Why You Should Use OKR & Why it is important
October 5, 2021
Excellent. You’ve got goals. OKRs (objectives and key results), regardless of what type, can help you achieve these goals.
Whether your goals, business goals or other leadership is to improve your management tool, OKRs will work. That’s because in “Measure What Matters,” as the OKR evangelist John Doerr says, “Ideas are easy. Execution is everything.”
The OKR process helps to make good ideas turn out well. They strengthen the engagement of employees and lead high-performance teams. OKRs include companies such as Allbirds, Google, Netflix and more.
Why OKRs work so well?
To understand this, you must first know the meaning and history of OKRs. Well, if you already know them, you can skip them undoubtedly.
The definition of “OKRs” is “Objectives and Key Results.” It is a collaborative goal-setting tool used by teams and individuals to set challenging, ambitious goals with measurable results. OKRs are how you track progress, create alignment, and encourage engagement around quantifiable goals.
Whether talking about office operations, software engineering, nonprofits or more, OKRs work the same for setting goals throughout many company levels. They can also work for personal purposes and can even be used by individuals to get things done at places where senior leadership doesn’t use them.
An Objective is simply what is to be achieved, no more and no less. By definition, objectives are significant, concrete, action-oriented, and (ideally) inspirational. When properly designed and deployed, they’re a vaccine against fuzzy thinking—and fuzzy execution.
Key Results benchmark and monitor how we get to the objective. Effective KRs are specific and time-bound, aggressive yet realistic. Most of all, they are measurable and verifiable. You either meet a key result’s requirements or don’t; there is no grey area, no room for doubt. At the end of the designated period, typically a quarter, we do a regular check and grade the key results as fulfilled or not.
Who created OKRs?
OKRs were created by Andy Grove at Intel and taught to John Doerr by him. Doerr introduced OKRs to Google’s leadership, who saw the value and started testing them out over the next couple of quarters. It supported Google’s growth from 40 employees to 100,000+. Inspired by Google’s example, the OKR methodology spread to other Silicon Valley companies. OKRs are used far beyond Silicon Valley in a wide range of organizations.
Now, as you know enough, we can jump to the Benefits of using OKRS
The benefits of the OKR goal-setting process are apparent given the roster of companies that use them: Adobe, Google, and Netflix have all implemented OKRs to astounding success. The objectives and key results model is a powerful way to express the goals of any company. It can help to bring to the surface the ultimate OKR: the top priorities of a company.
But if you’re just starting, you may be left to wonder, What makes OKRs so beneficial in not only setting but achieving the most audacious goals of teams and individuals? Why should I start using OKRs?
There are five key OKR benefits. These five benefits spell out the acronym “F.A.C.T.S.” so that when using OKRs, we can say that OKRs give us “just the F.A.C.T.S.”
Focus: Focus is the first benefit of OKRs because you set OKRs and are limited in their number. There can be more than one objective, but always less than seven. Fewer is better. Every objective should fit on one line. As for key results, you should have no more than five per objective. An OKR cycle should start with the question, What is most important for the next three (or six, or twelve) months? This time-bound query sets OKRs apart from other goal-setting systems because they bring to the surface the handful of initiatives that can make a real, immediate difference while deferring less urgent ones.
Alignment: Once top-line objectives are set is when the real work begins. As they shift from planning OKRs to execution, managers and contributors alike tie their day-to-day activities to the organization’s company-wide vision. The term for this linkage is alignment, and its value cannot be overstated. Companies with highly aligned employees are more than twice as likely to be top performers.
Commitment: After focus and alignment come commitments. Commitments are OKRs that all agree will be achieved, and schedules and resources will be adjusted to deliver them. Tracking these commitments is done transparently. Each team member must create obvious signals for everyone that they are working towards their OKRs. Whether this is done through a Google Sheet or an OKR software tracking tool, sharing OKR progress on all-hand slides every single month, or printing them out and posting them all over the office walls to say you now know what you’re striving for. If you’re hitting it or not, it doesn’t matter as long as there is alignment and transparency.
Tracking: Every OKR should be able to be tracked via the metrics established when they were written. And while OKRs don’t require daily monitoring, regular check-ups—preferably weekly—are essential to prevent slippage. Having reference points (likeAre you on track to meet this objective or not? Why or why not?) to grade your current OKRs is their long-term magic on the individual level.
Stretching: “Stretching” is last but not least. Instead, you could have the objective be to go to Mars, and if you fall short, you will get to the moon. This is how you make moonshots. OKRs inherently push organizations to strive further, to eke out a little more than what they thought was possible. Nothing is more energizing to a team than committing to a goal that seems unattainable at the beginning of a quarter, then sitting down to score themselves 90 days later and remembering their disbelief at the possibility of pulling off the impossible.
F.A.C.T.S. is why so many companies use the OKR system. The benefits of focus, alignment, commitment, tracking, and stretching have proven invaluable to many.
OKR is a culture
A founder who is everywhere, always
As a company grows, the founder or CEO can’t be a part of every discussion. Simple decisions often don’t get made until she weighs in.
Because OKRs are shared publicly throughout the company, everyone knows where the company is headed and how their team’s work connects to its overall objectives. Through a quarter, there will be any number of important decisions that need to be made. With the benefit of clear priorities and an appreciation of how progress will be measured, everyone can channel your founder into the room and use that understanding to inform how she would contribute to the conversation if she were there. Once the CEO knows that her teams understand where she’s heading and why — their decisions are naturally more consistent with that focus and don’t require her to be a part of every discussion. The result? Faster execution, less confusion, and a founder who’s freed up to focus on growing her business. Instead of slowing her team down by imposing processes, she’s giving them the tools to speed up and achieve more.
Failure = data
Even when your predictions are wrong — you come up short, missed the target entirely — OKRs let you turn that failure into data. You get the benefit of knowing something new — new information about why a goal is hard or impossible to achieve — and the next prediction will require you to adjust your approach so that you don’t repeat the same mistake.
Just say, “No.”
Without the consensus that comes with agreed-upon OKRs, it is exceedingly difficult for anyone team in a company to say no to a good idea, a worthwhile project, or a needed improvement. All good ideas get equal attention — leading to a lot of wasted time and effort, as not all good ideas are equally good. OKRs make it far easier to say no to the less critical statements — maybe you’ll get to them in a future quarter, perhaps you won’t — and saying no isn’t a political or emotional debate; it’s a rational response to a commitment that the entire company has already made.
Now that we have answered the question “why use OKRs?” let us look at some of the framework’s qualities.
Organizations that have employed OKRs successfully ensure that they utilize particular language common to all their employees to formulate objectives. You must clearly state your objectives precisely. Don’t sound vague.
Don’t state, for example; you want your business to grow as your objective. Instead, “to increase profits by 50%” may be a more accurate target.
So that you achieve your goals, you must also measure your KRs through specific indicators. A reduction in your operating costs might be an indicator. Another one would double your production.
Your KRs must be timely and specific (having a deadline). Having a timeline gives a sense of urgency and drives focus.
In some instances, your OKRs may have to be modified to suit your company’s changing needs. OKRs should be relevant and focus on the priorities of the enterprise.
Regardless of company size, organizational structure and industry, the framework is easy to implement.
It is flexible and is suitable for working with various dynamics. It might help encourage your employees to collaborate and engage and to improve their performance.
OKRs facilitate more meaningful goals by breaking them into smaller, more achievable goals.