How do we define OKR in an organizational performance culture? Before we get into the mechanics, let me confess that I am a newly- baptized to the world of OKRs. OKR is an abbreviation which stands for “Objective and Key Results” put in place to measure the progress of a company’s short term and long term goals. At first, it may sound tad alienating for a beginner to understand the technicality and how it works. However, the more you embody OKRs, it becomes a part of your DNA. This is a fantastic communication tool as well as a social contract that propel clear defined goals and a shared language within a company. Through this process, the individuals are held accountable both in an individual as well as a group setting. The striking feature of OKRs is how it allows greater optimization into accountability and transparency within the organization. The OKR is a public document within a company where everyone has an understanding into each other’s work streams.
John Doerr is regarded as the father of OKR who implemented it at Intel in the early 70’s. According to John, the “Objective” can be loosely translated to (WHAT) and “Key Results” are (HOW) we are going to achieve them. OKRs are whilst being proven to be an efficient tool for decades, today it is religiously practiced by top brands such as Google, Uber and LinkedIn in the silicon valley. The OKRs have become more than a tool, it has become the part of the culture in many organizations. Many start-ups in the silicon valley have embedded OKRs into their organizational performance culture. Let me deconstruct the fundamentals of OKRs and how it is aligned with the organizational performance culture.
OKR’s can serve as a tool to align the entire work force of a company to own and deliver results in a steadfast pace and cadence. Ideally, OKRs should trickle down from the overall Mission of the company that has broken down cascading to each department and individual in the pyramid. The main elements of OKRs should be SMART (Specific, Measurable,Achievable,Relevant,Timebound). The most important outcome of this exercise is that it forces you to get results that are measurable. In return, this helps organizations to improve their measurement and impact. There is no rule of a thumb as to how often you need to set time aside to review OKRs goal setting and performance evaluation. Depending on the nature of your company you could do them as regular as monthly, quarterly to bi- yearly.
It is always better to have an objective that is ambitious, striving for “the next big thing”. Even if you are a bit uncomfortable with the target you have placed, you will put all your efforts into giving it your best shot. This is where the healthy stretch or your performance muscles come into play. The moments that define you from the average lot to be truly disruptive in your innovation.
- The Key Results
The key results should be clearly marked, and achievable. More importantly quantifiable and should lead to objective grading.
By institutionalizing OKRs into the culture, the team members have the full visibility into each other’s work streams. It breaks down silos, especially if teams working remotely this is a fine feature to keep everyone abreast and pumped. As top as from the CEO level to each individual member of a product team owns OKRs. Similarly, a CEO does not need to have each manager’s OKRs incorporated into his OKR. He can focus on the most important two or three objectives that matter to the company in a holistic way. However, the process should be fluid. There should be a clear demarcation of cross functional responsibilities, who is doing what and how everything fit in the big picture. It is recommended to have not more than five or six objectives that are measurable. The results should be numerically capturable. The more “Objectives” you have for a quarter, the harder it takes to produce satisfactory results.
A quarter is comprised of 11 weeks. Suppose you have 10 objectives for the quarter, this way, one has only a week to hit his/ her targets for each objective. Hence, picking up the top five high priority objectives is the way to go about it. As for the results, on a scale of 0-1 , the sweet spot of achievement is 0.6% -0.7%. If you are constantly hitting 1%, then you need to recalibrate your OKRs as they are not ambitious or properly defined. In the same vein, the percentage here of 0.6% -0.7% is the average of the total output and it should not be read as the completion rate of each objective’s achievement percentage.
Another best practice when setting up OKRs is to arrange them bottoms up approach than a top down. A CEO or a Manager should speak with their peers and subordinates to pick the quarterly objectives as they feel the most important and priority in line with the overarching objectives. In return, the managers encouraged to sit with the individual members of the team to further narrate the department OKRs and how they align with the company goals.
There are several benefits by creating an organizational culture around OKRs. There is no such thing as each time one needs to achieve 100% in each OKRs. There can be certain quarters where results could be poor and also valid circumstances. This tool should be seen as a visual dashboard /pulse check to convey a better picture. Having a better diagnosis would invariably allow to course correct immediately.
In essence, OKR helps to eliminate creating silos while harnessing inter dependency with greater transparency among different teams. Also, it harnesses the risk taking ability and allowing everyone to proudly own a piece of the work that matters the most to the company.