The core of a framework like OKRs is that it is put in place to solve a concrete challenge in an organization. In some cases, it something gone wrong that needs action, while in others, it is an insight that the way of working needs to change in order to grow faster, perform better in competition, or elevate the organization to a new level.
There are many benefits to implementing a common goal-setting system, but OKRs adds several dimensions that go beyond KPIs and tracking. An implementation of OKRs can strengthen what initially appears to be unrelated areas, and when all the principles around the framework are followed, significant improvements manytimes can be seen in the organization.
John Doerr, who has played a central role in putting OKRs on the map, often highlights five ‘OKR superpowers’: Focus, Accountability & Commitment, Tracking, and Stretching. Together, they form the acronym FACTS, which makes them easy to remember.
All of these are relevant, but there are also other aspects worth mentioning, with a focus not only on value for the organization but also for the individuals within it. In the longer term, it is the individual’s engagement that has the ability to uplift entire organizations as a result of an OKRs implementation.
Therefore, I would advocate for seven reasons to implement OKRs:
5. Focus on results
6. Increased level of ambition
7. Transforming strategy into action.
Built into OKsR are forcing rules about limitations, i.e., arecommended number of objectives and key results to be set at each level in an organization. Typically, these are between 3-4 objectives with 2-4 corresponding key results each, but there are extreme cases where a single objective with associated key results is advocated.
It becomes evident quite quickly in an implementation that there are limitations on how many goals one can effectively focus on during a limited time period, as well as the value of shrinking focus enough to be able to fully complete things.
It is a common trap for ambitious individuals and teams to take on multiple projects and try to execute them in parallel. This creates a rhythm where even small projects take a long time because each project can only receive a divided focus. It also incurs costs in the form of transition time between activities for those working on multiple things simultaneously.
We can see the effect of this if we imagine taking on twelve projects, each taking one month to complete. With a scattered focus, we work on all of them in parallel and launch all twelve simultaneously after twelve months. However, if we instead allow ourselves to focus on one project at a time, we can suddenly launch one project per month for twelve months. By the twelfth month, the first project has already been out and producing results for eleven months!
The second consequence is when, partway through the year, it is realized that the project list was misprioritized from the beginning. By tackling projects one at a time, it becomes easy to adjust the prioritization going forward, be open to new projects, while previous priorities fade away.
In this way, focus is something that can emerge in an implementation where initially there may be difficulty in prioritizing and ending up with too many objectives, but over repeated cycles, the number of goals is reduced while the ambition level on each one of them is raised.
It’s worth noting that an organization like Google, with over 100,000 employees, works with 3-5 objectives per year at the strategic level. There is tremendous power in an organization when the entire organization’s ambition can be summarized in a handful of goals. A typical example is when an organization faces a threat like a new competitor, declining sales, or product issues – being able to elevate this area as a primary focus can create immense collective focus on finding a solution.
Alignment can best be described as an unspoken understanding among individuals about where they are collectively heading. In a well-functioning organization, this understanding is implicit, and through ongoing coordination of activities and goals between teams and individuals, everyone works towards the same common mission.
This effect arises as a result of the process of setting OKRs. Ideally, it starts at the leadership level, where measurable goals are collaboratively set for the entire organization through 3-4 OKRs. This document then becomes the starting point for all other teams in the organization when they set their OKRs. The basis of these discussions becomes what the team needs to achieve to support the organization’s common (strategic) goals.
This process can occur in levels, where OKRs are set sequentially, starting with leadership, then teams reporting directly to leadership, and so on in descending order throughout the organization. However, as this creates a delay in the entire process (where teams at the outermost level may not be able to set their goals until long after leadership), it is more common for all teams in the organization to set their OKRs based on the strategic goals and then calibrate with their closest teams to ensure alignment.
The ideal scenario here is that two completely different teams in the organization automatically drive actions that collectively support the strategic goals. For example, if a strategic objective for a software company is to establish a new market, measured by sales in the new market, when different teams align their OKRs with the strategic objectives, this may mean that the marketing team creates sales materials in the new language, the product team adds a feature important to users in that specific country, and the sales team implements a new sales pitch tailored to the new market.
In these types of scenarios, dependencies always arise between teams – the sales team needs materials from the marketing team to send to customers, product needs to launch the new feature for salespeople to demonstrate, and so on. This work of aligning activities and dependencies between teams is also facilitated by OKRs because there is a shared strategic goal to lean on. All three teams in this scenario are working towards a common objective, which facilitates collaboration among them.
Contrast this with a sales team tasked with establishing a new market while the product team has a stated goal of focusing on user administration and the marketing team is in the midst of developing a new visual identity. When goals are not set based on a shared strategic focus, there is a significant risk of friction and missed deadlines.
With OKRs, there is an explicit (and documented) focus for the entire organization to lean on and use in discussions about resource prioritization.
OKRs turn traditional hierarchical goal management models upside down, where goals are typically set at the strategic level and then broken down to the individual level by management and supervisors.
In working with OKRs, goals and corresponding measurable results are set by the team based on the strategic goals. It is up to the team members to ask themselves, where should we best focus our efforts in the upcoming time period to support the organization in achieving our common goals? The role of managers in this process is to lead the discussion, ensure goal alignment with the strategic objectives, and sometimes guide parts of the prioritization. It is often seen that after a period of calibration, about half of the goals are set by the team, while the other half comes directly from the team’s manager.
The effects of this approach are that individual employees have a new role in setting goals and designing the activities that will lead to those goals, while managers are responsible for guiding the process and ensuring delivery of the results.
In effective OKRs implementations, managers can step away from detailed activity management to focus on tracking and monitoring results and goals. This dynamic creates employees who take ownership of their goals – as they have been involved in setting them – and shifts the focus of discussions and dialogues towards results rather than activities.
A prerequisite for this work is that employees have access to the strategic goals – without them, it would be impossible to set meaningful and aligned OKRs.
Both of these components, clear goals and participation, are well-documented drivers of engagement. If we add increased transparency into the organization’s mission and understanding of how individuals contribute to the bigger picture, we have a powerful mix for creating increased engagement.
One of the main principles behind key results is that they should be measurable. This is a non-negotiable aspect of OKRs that cannot be compromised without going off track completely in an implementation. However, measurability can take various forms, including both results and deadlines for milestone goals for example.
With measurable goals and a structure for tracking progress, we gain insight into how the organization is performing at a much deeper level than with just KPIs. Through OKRs, we can understand how we are actually delivering against what we have defined as important to us.
Many parts of the organization that are not accustomed to setting measurable goals also gain a tool for measuring their pace and reflecting on whether what they have always considered important is still so when thinking about how it can be measured. It is common to realize that one has been working towards something that is not an actual result but an activity. By starting to measure, we open up discussions about what truly matters and often transition to measuring results instead of activities.
In certain parts of an organization, measurability is nothing new. For example, in sales, it is customary to track several highly measurable key metrics such as total sales, average order value, and repeat purchase frequency. With OKRs however other measurable key metrics can be introduced (such as time to invoicing or customer satisfaction).
Over time, OKRs tracking becomes the true gauge of how the organization is doing, whether it is succeeding with its initiatives, and if it is moving in the right direction in the long run.
In OKRs, it is important that a key result is a result and not an activity. This concept may take some time to get used to, and as obvious as it may sound, the majority of organizations tend to work towards activities rather than actual results (I’d exclude sales departments here that are usually very results oriented).
This is linked to the fact that activities (or initiatives as they are often referred to in OKRs language) are what we do on a daily basis, what we have in our to-do lists, and where our daily focus lies.
However, all meaningful activities are actually milestones towards a result, and if we measure activities instead of results, there is a high risk of being satisfied once the activity is completed and losing focus on the result we were aiming for.
Sometimes, we may be convinced that there is a connection between activities and results, such as believing that fifty phone calls should lead to two booked meetings for a salesperson. With enough data and experience, we might even measure against the number of phone calls instead of booked meetings. However, OKRs encourages us to set the goal towards the booked meetings and perhaps, in another step, towards the sales that these deals will generate.
It is also not uncommon for a completed activity to be an actual result. This is often the case when it comes to internal deliveries, for example, where a result can be measured by the development of a new product for sales by a certain deadline or the completion of new sales materials. In this case, we achieve a focus on results through clearly defined milestones and deadlines in our OKRs.
A results-oriented approach shifts the perspective from what needs to be done to what needs to be achieved. It can also expose activities that take up a lot of time but lead to minimal results. A practical approach here is to place planned activities in a matrix with axes of high/low effort and high/low impact, where impact represents the effect expected on a result. By viewing activities through this lens, prioritization towards activities with low effort/high impact usually happens quite naturally and can be supplemented with a number of efforts towards activities with high effort/high impact.
A rule of thumb is that all activities undertaken by an organization should be traceable to a desired result, which can be at different time horizons and have varying degrees of connection to the activity. However, if this connection cannot be made, the entire activity should perhaps be questioned.
For example, we know that a branding campaign can increase recognition and eventually lead to increased sales, even if we only see minor indicators of short-term results. We know that a certain number of phone calls leads to a certain number of booked meetings and that developing a new product provides the sales organization with tools to eventually increase sales. But many activities can be deprioritized when it becomes evident that we can’t even long-term link them to an actual result.
This mindset can be followed through a refinement process. As an example, a marketing team is tasked with creating an autumn campaign. They have always done a larger campaign in the fall, usually consisting of a TV ad and three print ads. With an activity focus, the objective would be to create a TV ad and three print ads. Now, if we shift to a results focus, we could instead start with the goal of reaching ten thousand individuals with the message and tie this to an objective of strengthening brand visibility.
Shifting from working with activities to working with results can have drastic consequences. In this case, the reasoning could lead to changing the media mix to channels that deliver the most cost-effective contacts instead of being locked into a specific format, or replacing the autumn campaign with something completely different.
Organizations often go through a process where they initially try to fit existing activities into their OKRs by finding connections to strategic goals or results. This often works well, but step by step, it becomes clear that other activities can better support the set goals, and over time, the focus shifts to different activities based on where actual results are seen in the shared goal.
When an entire organization embraces this mindset, significant resources can be freed up by stopping activities without clear goals and instead focusing on activities that drive measurable results.
With it’s origin in goal setting theory and motivation psychology, OKRs is built on goals that are ambitious to the extent that they are not expected to be fully achieved. A common target is to set goals aggressive enough that a 70% success rate is expected.
This mindset may not come naturally and can take time to establish in an organization. Some cultures prefer to reach their goals and celebrate more victories which leads to somewhat lower ambition in the goals.
However, setting ambitious goals is not arbitrary or based on an all-or-nothing sometimes felt to be American cultural perspective. There is a well-researched foundation in motivation psychology that repeatedly verifies that individuals perform better with aggressive, yet clear and measurable goals, as long as the goals are not perceived as impossible.
This type of “stretch” in goal-setting encourages thinking outside the box, questioning current approaches, and seeking new ways to solve old problems. It also involves raising expectations and putting in extra effort to ensure successful completion without slowing down prematurely as a deadline draws closer.
In OKRs, it’s important to avoid linking goals to compensation, as it can lead to setting overly cautious goals. Ambitious goals constantly challenge what is possible, foster creativity, and drive individuals to achieve better results.
This does not mean that celebrating milestones or acknowledging progress is discouraged. The goals should be aggressive but never unattainable. If goals are deemed unattainable without a clear plan to achieve them, it can have a negative effect on motivation.
This aspect of OKRs helps organizations challenge themselves, set aggressive yet realistic goals, and realize more of their full potential.
Consultants have been involved, the board is informed, and the leadership is fully on board. The organization has a new strategy that needs to be translated into action. Sometimes this needs to happen immediately to drive change, and in other cases, it is part of a minor course adjustment.
What happens next will determine whether the strategy remains a paper tiger or actually permeates the entire organization, becoming the starting point for a journey of change.
Whether OKRs are already implemented or being implemented specifically for this challenge, this is an area where the framework truly shines.
By aligning goals and focus in each team with the strategic goals of the leadership, significant changes in direction can be quickly implemented throughout the organization. Through workshops and presentations, the leadership can communicate their goals, how they are measured, and how they are tracked. In an organization familiar with OKR, there is no clearer signal than a goal disappearing (or being added) to the overall strategic goals. Those who continue to focus on goals that the organization has left behind will soon be questioned by colleagues and other teams in need of support to deliver on the new goals.
With a tailored rhythm for setting and tracking OKRs in the organization, a set level of agility is created. At regular intervals, adjustments can be made, or goals can be redefined in the middle of a time period. This represents a significant change compared to the current standard of annual budgets and associated strategies. The ongoing course correction also enables quick responses to market changes, shifts in focus due to new competitors, or the pursuit of new business opportunities.
Like any system, OKRs have a certain (often healthy) inertia. When the leadership’s goals change, it is expected that many teams will continue to pursue previously set objectives at varying paces. It should also be noted that OKRs capture the initiatives that drive change and make a difference, while many processes in an organization continue in parallel if they are not directly affected by the organization’s goals (invoices are sent, support answers calls, projects are executed and so on).
Overall, OKRs becomes a tool for driving rapid changes in direction and focus throughout the organization, enabling separate teams to tackle new challenges together. With measurability and a focus on results, the evaluation of the outcomes of the new strategy will be swift as well.
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