OKR – A framework for strategy implementation
Involving employees in defining goals and developing strategies is very important for many organisations. Objectives and Key Results (OKR) are a framework for strategy implementation and modern people management. It is based on qualitative Objectives and measurable Key Results, which is why some publications refer to it as a goal-setting method or model.
OKR is characterised by
- short-term planning cycles,
- limitation of objectives and
- independent goal formation at team level with alignment to corporate goals.
With these characteristics, they ensure clear target agreements, focus and at the same time increase transparency in an organisation. Furthermore, they support the expansion of agile principles throughout the organisation without themselves constituting an agile target system.
The idea for the framework was developed in the early 1970s by Andy Grove¹, the co-founder of Intel. Objectives and Key Results became really well known through Google, which has been using the framework since its foundation.² In recent years it has also become increasingly popular in Germany, so that companies such as Telekom, Bayer and Zalando now also work with it.
How are Objectives and Key Results defined?
Objectives and Key Results consist of two components:
- Objectives are short and precise inspirational descriptions of a desired target state.
- Key Results are metrics that make both progress and achievement of objectives measurable. For each objective you usually express between 2 and 5 key results.
When phrasing OCR, there is a crucial approach: Each OCR is a description of a solution, an effective improvement or an impressive result. In other words: Objectives and Key Results are measurable impact targets that are thought up by the customer or the market.
The following OKR was developed by YouTube in 2016 and combines all the characteristics of a good formulation. It is precise, motivating and truly ambitious!
- Objective: “We will become the market leader in the segment of free streaming videos.”
- Key Result: “We achieve 1 billion hours of video viewing time per day.”
Mission and vision as a prerequisite for Objectives and Key Results
For the effective use of Objectives and Key Results, the existence of a clear goal, i.e. a mission and/or vision for the organisation or a product, is very important.
- A mission is the permanent and long-term task that justifies the existence of the organisation or a product.
- A vision is an ambitious and clear picture of the future, which describes where the organisation or a product wants to be in the coming years.
An important question in the phrasing is therefore:
“What is the problem we have to solve in order to come closer to our vision in a sustainable way?”
An example of a nice mission statement can be found on the Nike website:³
“Our Mission: Bring inspiration and innovation to every athlete* in the world. * If you have a body, you are an athlete”.
The OKR cycle
The diagram shows the complete OKR cycle. Objectives and Key Results distinguishes between strategy development (left) and the actual cycle (right), which usually runs at a frequency of 3-4 months.
The most important ceremonies in the OKR cycle are:
- Planning – The joint development of the goals for the next cycle. OKR planning is first carried out at company level and then at team level. OKR planning at team level is self-organised.
- Alignment – The alignment of all the objectives of the organisation.
- Check-Ins – Regular assessment of progress at the company and team level, usually once a week.
- Review – Evaluation of the achievement of objectives in the completed cycle.
- Retrospective – Reflection of the working methods in the completed cycle.
The OKR coach promotes and accompanies the process at company level. The Objectives and Key Results formulated in the company are summarised in a common backlog visible to all employees.
The benefits of OKR
The benefits of using OKR can be derived from the 6 principles for Objectives and Key Results:
- They focus an organisation on common impact objectives.
- They create transparency about all objectives of the organisation.
- They enable validatable experiments for change based on data.
- They promote individual responsibility in the teams through self-organised team goals.
- They enable moonshot goals and thinking “out of the box” for innovation and significant improvement in the organisation.
- They promote critical thinking throughout the organisation by consistently testing the effectiveness of decisions.
Tips for starting with OKR
With these 7 tips, you can get started with Objectives and Key Results:
- Make sure you have a clear vision and strategy before rolling out.
- Start small before rolling out the framework across the organisation. A good starting point is the leadership team.
- Start at the corporate level with an OKR.
- Invite their staff and experts to the goal development.
- Think about the game and not about winning! Every day counts in goal achievement.
- Celebrate successes right from the start!
- Ideally, have an experienced coach accompany you during the introduction.
In addition to these 7 tips, there are a few other points that are essential for success:
- It is not an employee evaluation method, but a framework for strategy implementation.
- Linking it to a bonus system is wrong.
- Missed objectives are not sanctioned, but used as input for future objectives.
- Lack of management support is the beginning of the end.
- Without a mission statement, the effort cannot succeed.
- Too many goals overwhelm any organisation.
- And: the use of software for implementation does not have to be advantageous.
OKR in practice
Here you will find some contributions that deal with the application in practice:
- The 5 myths about the agile target system Objectives and Key Results – arcticle by André Claaßen
- My OKR is broken! – arcticle by Cansel Sörgens
- Our experiences with Objectives and Key Results – article by Bernhard Freiter
- 22 experts explain the main benefits of OKRs for companies and employees – article by Kim Atherton at Just3Things
- The Importance of OKR Definition Inputs for Product Teams – article by Tim Herbig
- KPIs and OKRs: What’s the difference? – article by Ryan Panchadsaram atWhat Matters
- Stop Letting OKRs Masquerade as Strategy – article by Roger Martin
We would be happy to add more exciting contributions to the list.
Impuls zum Diskutieren:
How does management get behind the approach without setting the Objectives and Key Results top-down?
Are you interested in a German language OKR Podcast? Then please listen in here.
German service provider wanted? Our recommendation: André Claaßen.
“Be bold, embark on a journey to a more agile and adaptive organisation. You are in for instructive, interesting and successful times ahead.”
Here you will find additional information from our Smartpedia section: