goal-setting framework that puts purpose at the center of work by unifying the business around its most important priorities and enabling employees to accomplish them.

The framework consists of two parts: (1) Objectives, or what you’re trying to achieve; and (2) Key Results, or how you know you’ve achieved the objectives. You should aim for two to three objectives per quarter, and they should be specific, time-bound, and measurable. Each objective should have three to five key results, which should be impartial quantitative or Boolean measurements of the objectives.

Sure, you can have more than three objectives and more than five key results. But the more you have, the harder it is to focus on what is truly important. Not all objectives and key results are weighted equally, and by making the list of each longer, we might distract ourselves with what could be accomplished instead of what truly must be.

So, for example, if the objective is: Achieve the best customer service in our market, here’s what your key results might be and what an OKR table for that objective might look like:

The idea is that in an OKR-driven organization, teams and individuals know what success looks like and how to measure it because it’s explicitly spelled out. Originally created by Andy Grove, former CEO of Intel, the OKR framework was popularized by venture capitalist John Doerr in his book, Measure What Matters: How Google, Bono, and the Gates Foundation Rock the World with OKRs, and is now famously used at LinkedIn, Netflix, Anheuser-Busch, Deloitte, Adobe, and many more. Considering the success of those companies, it’s safe to say, OKRs work.

How are OKRs different from other goal-setting systems?

There are other popular management by objectives (MBO) systems, of course, such as SMART goals and KPIs, or Key Performance Indicators. However, each differs from OKRs in a couple of distinct ways.

SMART goals, for instance, are guidelines to help people create and write appropriate goals. To that end, SMART guidelines indicate that goals should be Specific, Measurable, Attainable, Realistic, and Time-Related—not unlike the guideposts for writing objectives in the OKR framework. SMART goals do not, however, provide the metric for knowing you’ve achieved those goals, or in OKR terms, the key results. So, while you can use the SMART goal guidelines to create good objectives, you need the OKR framework to help set, adapt, measure, and continually improve organizational goal-setting in the long run.

KPIs, for their part, are metrics used to track operations, systems, and processes in your organization. These metrics, or “indicators,” include things like uptime, conversion rates, or average ticket response time. KPIs are different from OKRs in that OKRs encompass all of direction, measurement, and purpose, whereas KPIs only really involve measurement. An organization can have 100 KPIs—but without additional guidance, KPIs won’t inherently tell you what is actually important to optimize. The right KPIs do fit within the OKR framework as excellent key results, though. For example, if one key result for an objective to improve customer satisfaction is increasing the Net Promoter Score by 10% in one quarter, the Net Promoter Score is your KPI.

In these ways, both SMART goals and KPIs can be incredibly useful to incorporate within the OKR framework, but they don’t provide as full of a picture or system for continual improvement by themselves.

How do you implement OKRs?

While OKRs are simple to understand, they are not necessarily easy to implement. Businesses need to carefully consider how OKRs will work within their culture, and business leaders need to consider how they will set aside time for strategy. Without foresight and planning, the OKRs framework can conflict with company culture and expectations and quickly be dismissed as just another management fad.

Even with foresight and planning, there is no single path to implementing OKRs. For some businesses, a pilot program or phased rollout works best; for others, it’s better to work with a coach or outside facilitator to set the process in motion. In my experience, guided implementation and facilitation gives teams the best chance to implement OKRs effectively and achieve their goals—here’s why:

• Guided facilitation ensures the process is actually completed, reflected on, and continuously improved.
• All opinions can be equally elevated to find commonalities and points of disagreement. Having an unbiased, third-party observer makes it easier to pull out what truly is best for the company instead of what’s best for the individual—even what may be best for the CEO personally.
• Guided facilitation also helps organizations celebrate progress, rather than insisting on perfection. It shifts the conversation away from the personal realm, where “Why aren’t you achieving our goals?” becomes “What barriers are preventing us from achieving our goals?”

Here’s a sample framework for the OKR journey any organization can work with:

1. Conduct discussion sessions with the executive team and senior leaders to narrow down potential objectives for the next quarter.
2. Gather input from everyone in the organization on what the next quarter’s objectives should be.
3. Conduct discussion sessions with the entire organization to arrive at a common set of objectives.
4. Set key results for those objectives.
5. Set up an organization-wide dashboard with metrics for key results.
6. Teams and individuals set their own OKRs.
7. Press play!

How long does it take to develop and implement OKRs?

Most organizations use a combination of both annual OKRs and quarterly OKRs. These interlock and cascade, so that by completing quarterly objectives, we advance our annual plans.

There is no correct or incorrect timeline for establishing OKRs—it will largely depend on employee headcount. Larger companies need more time, while smaller companies can move more quickly. In either case, the full process can take four to six weeks, ideally before the start of the upcoming quarter. This lead time allows for feedback and making changes if necessary. When we work with clients, here’s what a typical OKR timeline for larger companies looks like:

• 6 weeks before the quarter: Brainstorm objectives.
  • 3 weeks before the quarter: Select objectives for the upcoming quarter; begin drafting and selecting key results.
    • 2 weeks before the quarter: Announce objectives to the entire organization for the upcoming quarter.
      • The quarter starts: Reiterate OKRs to the entire organization; teams and individuals draft their own OKRs.
        • 2 weeks into the quarter: Teams and individuals publish their OKRs for the rest of the quarter.

Regardless of the exact timeline, organizations setting OKRs should always apply the following principles:

• Deliberated and debated with intention. The OKR process should not be rushed. Speeding through a planning process increases the risk of working on the wrong things.
• Involve multiple viewpoints. To generate the most amount of buy-in, include everyone in the OKR process, and allow the best ideas to surface to the top.
• Clarify the process, time frame, and expectations in advance. Different levels of the organization—executives, managers, and individuals—will each require time to consider and build their own OKRs based on the feedback from those in levels above and below them. Ensure everyone understands the purpose of the exercise and how to get the most out of it.

OKRs create commonality

These principles create semblance and, as OKR creator Andy Grove says in High Output Management, commonality throughout the team: “In fact, commonality of operational values, priorities, and preferences—how an organization works together—is a must if the progression in managerial style is to occur. Without that commonality, an organization can become easily confused and lose its sense of purpose.”

What he’s getting at is the why behind setting OKRs. It’s more than achieving objectives and driving goals forward in a real, measurable way. It’s about motivating your teams behind a commonality of priorities—a “sense of purpose”—to activate their engagement in the work and the organization’s overall growth and forward motion. Having clearly defined and shared goals significantly builds engagement, and employee engagement keeps your company growing. OKRs make that happen.