Qualitative and quantitative assessment of results in business, management, and many other «intangible» spheres of activity, where it is difficult to measure and calculate something, is always a big problem. Let’s try to understand what OKR is and how to apply it.
How do you even realize that the planned result has been achieved? How do you put a point and know that the process you have been working on is completed? There are many methodologies to solve this problem. OKR is one of them.
OKR or OKRs (Objectives and Key Results) is a method of assessing complex and ambitious goals, often obviously unrealistic, with a timeframe, which involves breaking them down into smaller components and introducing several measurable parameters for each of the goals. The overall achievement result is usually measured in fractions or percentages.
It is important to note, that the presence of a hundred percent achievability is rather a negative indicator showing that goals chosen are not ambitious. According to this methodology, the best result would be in the range of 70-80%.
The employee should and obviously will feel not quite comfortable when receiving or setting such goals. It is a kind of stimulation and self-control system, since the employee is often responsible for evaluating their own performance.
OKR indicators do not affect the overall employee’s performance assessment, and they are not involved in the salary calculation.
A bit of history
The creation of this methodology is attributed to the American engineer and businessman Andrew Stephen Grove. He invented, implemented and tested all the principles of this management model during his time as a manager at Intel.
The theory was documented in 1983 in the book «High Output Management».
The first experience of adopting OKR principles is associated with John Doerr, who introduced this theory to Google’s top managers. In 2017, Doerr published his book about OKR named «Measure What Matters».
Later, OKR was adopted by other IT corporations, and then by many IT startups.
Larry Page stated that the OKR methodology allowed the corporation to achieve tenfold growth.
Among the main OKR competitors, the following strategic planning methodologies can be mentioned: OGSM (Objectives, Goals, Strategies, and Measures) and X-Matrix (Hoshin Kanri). Some principles overlap with KPIs and the Balanced Scorecard (BSC).
More about OKR principles
The methodology involves:
- common (main) goal. It sets the vector of aspiration for all employees and the company as a whole. The goal should be as specific and significant (read «ambitious») as possible.
- sub-goals. All of them are aimed at achieving the main one. Sub-goals can be for individual employees, teams, departments, services, and other structural units. OKR works most effectively with group goals.
- evaluation criteria. They are also key indicators or results. Indicators are tied to goals. Each goal can have up to 4-6 evaluation criteria that can be expressed in numbers, amounts, percentages, and other ways to understand whether the goal is achieved or not. Key indicators are usually set quarterly.
OKR for the marketing department: example of goals and key indicators
Goal: to increase the number of customer transactions.
Key indicators in this case will be:
- revenue growth by 40%
- number of completed transactions – more than 10,000 contracts (compared to 5,000 for a similar period)
- more than 15,000 new user registrations
- 2 new advertising campaigns
How to increase efficiency using OKR
It is clear that any company can adopt this methodology, since it has proven its effectiveness in the largest IT corporations. There is nothing difficult here: you just need to set a goal, evaluate the metrics correctly, and go ahead! If you don’t achieve results, it is not a problem, OKR allows it.
But it is worth understanding that effective implementation of OKR methodology requires adhering to some principles. We will talk about them below.
- Training. The methodology should be adopted at least by all managers. And it is even better when the whole team is moving towards the same goal. If individual employees do not understand what they are doing and why, for what goals and results, they will pull everyone in the opposite direction. Everyone needs to be taught how to work with OKR methodology, from directors to ordinary specialists.
- Planning. Plans should not be ephemeral. Yes, they may be unattainable, but this is more about general aspirations. Plans in OKR should be potentially achievable and coincide with investors’ goals. If you choose inappropriate goals, everyone will go the wrong way.
- Implementation. The methodology is actually very flexible and can adapt to any size business. But you need to carefully prepare yourself and your employees for the new approach. Without full acceptance of the principles, a successful implementation is not worth waiting for.
- Management. The process of achieving goals can and should be managed. In fact, it is the driving force that allows you to fulfill and exceed plans. But this does not mean that the goals should be followed blindly. You can adjust the course as you go along.
- Improvement. Keep pushing forward. Evaluate your results regularly and set more ambitious goals.
And most importantly, to successfully integrate OKR into your project, you will need specialized software: to coordinate all details, to set and control goals, tasks, plans, and so on.
The best solution for a quick and hassle-free start is Projecto. Here are some advantages of this system:
- it operates in the cloud 24/7, and if desired, the product can be deployed on a corporate server
- ready-to-use mobile apps that provide immediate notifications and full control at any time of the day or night
- flexible planning system, compatible with OKR principles as well
- everything related to the work process will be in one place: contacts, documents, employee data, calendars, etc.
- it is easy to reassign the employee’s remaining uncompleted tasks when he or she leaves the company
- internal reporting system
- tracking of overall company progress
- full compliance with confidentiality requirements.
You can try Projecto and give us your feedback.
