Introduction to OKRs

Introduction to OKRs

What are OKRs?

Objectives and Key Results or OKRs is a framework of goal setting invented by Andy Grove, legendary CEO of Intel . OKRs were later popularised by John Doerr, a legendary Silicon Valley venture capitalist who helped implement the OKR framework at Google during its early days.

OKR is a framework of qualitative and quantitative goal setting to drive the organization forward in a desired direction.

Objectives are qualitative statements that answer the broad question "What do we want to do?" and Key Results are the quantitative statements that address the question "How will we know if we met success in achieving the objectives"?

John Doerr, in his popular book, Measure What Matters says "Objectives and Key Results are the yin and yang of goal setting - principle and practice, vision and execution"

OKRs are set at 3 levels - 1) Company 2) Team and 3) Individual with alignment from bottom to top.

Objectives should be:

  1. Managed by the team
  2. Achievable in 3 to 6 months i.e. within the performance summary cycle
  3. Provide business value
  4. Inspire and engage the team

Key Results should be:

  1. Specific
  2. Measurable for progress
  3. Drive right behaviours

Why do companies need OKRs?

Companies set objectives or goals to translate their vision and mission into actions.

Typically, objectives or goals are set annually, cascaded down to departments, business units and individual employees. Performance against these objectives is tracked at the end of the year. Key employee benefits like bonuses, salary hikes, promotions are linked to overall company performance and individual employee performance.

In today's rapidly changing world, annual objective setting exercise alone is not sufficient as companies need to be more agile and resilient to adapt to the changes in the external business environment.

OKRs allow companies to break down annual objectives into set of objectives and key results that are tracked more frequently for example, once a quarter. OKRs help companies drive more agility, accountability and alignment with the overall company objectives.

Benefits of implementing OKRs

Below are some of the key benefits of implementing OKRs:

  1. OKRs help improve alignment, bot vertical and horizontal. According to a Harvard Business Review, companies with highly aligned employees are more than twice as likely to be top performers. However, 100% alignment is difficult and rate to achieve. According to a poll of global CEOs, lack of alignment is the number-one obstacle to execute a growth strategy.
  2. In today's world of VUCA, companies need to respond fast to changes in the external business environment. With the razor sharp focus on short-term goals, OKRs help build agility within the organisation.
  3. Modern organisations require a set of tools to build and reinforce their performance culture. OKRs, when combined with continuous performance system of Conversations, Feedback, Recognitions (CFRs) and continuous pulsing of culture, provide a powerful set of tools for companies to amplify their performance culture.