24th February 2017

Companies have been setting goals for a long time. Even before the management discipline came about, there were various ways organisations put together a strategy to achieve their vision. After Peter Drucker pioneered the Scientific Management, approach to goal setting has evolved along with the market landscapes.

While Management by objectives (MBO) has been used for quite a long time, in the last few years OKRs have been gaining traction rapidly.  They are being adopted the world over and are no more fiefdom of Silicon valley.

OKR or Objectives and Key Results is a goal setting framework that has evolved from Management By Objectives (MBO), by adopting its best practices. The framework was introduced by Andy Grove at Intel in the 1970s. It became more popular after John Doerr implemented it at Google in 1999, who continue to use it to this day for their internal alignment. They have since maintained that they owe much of their astounding success to OKRs. Ex-Googlers are also known to continue using OKRs in companies that they later joined.

Understanding the basics of OKR

Objectives:

Objectives provide the answers to the ‘what, where, when and by whom’ – questions, that determine how the company will achieve its vision. They are set at 3 levels of the organisation viz. Company level, team level and at an individual level.

Key results:

Key results are the measurable outputs that are used to assess if the objective has been successfully achieved. They are meant to be difficult to attain, thus the expected achievement percentage is between 60{af8723c1f93a301e238482aef44e60fee0ab7def501262309d53fe66a24bb326} to 70{af8723c1f93a301e238482aef44e60fee0ab7def501262309d53fe66a24bb326}. In case an individual achieves 100{af8723c1f93a301e238482aef44e60fee0ab7def501262309d53fe66a24bb326} success, it goes to show that his OKRs weren’t ambitious enough.

How to set OKRs

Goal setting begins at the very top level. The management’s strategy to achieve its company vision is usually from a higher perspective. It should be turned into more achievable steps. These steps form your Company level Objectives, yet are still at a strategic level. On breaking them down further to a tactical level, you get your team objectives. And lastly, at an operational level, you form your individual objectives.

One major difference between OKR and MBO is the duration for which goals are set. Individual and team OKRs are usually set for a monthly or quarterly duration, depending upon the company’s growth stage. Startups typically prefer shorter durations as they grow at a rapid pace. Strategic (company level) goals are more long term, preferably set for the entire year. The reason being, it is quite unlikely that your strategy will change at the slightest disturbance in the external environment. And if they are getting affected, then you probably didn’t get your research right.

At each level throughout the organisation, prioritise a few essential objectives and set 3-4 quantifiable key results for every one of these. One of the most important features of OKR is its ability to align goals. Whether it is at an individual or team level, every OKR should ideally be directed towards the overall company goals.

For example, various teams from the product department depend on the marketing team’s studies about which products resonate most with their target market. Marketing teams need information from the Sales guys about their customers’ feedback/complaints. All of these teams need to work together and help achieve one or more of the company objectives. This could be something along the lines of:

“Create an augmented product that will capture 15{af8723c1f93a301e238482aef44e60fee0ab7def501262309d53fe66a24bb326} of the market share within 3 months of its production”

Key Result:

  • Product sales increase by 30{af8723c1f93a301e238482aef44e60fee0ab7def501262309d53fe66a24bb326}
  • Company increased its market share by 12{af8723c1f93a301e238482aef44e60fee0ab7def501262309d53fe66a24bb326}
  • Demand for product increased by 45{af8723c1f93a301e238482aef44e60fee0ab7def501262309d53fe66a24bb326}

Every individual from these teams will have some OKRs that will enable their team to achieve its own goals. However, they can have 1 or 2 personal OKRs that are meant to help them with their career growth.

Alignment also helps to create transparency within the organisation. The system is designed in such a way that all the employees are aware of what is expected of them (the objective), how to go about achieving it (the key results) and how it will help their team and ultimately company in fulfilling top level objectives.

What happens once OKRs are achieved?

It is unwise to expect that OKRs will be successful the very first time. Google did not become successful overnight. That is a highly unlikely scenario. There will be various iterations within the process before you hit the right chord. Even after getting them right you need to check-in regularly, mostly every week, to monitor their progress. This way they can be updated in real time to reflect changes in the market landscape, business strategy and its execution.

There are a couple of mistakes that are common while setting OKRs. You need to be careful with the following:

  • OKRs are not a to-do list
  • Do not set too many OKRs
  • They are not meant to be confidential. Share them with your entire team and manager.
  • Do not forget to align OKRs
  • OKRs should not be used as a part of performance reviews
  • Setting easily achievable OKRs will defeat the purpose behind it

Before you go ahead with implementation, make sure that everyone in your organisation is committed to the concept of OKRs. A half-hearted attempt will not help you to succeed in any way. Preferably, get an OKR expert on board and let him or her educate everyone about the process. An expert will be better equipped to streamline the efforts and get the entire company to efficiently use OKR framework for setting their goals. This blog was written by Yatin Pawar, Yatin is the Product Marketing Manager for UpRaise at Amoeboids Technologies. As a content developer, he covers various topics of HR such as leadership skills, employee engagement to performance management. His most recent work involves collaboration with HR publications to share insights about relevant topics for their audience.

This blog was written by Yatin Pawar, Yatin is the Product Marketing Manager for UpRaise at Amoeboids Technologies. As a content developer, he covers various topics of HR such as leadership skills, employee engagement to performance management. His most recent work involves collaboration with HR publications to share insights about relevant topics for their audience.  Linkedin  Twitter

About Kayleigh Tiernan
Marketing Executive at MagenTys


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