OKRs: Strategizing for Growth
There are about a hundred different ways to go about goal setting in a company. In fact, this is probably one of the most important things that managers do. Key Performance Indicators,…
There are about a hundred different ways to go about goal setting in a company. In fact, this is probably one of the most important things that managers do. Key Performance Indicators, daily stand-ups, other forms of goal setting are all used in a variety of ways to accomplish different goals. But setting a long-term vision for a company can be very difficult. That’s where an OKR comes in. Objectives and Key Results (OKRs) help an organization focus on the few pivotal and absolutely necessary parts of organizational success. An Objectives and Key Results framework bridges the gap between “macro strategies” and the minute details of the day to day which creates value for organizations and helps them grow.
So what is an OKR? Kenneth Lewis defines them as follows: “OKRs are used to propel an organization’s growth while focusing on the critical few priorities. They are used as a medium to communicate what’s wildly important. Employees have a clear line of sight between their work and the organization’s success.”
At the end of the day, this is what all managers want for their teams. Establishing a connection between their team’s day-to-day work and the long-term vision means that employees can better understand where the company is heading long term and make daily steps to get there. Engaged employees lead to engaging customers and ultimately, successful business outcomes. (For more on this topic, check out our post here).
An OKR can be simple. Here’s a framework teams can use to implement Objectives and Key Results strategies. Just as the name suggests, an OKR has two parts.
Objectives: This describes a clear and simple purpose.
Key Results: The Key Results portion of the OKR explains how the objective will be accomplished. It’s important to get the metrics right so that they can be properly measured.
Pros of OKRs:
- A top-down strategy helps align stakeholders
- Managers avoid micromanaging
- Creates regular cadences for accountability and goal measurement
So what are the key factors to making and implementing a successful OKR Strategy?
1. Leadership Buy-In
Getting an organization moving can require a lot of behind-the-scenes work. The most important step to the get ball rolling is to begin by aligning the leadership. For an OKR strategy to work, top leaders must be aligned in conveying the vision across the company.
However, transparency is crucial to the success of OKRs. When the leadership team creates the strategy, it’s important to ensure there’s clarity with the team. When the agenda is set by leaders, they must then take that agenda to the employees. Forbes recommends that “it’s time to be transparent by communicating less over email and through third-party communication – and become more personally engaged with their employees via face-to-face and/or video interaction and with greater frequency.”
2. Measure and Account
Now that you’ve created a vision around OKRs, it’s time to measure and account for the different goals. “You grade OKRs on a scale, usually from 0.0 to 1.0, where 1.0 means complete. Increments along the scale indicate levels of completion. Usually, you grade each key result individually, then average the scores to grade the OKR.”
- 0.7 to 1.0 = green. (We delivered.)
- 0.4 to 0.6 = yellow. (We made progress, but fell short of completion.)
- 0.0 to 0.3 = red. (We failed to make real progress.)
These scores are then used to be measured. Above 70% is good (on the path to completion).
3. Unify the Team
Jeff Gothlef of Harvard Business Review describes how OKRs can be used by managers to unify their teams. “OKRs are a team-based goal-setting methodology. A shared objective and quantifiable metrics can help a team to coordinate their activities, align with stakeholders, and act with more than just their own immediate goals in mind. Within this framework, success is measured not by what anyone individual does, but rather, by the impact of the team as a whole on the users of the products and services they’re building.” As managers build and use OKRs in teams, it’s important to focus on the ways the team will be unified in working together towards the key results.
Now that we’ve discussed OKRs and their potential impact on an organization, managers can go out and apply these principles. OKRs can unify teams and provide an opportunity for accountability and success for individuals. Using these frameworks can help spur business growth.