What is OKR (Objectives and Key Results)?

OKR – A framework for strategy work and people management

In the causal world, setting and working through plans and achieving goals was relatively easy for many companies. Today, however, many companies operate in a complex world, so that many classic instruments of planning and control no longer work.

Objectives and Key Results (OKR) is a framework for holistic strategy work and people management. Based on a company’s vision, qualitative goals (Objectives) and measurable key results (Key Results) are defined in the course of strategy development and strategy implementation to validate the strategy.

Objectives and Key Results are characterised by

• a space for action to be actively shaped,
• an iterative, incremental and focused approach,
• a supportive and networked cooperation,
• short-term planning cycles,
• the limitation of goals and
• independent goal setting at team level with orientation towards corporate goals.

With these characteristics, organisations ensure focus and clear target agreements, while increasing transparency for all stakeholders. Furthermore, the expansion of agile principles throughout the organisation is supported without itself 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 OKR 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.”

OKR cycle – a continuous process

The OKR cycle is a continuous process and distinguishes between strategy development (left) and the actual cycle (right), which usually runs with a frequency of three to four months.

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 ceremonies in the OKR cycle are:

• MOAL Planning – The Mid-Term Goal (MOAL) is the link between the long-term vision and the short-term, operational OKR (usually 3-4 months). Here, the period of 1 year is considered. MOAL planning is usually planned with a timebox of 8 hours.
• OKR Planning – The joint elaboration of the goals for the next cycle. Planning is done first at the company level and then at the team level. Planning at team level is self-organised. Usually a timebox of 4 hours is used.
• OKR Alignment – Alignment of all the objectives of the organisation. This can take one to two days.
• OKR Check-ins – Regular assessment of progress at the organisational and team level, usually once a week. Some publications also refer to a Weekly OKR. The usual duration is 15 minutes.
• OKR Review – The joint discussion of all goals and goal achievements, as well as all impediments to ensure transparency and as a basis for validated learning. Usually a timebox of 2 hours is set.
• OKR Retrospective – Reflection on how the team worked in the completed cycle. Again, usually 2 hours are used.

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 OKR Backlog – sometimes also called OKR List – visible to all employees. It is the only prescribed artefact in the framework.

Benefits of Objectives and Key Results

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:

1. Make sure you have a clear vision and strategy before rolling out.
2. Start small before rolling out the framework across the organisation. A good starting point is the leadership team.
3. Start at the corporate level with an OKR.
4. Invite their staff and experts to the goal development.
5. Think about the game and not about winning! Every day counts in goal achievement.
6. Celebrate successes right from the start!
7. Ideally, have an experienced coach accompany you during the introduction.

In addition to these tips, there are a few other points that are essential for success:

• It is not an employee evaluation method, but a framework for strategy work.
• 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.
• Speaking is silver, action is gold. It makes sense, for example, to set concrete steps after defining the key results in order to move directly into action. Validating these actions can become part of the weekly check-ins.
• And last but not least: the use of software for implementation does not have to be advantageous.

Similarities and differences between OKR and MBO

Management by Objectives (MBO) is a transactional leadership technique developed by Peter Ferdinand Drucker in 1954, which postulates the setting of clear goals and the regular review of progress towards these goals. It is generally assumed that Objectives and Key Results was influenced and developed further by the principles of Management by Objectives.

In detail, both approaches differ from each other⁴:

• MBO objectives are often formulated quantitatively by Key Performance Indicators (KPI), whereas OKR is about qualitative objectives, which are broken down into quantitative key results by Key Results. Thus, Management by Objectives focuses on results, whereas Objectives and Key Results also give central importance to the process of goal achievement.
• MBO follows a top-down approach⁵, according to which the company’s goals are set by the management level and subsequently broken down to the divisions, departments, teams and, if applicable, employees. Even though the implementation of Objectives and Key Results is similar in many companies, the approach itself addresses a holistic strategy work that starts with the vision and purpose of the company and extends through strategy development and strategy implementation to strategy validation. In a sense, it is both a top-down and a bottom-up approach.
• Objectives are often formulated once a year in Management by Objectives. This is roughly equivalent to the Mid-Term Goals (MOAL) in Objectives and Key Results. Such a period allows for constant work towards the defined goals. An OKR cycle usually lasts only 3-4 months, so that staff and organisations can react quickly to events or new findings. Check-ins, reviews and retrospectives are appropriate formats for exchange.

In summary, MBO is a more traditional and structured approach and OKR is a more agile and flexible approach.

Tools for Objectives and Key Results

There are many tools that support the work with OKR. Here you will find a small list without any claim to completeness or evaluation:

• Ahundred
• Alignment
• ConectoHub
• Corvisio
• culture.easy
• Datalligence AI
• Fitbots
• GroSum
• huminos
• intry
• JOP
• mesh
• Microsoft Viva
• Mooncamp
• okrs.app
• OKRstudio
• perdoo
• Peoplebox
• Profit.co
• Quantive
• Steer
• SugarORK
• tability
• Talbit
• Unlock:OKR
• Weekdone
• WorkBoard
• Workpath
• Workteam
• xto10x

Certainly, the list can easily be extended, especially since there are numerous products that are used in organisations for working with goals, but originally have a different marketing focus.

Objectives and Key Results in practice

Here you will find some contributions that deal with the application in practice:

• 5 myths about the agile target system OKR – article by André Claassen
• My OKR is broken! – article by Cansel Soergens
• Our experiences with Objectives and Key Results – article by Bernhard Freiter
• Strategic alignment with OKR – article by Cansel Soergens
• The Importance of OKR Definition Inputs for Product Teams – article by Tim Herbig
• KPIs and OKRs: What’s the difference? – article by Ryan Panchadsaram at What Matters
• Stop Letting OKRs Masquerade as Strategy – article by Roger Martin
• The OKR madness: 16 mistakes to avoid – article by Afonso Franco

We would be happy to add more exciting contributions to the list.

Impulse to discuss:

How does management get behind the approach without setting the Objectives and Key Results top-down? And what do you think of the statement “We don’t rise to the level of our goals, we fall to the level of our systems!” by James Clear⁶?

Notes:

[1] Andy Grove explains Objectives and Key Results in a video (2:26 min)
[2] Google explains how to work with the framework (1:22 Std.)
[3] Mission Statement from Nike
[4] Some publications describe further differences such as intrinsic or extrinsic motivation, silo thinking or a willingness to take risks. The extent to which such attributions are scientifically valid or to a certain extent correspond to wishful thinking is presumably decided in actual corporate practice.
[5] It is also often pointed out that MBO could also take place bottom-up. This may be the case in individual cases, but then the name of the approach – Management by Objectives – is probably not quite right. In the 1950s, leadership came from executives who, in the vast majority of companies, were located higher up in an organisation. This is probably similar today, even if MBO is probably less popular as an approach.
[6] James Clear: Atomic Habits.

Are you interested in a German language OKR Podcast?

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 and successful times ahead.”

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