OKR Goal Setting System
Objectives and Key Results (OKR) is a framework for more efficient business goal setting and result monitoring. Its two key parts are objectives, which define what needs to be accomplished, and key results, which define how objectives will be accomplished. Companies in the United States that use the OKR framework include Google, Amazon, Adobe, LinkedIn, Microsoft, Twitter, and Zynga.
Description of OKR
- Created in the 1970s by Andy Grove and popularized by early Google investor John Doerr, OKR is a framework designed to help organizations establish objectives or goals in a more efficient manner, and then monitor the outcome.
- With the framework, organizations can "establish far-reaching goals in days instead of months." It is for this reason that the framework is quite popular among tech companies, especially those in Silicon Valley. In general, tech companies find that OKRs can help them remain on course while being innovative in a fast-paced and fast-changing industry.
- Although OKRs may seem similar to key performance indicators (KPIs), there is a difference between the two. KPIs are more about reporting and less about business goals, while OKRs are more about business goals and less about employees' day-to-day work.
- Most organizations use spreadsheets and Google documents to record their OKRs, but there are now companies that offer solutions to make the documentation process more efficient. Examples of such companies include startup Ally, Wrike, productboard, Engagedly, and Weekdone.
Key Parts and Features of OKR
- OKR has two key parts, the objectives and the key results. The objectives pertain to what needs to be accomplished, while key results pertain to how objectives are to be accomplished.
- Key results are not simply a to-do list. They should be statements of how specific tasks relate to business objectives. An example of a correct key result is "Shipping feature X increases new user sign-ups by 10 percent this quarter," while an example of an incorrect key result is "Ship feature X by the end of the quarter."
- Objectives are characterized by the following qualities: ambitious, qualitative, actionable, and time-bound. Key results, on the other hand, are characterized by the following qualities: measurable, quantitative, achievable, and time-bound.
- Although OKRs are communicated to all concerned members of the organization, each key result has an owner who is in charge of monitoring progress and of exploring ways to achieve the desired result.
- Teams implementing OKRs typically have three to five objectives, with each objective having three to five key results that can be measured. Smaller teams are advised to keep objectives to a maximum of just three, while larger teams are advised to keep objectives to a maximum of five.
- Objectives at lower levels of the organization correspond to key results at higher levels of the organization.
- Key results are periodically monitored and scored on a scale of 0 to 1 or a scale of 0 to 100, where the highest possible value corresponds to the complete accomplishment of the objectives. The score for the objective is the average of the scores for the objective's key results.
- A score of at least 70% to 80% is generally indicative of success.
- OKRs are supposed to be flexible; therefore, they can be adjusted if business priorities shift.
Examples of Companies Using OKR
- Google, Amazon, Adobe, LinkedIn, Microsoft, Twitter, and Zynga are some of the largest companies that are known to be using the OKR framework.
- OKRs were introduced to Google by John Doerr in 1999. Since that year, OKRs have been a huge part of Google's success. When Sundar Pichai took over Google as chief executive officer, he simplified the company's OKR framework such that employees need to deal with only one set of goals instead of two (i.e., short-term and long-term) at a time.
- Amazon is said to rely to a large extent on OKRs in ensuring employees are working in alignment with company objectives.
- Adobe used to have a dreaded "rank and yank" system where least productive members are identified and let go. Now, it has found people management success with OKRs.
- LinkedIn is said to use OKRs for the purpose of creating a sense of urgency among its employees.
- Bill Gates of Microsoft recommends OKRs for managers who want to perform better. He says his management style is largely influenced by OKRs.
- Twitter uses OKRs to not only measure progress but facilitate communication and understanding of business objectives among employees as well. It encourages employees to look at their colleagues' OKRs and talk with these colleagues.
- Zynga's approach to OKRs is different in that it has a weekly cadence instead of a quarterly cadence. Zynga CEO Mark Pincus calls the OKRs "individual roadmaps," and he checks in on these roadmaps every Friday.
- Weekdone, an OKR software provider, identifies 57 companies that use OKRs.