Setting goals is an important part of running a successful company—without goals, what do companies and their employees work toward? In reality, goal setting can be easier said than done. It takes critical, forward thinking and a goal-oriented mindset to determine what will take a company to the next level, and just as importantly, how to get there. Employing the OKR framework can be a handy tool in this process.  

What are OKRs? 

Short for Objectives and Key Results, OKR is a process used by companies, teams, and individuals to set goals and track progress toward those goals. As its name would suggest, OKRs are composed of two main components: 

  • Objectives: An aim, goal, or end action to which effort is applied and worked toward
  • Key results: Metrics used to monitor progress toward the objective

Together, objectives and key results help facilitate company- and department-wide processes such as performance reviews and employee engagement. The former ensures that employees’ activities and outputs ultimately feed back into the company’s goals, or that the goals of the company and its employees are in alignment. The latter enables a robust environment where employees feel like they have a stake in the company’s success, and they feel inspired to work toward its goals. 

OKRs are popular among Silicon Valley tech companies, as well as other national household names, nonprofits, and can even be applied on an individual level. Objectives are enduring in nature and can therefore be carried from quarter to quarter or year to year. Key results, on the other hand, should be monitored and graded on a regular basis. Frequent checkups allow a company or department to reassess their key results as the life of a company evolves.  

Tips for successful OKRs

OKRs look different for every company because every company has different goals and resources. However, there are certain constants that you should follow when establishing OKRs. 

Your OKRs should be: 

  • Ambitious: OKRs should be challenging, aggressive, maybe even outside your company’s comfort zone. 
  • Clear and concrete: There should be no room for interpretation by different members of a team.
  • Actionable: You should realistically be able to achieve key results and push toward your objective with the team and resources at your disposal.
  • Measurable: OKRs should be quantifiable or easily deemed a success or failure.
  • Collaborative and inspirational: OKRs should inspire every team to set individual or department goals, and to work within and across teams to achieve the same end. 

Your OKRs should not be: 

  • A list of every single thing that you would like to achieve as a company. Setting too many OKRs can overwhelm employees and detract from the company’s focus. Instead, OKRs should reflect 2-5 of the company’s, team’s, or individual’s top priorities.

OKR software company Perdoo describes OKRs as “the missing link between ambition and reality. They help you break out of the status quo and take you into new, often unknown, territories.” 

History of OKRs

In the 1970s, Intel CEO Andy Grove invented the concept of OKRs, which was a nod to Peter Drucker’s 1954 book The Practice of Management. In the book, Drucker introduced the MBO, or Management by Objectives, which invited management within companies to lead by setting big-picture objectives rather than settling into the nitty gritty of a company’s day-to-day activities.  

The major shortcoming of Drucker’s MBO method was that it looked at the longer term objectives of a company but failed to acknowledge how a company would reach those goals. Without specific measures to judge an objective’s success, the MBO method left much up to interpretation and quality suffered because of it. 

When Grove adopted the MBO concept, he incorporated key results as a means of measuring success toward the company’s objectives—so was born OKRs. The concept of OKRs was passed down from Grove to upper level Intel management, including notable venture capitalist John Doerr, who officially coined the term and later introduced the process to Google. 

Example of an OKR

Depending on the size of a company, OKRs may be created at the company, department, or individual level. They are most effective and best measured when applied to a specific area within the company—such as sales, operations, engineering, or marketing. 

A marketing team’s OKRs might look something like this: 

  • Objective: Build brand awareness
    • Key result #1: Increase social media following by 25% by the end of Q2
    • Key result #2: Double customer revenue through new referral program
    • Key result #3: Establish thought leadership through at least five guest posts or podcasts per quarter

Long term, the company would like to build brand awareness. Without key results, this goal could be interpreted very differently by the members of a team. The key results give this objective a clear picture as to what employees should be working on and what needs to be achieved in order to progress toward the objective. 

Difference between OKRs and KPIs

People often confuse OKRs with KPIs—or key performance indicators—but these two goal-setting methodologies differ in scope and measurability. 

  • OKRs represent an entire strategic framework, are forward-thinking, and set ambitious goals that a team or company hopes to achieve. 
  • KPIs are individual targets that measure how well a company performed at a certain program, product, or project. These targets exist within a framework, but they do not substantiate a framework on their own. They’re similar to KRs in OKRs, but need something bigger (like the O in OKRs) to ladder up to.

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