Aligning Ambition: How OKRs Can Drive Synchronized Cooperation
More and more organizations not only businesses, but NGOs and government organizations adopt Objectives and key results (OKR, alternatively OKRs) approach which is a goal-setting framework to translate ambitious objectives into measurable key results. It was developed in the 1970s by Andy Grove as a result of improving ‘Management by Objectives’ method proposed by Peter Drucker. That time Andy Grove was CEO at Intel. In 1999 OKRs were introduced to Google. After a decade many companies started adopting OKRs inspired by Google’s example.
How does it work?
OKRs enable structuring of plans and their implementation results on a quarterly and annual basis, as well as synchronizing planning at all levels of the organization.
At the beginning, a goal (objective) is set and several, usually 4 or 5, key results that are easy to measure (i.e., you don’t need to spend a lot of time on the measurement process). Key results help determine how fully the goal has been achieved. The goal is initially set as ambitious and unattainable: you should feel a little uncomfortable when formulating it.
Each result is evaluated on a scale from 0 to 1. A good result is considered to be if you can reach the goal at a total level of 0.6 or 0.7. If you get 1, you probably played it safe. If less than 0.4, it’s a reason to think about what’s going wrong, or, on the contrary, how important and relevant this goal really is.
For the year and quarter, each employee sets four to five goals for themselves. In this case, the goals and results for the year can be periodically redefined — this allows the entire company to react faster to the situation, while the set of goals for the next quarter is no longer tried to be changed.
When an organization trusts all employees, then anyone can look in the common OKR system at any colleague’s plans, regardless of their management level. It’s also important to keep a history of OKRs from previous years, including assessments of achievements.
Another feature of OKRs is that the achievement of OKRs is evaluated by the employee themselves, and does not determine their professional qualities and performance (i.e., it is not related to salary, bonuses, and promotion to new positions). There are other tools for that, such as peer review – when employees are assessed by their colleagues. Nevertheless, the very process of keeping OKRs helps both the employee and their direct manager gather examples of professionalism and learn about the value that employees create for the organization, which in turn influences their promotion.
For teams and groups, OKRs are formed iteratively, with the necessary information and decisions communicated both top-down, at team meetings, and bottom-up, at individual meetings between managers and their employees. Over half of the group OKRs should be formed bottom-up.
To summarize, the benefits of the OKR system include:
discipline in setting priorities: truly important tasks always remain in focus;
clear communication between people: information about tasks and priorities is available anywhere in the organization;
transparent performance indicators: it’s always clear how far away you are from the planned result;
focus of the organization’s resources and efforts: the goals and interests of teams and individual employees are synchronized.
At Asgard Consulting we have expertise in agile transformation and organization design, where OKRs is an important framework, but it’s only a part of the wide range of modern approaches to equip teams for better performance and meaningful output and impact.
