OKR 101: What Is It and How Does It Work?

Consider using the OKR (objectives and key results) method when your organisation is exploring a way to define goals. It is a straightforward management structure that makes it easier for everyone to track the progress of shared objectives.

The Objectives and Key Results (OKR) model is a viable solution utilised in practice by Google, Netflix, Uber, Linkedin, Airbnb, and others.

What does OKR mean?

OKR is a goal-setting framework that encourages collaboration among organisations, teams, and people. It ensures that everyone in the organisation works toward the same vital issues or company goals.

Knowing the organisation's goals for the upcoming quarter, six months, or year gives every employee a sense of purpose and responsibility to be engaged and strive towards the goal.

What are Objectives?

Objectives are descriptions of what you aim to achieve with your products in the future based on the duration of the OKRs, but they essentially set the path.

For instance, improve customer happiness with the product and lower Product X's carbon footprint.

What are the Key Results?

Key results are known as the measurable results or outcomes required to accomplish the set goal. Key results make it crystal clear whether or not the goal has been achieved. Similar to how a signpost indicates how far away the destination is from the current position, key results show progress toward the goal.

For instance, boost company website traffic by 150%.

Combining objectives and key results moves away from an output-based strategy and closer to an outcome-based one, bridging the gap between strategy and execution.

Why should your organisation utilise the OKR framework?

Any business that uses this goal-management framework will gain several advantages, including:

More clarity and transparency: A framework like OKR increases the clarity and transparency of the goals that have been set. According to research from Bersin by Deloitte, organisations with high levels of goal clarity are four times more likely to rank in the top 25% of their industry.
High business impact: The OKR framework takes a more bottom-up approach and allows each employee more flexibility and accountability to be highly focused, coordinated, and efficient, which has a positive influence on the company. OKRs contributed to Google's ten-fold growth.
Focused implementation: How frequently do people in organisations need help understanding prioritisation, or when it changes quite often that it is difficult to have focused implementation? OKR improves this situation by allowing you to focus solely on what is most critical by prioritising only the activity with the greatest business impact.
Cultural benefit: In most companies with no goal management currently in place, employing OKR has a substantial cultural change from output to outcomes. When employees consider how their work affects their customers' lives or the business's growth, there is a significant shift in perspective.
Improves employee engagement: As employees are given more freedom to experiment, create, and take on more responsibility as a result of having more transparent and clear goals, the workplace becomes a more enjoyable place to work.

The set OKRs must also be high-quality because they will outline your organisation or product's direction.

Key Principles of OKRs

The OKR goal-management framework is based on several core principles, which include:

Provides alignment and clarity: OKRs are public. Since they are open and transparent, it is easier to achieve alignment across all departments and levels and ensure everyone is focused on the same goal.
Flexible and straightforward: OKRs are defined monthly or quarterly to make an organisation flexible enough to react to changing situations. Due to the framework's simplicity and ease of use, organisations invest time and resources in attaining their goals rather than defining and explaining them to everyone in the organisation.
Facilitates teamwork: OKRs aid in understanding how every individual in the company has a vital role in accomplishing the strategic OKRs. Everyone is heading in the same direction, demonstrating that no person can achieve the ultimate goals alone.
Bidirectional: OKRs don't flow down from top to bottom. The strategic OKRs are established, and each group and person subsequently develops tactical OKRs that match the strategic OKRs. Compared to cascade goal-setting models, it results in a process that is far more efficient and effective.

OKR's best practices

The OKR approach will become a robust goal management framework when combined with the key principles and several best practices, which include:

It's OK to meet 60–70% of your OKRs. If your organisation achieves all of its OKRs, they are probably too simple, and you should set more challenging objectives.
The procedure must be simple. Avoid adding too many meetings or documents to the process. Companies that successfully use OKRs maintain the level of simplicity that was intended.
OKRs are not a means of evaluating employees. The management must assure employees that not achieving every OKR won't harm them for them to feel secure setting ambitious OKRs.
Everyone must participate. The company as a whole needs to be committed to OKRs. Only a small percentage of management and staff must be dedicated for the process to succeed.
Be patient with your company while you become used to the process. As with any management tool, it might be executed differently than the first time you try. Allow yourself and your company enough time to master the OKR process.

Examples of OKR

HR Department

O: Hire ten new employees by the end of April.

KR1: Develop an annual hiring plan by the end of March.

KR2: Onboard a recruiting agency for Sales hiring by March 15th.

KR3: Launch a new careers page with employee content to improve the hiring brand.

Sales Department

O: Increase sales by 50% over the last quarter.

KR1: Generate RM5 million in sales.

KR2: At least 10% of sales must come from returning clients.

KR3: Reach 95% customer satisfaction.

KR4: Provide monthly training for the sales team.

Since some of the most successful companies of our time rely on the OKR process, it could also drive your organisation's success.

Sources: LinkedIn, What Matters

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