The history of the goal setting framework called OKRs – which stands for Objectives and Key Results has become the stuff of legend as it’s how Google decided to set goals when they were a few people, not the 130,000 plus employees they are today.
In case you are wondering, Google still uses OKRs to set goals. Now if you are a start-up, scale-up, or a more traditional sector like a retailer or bank, the chances are you are using OKR or will consider using the framework to set goals soon.
Why is the framework so popular? The first reason is simple. There are only two things you need to know how to create. An Objective and a Key Result. When creating these there are also some guiding principles that should be followed, and it is in these guidance notes that the secret sauce can be found.
Let us first start with Objectives and Key Results though. To write an Objective all you need to do is describe what you want to achieve and why in a positive way. For example, a Company OKR might look like this:
Predictable and sustainable revenue growth
You then propose how you would like to measure success, ideally using metrics not tasks. This OKR could then look like this:
Predictable and sustainable revenue growth
- Grow Revenue by 100% Y-on-Y
- Customer Satisfaction Levels are 90% or above
Other teams can then discuss this and other Company OKRs and propose how they might support this goals achievement with their own OKRs. For example, Marketing might propose to:
Grow repeat customer base so revenue is predictable
- Increase % of customers purchasing weekly from 35% to 50%
- Average Order Values increase from $35 to $45
How these targets will be achieved is what Initiatives are designed to do. Imagine that Marketing has got together and gone through their backlog of things they want to do in addition to brainstorming things they could do. The Initiatives they agree on are:
- Test predictive analytics to sent email with products customers might buy
- Test basket building suggestions
- Test voucher thresholds build basket sizes
- Test free P & P for orders of X
When each of these is done the team will know what the impact of their hard work was.
The OKR Secret Sauce
Having goals that have measurements that matter is obviously a clever idea. What was not clear from the examples above is that each of the targets used was deliberately set as ‘Hard’ and a stretch. Hard goals create focus, prolong effort, and stimulate ideas and collaboration.
Easy to achieve targets do not. But do not worry, 100% achievement is also not expected. Depending on how hard the target was it might be that 70% is a considerable success and 100% would be amazing.
The next thing to note is OKRs when done well do not include business-as-usual goals. Marketing is tracking a lot of metrics and working on lots of activities that include social media posting, updating the website.
These are not OKRs are they are not priorities and targets for significant improvement in the next quarter. OKRs provide clarity on the few things that are going to have the greatest impact and get commitment to achieving them.
How was clarity achieved? Through conversations in teams and with other teams in cross-functional planning sessions. During these conversations, debates, and if necessary, arguments teams get to share, explain, and agree on what matters most, where resources can come from, and who should be working on what. Goal, role, and plan clarity is achieved via conversations.
Are OKRs set and forgotten like most other goals? No, they are checked in and discussed weekly. Progress is shared along with plans for the week ahead and any problems. Teams are agile and empowered enough to adapt to change and opportunities. When management wants to know how OKRs are progressing and what is being done to achieve them it is clear for all to see. In fact, transparency is another pillar of OKRs that employees tend to love.
Bringing it all together
When you then bring the obvious and the secret sauce together you find yourself with a way of:
- Expressing your priorities and measuring whether you have achieved them
- Encouraging ambition and making it safe to fail
- Empowering teams to discuss priorities, share an idea and work together
- Processes for keep teams focused on goal outcomes and Initiative execution
- A way that allows the whole company to see what other teams are working towards, how their work helps, and how they might be of help