It is the goal of every workplace to be as productive and efficient as possible. Not only that, but to also be an organization that fosters creativity and orderliness. These terms are the new catchwords in today’s business environments, never mind that just a few years ago, these goals were much easier said than done. The norm were what we now call traditional management and organizational “leadership” methodologies, never mind the fact that these methodologies were not only outdated, but also potentially counterproductive and destructive.
These days, however, with the massive influence of mediums like social media — which businesses and organizations have utilized and adopted to meet their own needs and requirements — as well as other developments in the technology and digital space, these goals are much more attainable. It is no longer a dream to achieve the “ideal” organization.
Defining the future, and finding the means to do so
This is where goal setting comes in. With efficiency and productivity come the capacity for companies and organizations to better see not only where they are, but what they want to be in the next couple of months and years to come. This is part of why many smaller and startup companies have become performers in their industries at par with more established and larger peers and competitors. Whereas before, many organizations were content to just “wing it”, today companies know what they want and determine how to get it. This is one defining trait of many successful organizations today.
As a result, companies around the world have found themselves coming up with their own culture that puts a premium on things like productivity and efficiency. They have much clearer and realistic goals that have a bigger impact on the way the organization is run, and they and are more focused and equipped to achieve these goals. One of the many methods and techniques used to achieve this is OKR (Objective and Key Results).
The method has been met with much success that many prominent companies and organizations have adapted some form of OKR, which have in turn help these companies grow to the industry leaders they are today.
A quick history of OKR (and its success)
While the success of OKR has only seen the limelight in recent years, the concept itself has been around for a while now. It was developed in the 1970’s by Andy Grove, one of the founders and the former CEO of Intel. However, its greater business mainstream popularity is due to John Doerr.
Doerr was one of the earliest of the movers and shakers (and investors) in Google. Doerr was so sold on Grove’s idea of OKR that he actively campaigned for the OKR methodology to be a part of Google’s organizational operating process. He managed to convince his fellows in the c-suite, and as the saying goes, the rest is history.
Owing to the part OKR played in Google’s massive success, other companies and industry leaders have looked at the benefits of OKR, and have looked at ways OKR can be adapted and made a part of how organizations operate and do business, and achieve their business goals in the process.
One of Bill Gate’s recommended readings is Doerr’s book, “Measure What Matters”, which discuss OKR. Studies have shown that OKR does help improve the bottom line. “For the group who used OKRs we saw an increase in their average sales per hour from $14.44 per hour to $15.67, or an average increase of 8.5%. This increase is not only statistically significant, but practically significant,” according to an initiative conducted by Chris Mason, who serves as the Senior Director for Strategic Talent Solutions at Sears Holding Company. Sears also discovered that “even a minimal use of OKRs led to higher levels of performance, including an 8.5% lift in hourly sales.”
Okay, so what IS OKR?
The letters O-K-R stands for “objective and key results”. It may not sound much, but in truth, it hits on a profound truth, capturing the essence of organization and goal success in just three simple words.
Over recent years, many companies have seen the benefits of OKR methodology and have incorporated its principles into the way they run their respective organizations. Many have a highly affirmative view about how positively transformative the OKR process has been for them. Business and companies utilize the OKR method to embark on high-level initiatives and goals that are measurable and can be tracked regularly over a particular course of time. Another thing that sets OKR apart from traditional planning, management, and development methods is its capacity for tracking and re-evaluation, as well as the frequency of the assessment (usually quarterly).
Another major factor that defines the OKR methodology is efficiency and speed. In short, the faster things go, the more positive impact it will have. What makes this achievable is the way the method involves the close monitoring of milestones and smaller goals make up and lead to the achievement of the larger mission and objective.
As its name implies, the method is defined by two major things — objectives and key results (notice right away that the process puts a lot of focus on the way things start, and how things turn out). OKR objectives are meant to motivate and inspire the organization, and should be relatable, realistic and short. Everybody in the organization should be able to understand them. Key results, on the other hand, talk about what’s been done so far to meet those objectives, as well as what still needs to be done. Like the objectives, key results need to be short and sweet so that it’s easy to get everyone on board — a good benchmark to have is around 2 to 5 measurable and transparent key results for each objective.
OKR versus KPI
Now, let’s look at OKR versus KPI, or key performance indicators. For one, the KPI method can be significantly richer with data — often too rich in fact, that the organization runs the real risk of drowning in numbers and meeting too many metrics that it loses sight of the larger goals it needs to achieve. OKR, on the other hand, while it still deals with metrics, only limit them to a few very important ones, allowing everyone involved to see both the smaller AND the bigger picture at the same time.
OKR can also prove to be much more efficient; the very nature of OKR’ simple but profound process means that everyone can take a look at what they do and eliminate redundancies or cut out inefficient and unnecessary processes. It also helps members of the organization have a better grasp of what kind of tasks to prioritize. All in all, OKR can help an organization make significant steps to become much more efficient and even cost-effective.
OKRs also help create a culture where performance sees constant and regular improvement. The holistic nature of OKR encourages a closer look at the status quo to identify areas that can be improved while keeping the quality of other standards in other areas. Once one improvement is achieved, you move on to the next area of improvement, and so on and so forth.
Pointers in developing a solid OKR strategy
1. Delegate, divide and conquer.
Every person in the organization has his or her role to play in developing OKR objectives. Executives, for example, can set broader goals, while leaders and managers down the line can develop more specific goals and metrics. Every person in the organization should be encouraged and directed to focus on specific objectives instead of having them multitasking and being all over the place. This way, things not only are more efficient, but there’s less room for error because everyone is focused on something specific.
2. Engage from the bottom-up
Traditionally, goals come from the top going down. In OKR, a significant chunk of objectives should come from bottom-up. Part of getting everyone on board to work together to meet goals is to involve them in the goal-setting in the first place. Since everyone has a bigger investment in the larger plan, you can count on a stronger engagement and dedication to meet goals from everyone involved. In addition, this also rightly puts value on the skills and intelligence of employees (which also in turn leads to higher motivation and morale); executives and managers don’t have a monopoly on good ideas that can help the organization grow.
3. Have a measurable and transparent process.
Keep objectives clear and concise so that the progress can be more accurately measured as well. And don’t set easy goals — challenge everyone in the organization to strive for excellence. It’s also important to maintain a significant degree of transparency, so no one feels left out of the loop, and everyone knows how them and everyone else is contributing.
OKR is an effective tool — use it!
Industry leaders have spoken. You’ve seen and read for yourself how OKRs can make a significant and positive impact on a company’s growth and development. So why not see how your particular organization can benefit from such a method? Wouldn’t it be interesting to know how your business can become more efficient, cost-effective and productive? Let’s continue the conversation in the comment section below!