Google, Amazon, Spotify and LinkedIn are some of the most recognizable brands in the market today. These companies all have something in common, and it’s not just that they’re leaders of the technology industry.
They all follow the same goal-setting system: OKR.
What is an OKR?
The acronym stands for “Objectives and Key Results.” OKRs are a highly flexible and effective way to organize company goals, inspire employees and stimulate guided growth. Companies in Silicon Valley have been using this method for decades and, recently, organizations in every country, industry and maturity level have begun following their lead.
Objectives are qualitative, inspirational and time-bound goals, usually within a business quarter, that are set to be executed by a specific group of people within a company. An example of an objective could be: Build a robust demo pipeline.
Meanwhile, key results answer the “how to” of the objective. They provide concrete, metric-based targets that measure the success of the objective in quantitative terms. For example, the key results used to measure the success of the objective from the above example could be:
- Increase outbound demos from 15 to 75.
- Qualify at least 60 leads from monthly webinars.
- Maintain at least 125 new outbound emails per week.
Five Key benefits of OKRs
This methodology uses a cyclical framework of weekly check-ins, continuous learning and quarterly re-evaluation to help companies turn their abstract goals into concrete realities. This is a simple and yet immensely powerful methodology that brings five major benefits to an organization when utilized correctly.
These are outlined by the famous venture capitalist John Doerr in his 2018 book Measure What Matters: How Google, Bono, and the Gates Foundation Rock the World with OKRs. An easy way to remember these benefits is by remembering the acronym FACTS, which we dissect into its components below.
Focus: First, OKRs help narrow focus. In order to put in the necessary effort to achieve idealistic goals, leaders need to prioritize between three to five written objectives. These objectives, alongside their corresponding key results, then become the top priorities for the quarter.
Alignment: OKRs can be set at different tiers of a company, which can include corporate, departmental, team or individual-level OKRs. To ensure that goals are compatible with one another, OKRs are aligned within a company. This can be accomplished through top-down alignment, in which a higher-tier key result informs a lower-tier objective or key result; or they can be aligned from the bottom-up, in which a lower-tier objective informs a higher-tier key result.
Commitment and Tracking: Next, OKRs encourage employee commitment and detailed tracking. These benefits improve the engagement level of employees within the company. Weekly or biweekly check-ins are vitally important for OKRs, both to track progress and to remind workers of their priorities. Rolling out this program at every level of an organization can be a big shift for some companies. However, when an organization decides to use this framework, employees are given the autonomy to fulfill their responsibilities, closely track their progress and contribute to larger company goals. This model fully engages employees and provides an easy way for leaders to track progress.
Stretch Goals: The fifth benefit of a successful OKR program is stretching. Setting stretch goals not only ensures that targets are ambitious, but also pushes employees out of their comfort zone, encouraging them to find ways to achieve more. This encouragement can have groundbreaking results.
When businesses take the time to formulate their OKRs properly and encourage employees to look toward their OKRs as a source of guidance and progress, this methodology can be truly transformational.
The OKR Culture
OKRs are more than just a goal-setting methodology. When utilized correctly, they become part of the culture within a company. Companies that repeatedly return to OKRs to determine their progress, guide their growth and learn from their past mistakes will find that this framework encourages employee engagement, accountability and productivity.
With OKRs, individuals are responsible for certain goals. Their day-to-day work becomes connected with quarterly corporate objectives, which instills not only a sense of ownership in employees but also a sense of purpose. Employees know their priorities for the quarter and can see their contributions drive progress.
In eliminating unnecessary confusion among employees about priorities and purpose, OKRs can help businesses maximize every working hour they have, driving productivity and profitability within their company.
Bastin Gerald is the founder and CEO of Profit.co, which provides an OKR management solution for a wide array of companies around the world. Its mission is to help businesses implement transformative and effective OKR programs that drive focus, alignment and growth. Profit.co provides OKR coaching, implementation training and OKR-centric software that helps companies manage their employee performance, engagement and tasks.