What are OKRs and why the hype?

How can I make sure this is valuable? How can I avoid doing something that no one cares about? What if what I am doing does not bring us closer to our goals?

These are frequent questions I ask myself and to the teams I coach.

I have found out that using OKRs ensures your work has a measurable and valuable impact. And I want to share this collaborative goal setting protocol with you today.

This series will cover three topics: 

• What are OKRs and why the hype? 
• How to implement them
• Common challenges faced during implementation

Let's get us started! 

IOKRs, which stands for Objectives and Key Results, is a goal-setting protocol introduced to Google when it had 30 employees. (Curious tidbit: The consultant, who also invested in Google, is now the 140th richest person in the world). Larry Page and Sergey Brin fully committed to OKRs. The consultant that introduced it to them, John Doerr, had learned about OKRs from the creator himself: Andy Grove the CEO of Intel in the 80s. 

This protocol has a solid background and has been successfully battle-tested over time. It has played a key role in generating a lot of value.

OKRs are a collaborative goal setting protocol. Your company, departments, and teams each have objectives. Each objective is linked to key results; achieving these key results means the objective has been met. When the key results are accomplished, the objective must be attained.

• You write objectives as bold statements.
• You write key results as specific statements that can be measured and are time bound.

Example I
Objective: Be the number one payment provider in Latin America

Key result: Increase market share from 30% to 51% in 2025

Objectives provide direction, clarifying what we need to achieve. They should be concrete, ambitious, and ideally inspirational. If you turn up the ambition knob very high, you can also mark it as an aspirational OKR accepting that full completion is unlikely. This gives the team more leeway to try things out and take riskier approaches. 

Key results indicate when we've reached our destination. Make sure you can actually measure them. Limit key results to fewer than five per objective. A tip: Balance out key results between quantity and quality. I will exemplify:

Example II
Objective: Be the number one payment provider in Latin America

Key result (quantity): Increase marketshare from 30% to 51% in 2025

Key result (quality): Maintain current customer satisfaction score at 87/100.

Transparency

OKRs need to be transparent, accessible by the whole company with just a few clicks. If you want this to drive collaboration and clarity on who does what, this is a must. Neglecting this, whether intentionally or not, means missing out on this important benefit. This can happen if you don’t invest in software to manage OKRs or, in smaller companies, if there are no clear templates and storage guidelines in place.

Aggressive 

“Hard goals are more motivating that easy goals” Read the science behind this statement here.

Not tied to pay

If you have a bonus driven culture, complying with this can get tricky. Let's weigh the advantages and disadvantages of tie OKRs with pay. 

• Advantages: Avoiding parallel goal systems, the OKRs one and the bonus related one; You don't need to check that all these goals are compatible or synergistic; You can have two kinds of OKRs for teams: ones that come with a bonus when achieved, and regular ones. The bonus paying OKRs will get extra attention from the teams, effectively influencing priorities. 
• Disadvantages: When rewards, such as bonuses, are tied to OKR achievement, the focus shifts from ambition and inspiration to simply getting the job done. People might play it safe and set easy OKRs so they don't risk losing their bonuses.

My personal take? Pay bonuses on individual and/or company performance. Leave OKRs out of it.

• Collaborative: To foster collaboration, we should move away from a top-down approach and find a middle ground. For example, a team receives two OKRs from their director, and they write one more for the quarter. Teams end up with a mix of self-written OKRs and top-down OKRs. Another approach is that the Objective is written by leadership and the key results are defined by the teams. 
• Hierarchical: The OKRs are nested into a company-wide hierarchy. First, OKRs are written at the company level. Second, departments develop their OKRs based on the company's OKRs. Third, team-level OKRs are derived from the department-level OKRs. At Google they extend this hierarchy to include individual OKRs. I have never seen this in practice, so I am undecided about recommending it.

Companies are struggling with the ever present list of problems: 

“We don't know what my teams are working on” 

“Priorities change every week”

“Team isn't engaged”

"Departments are not helping each other" 

“My pile of work suffers never ending growth”

A good implementation of OKRs will fix this. And it did fix it, or avoid it happening in the first place, for Google, Amazon, Spotify, and many other giants that rely on this protocol to consistently rock.

OKRs have also some great statistics that back it up: 

• 83% of companies would recommend the OKR framework to others as a valuable goal-setting approach for their company. 
• 78% of employees who use OKRs are satisfied with their jobs.
• Employees working with team OKRs tend to have a better understanding of the company's vision (~72% vs. ~50% without OKRs)
• The 3 most common motivations for implementing OKRs are transparency, better prioritization, and overall more effective strategy execution.

This stats and data is sourced from @mooncamp and @haufe_talent

That’s a wrap for this introduction to OKRs! The next article will focus on implementation ;)

Stay tuned!