OKR – Objectives & Key Results
What is OKR, how is it defined and which ceremonies are most important?
OKR – A framework for strategy implementation
Objectives & Key Results (OKR) is a framework for strategy implementation and modern employee management. It is based on qualitative objectives and measurable key results. 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 it supports the expansion of agile principles throughout the entire organisation, although OKR itself is not an agile target system.
Where did the idea for OKR come from?
The idea for Objectives & Key Results was developed by Andy Groove,¹ the co-founder of Intel, in the early 70s. OKR became really well known through Google, which has been using the framework consistently since its foundation.² In recent years it has become increasingly popular in Germany. Well-known companies like Telekom, Bayer and Zalando are working with it.
How are Objectives & Key Results defined?
Objectives & 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 & 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.”
Without target image no OKR
OCR are a framework for implementing a strategy. For the effective use of Objectives & Key Results, the existence of a clear picture of objectives, 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 cadence of the organisation
A great achievement in thinking, which originally comes from lean management, is the pulse or heartbeat of a company. In this idea, a steady flow of values is created through a rhythm of decisions and work.
A nice term that fits this idea is the cadence from music theory, which describes a harmonic chord sequence and can be interestingly translated to organisational development.
From agile work, we know the cadence in the form of a Scrum cycle, with its markup in Planning, the daily Daily Standup and the final chord through Review and Retrospective.
This rhythm can be transferred to the whole company, because planning and strategy implementation can also follow a cadence. The Objectives & Key Results framework supports this heartbeat in the company with its regular OKR cycle.
The OKR cycle
The diagram shows the complete OKR cycle. Objectives & Key Results distinguishes between strategy development (left) and the actual OKR cycle (right), which usually runs at a frequency of 3-4 months.
The most important ceremonies in the OKR cycle are:
- OKR 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.
- OKR Alignment – The alignment of all the objectives of the organisation.
- OKR Check-Ins – Regular assessment of progress at the company and team level, usually once a week.
- OKR Review – Evaluation of the achievement of objectives in the completed cycle.
- OKR Retrospective – Reflection of the working methods in the completed cycle.
The OKR coach promotes and accompanies the process at the company level. The OKR formulated in the company are summarised in a common OKR backlog visible to all employees.
What are the benefits of OKR?
The benefits of using OKR can be derived from the 6 principles for Objectives & 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 & Key Results:
- Make sure that you have a clear picture of your objectives and a strategy before introducing OKR.
- Start small before rolling out OKR across the organisation. A good starting point is the management team.
- Start at the corporate level with an OKR.
- Invite your employees and experts to develop goals.
- Think about the game and not about winning! Every day counts in achieving your goals.
- Celebrate success right from the start!
- Ideally, let an experienced OKR coach accompany you during the introduction.
What are the risks with OKR?
The use of Objectives & Key Results is associated with great opportunities but also with risks. Without serious support from the management level, the introduction of OKR will not succeed. Uninspired or even wrong objectives are dangerous. An introduction without change management dramatically increases the risk of failure. Since the framework affects the entire organisation, the support of an experienced OKR coach during the introduction process is recommended.
Why do OKR work?
OKR work. They work because they …
- allow focusing and bundling their organisational energy.
- promote self-organisation and agile working methods.
- promote a culture of leadership: Through framework and direction!
And a final quote from André Claaßen: “Be courageous, embark on a journey towards a more agile and adaptable organisation. You are in for an instructive, interesting and successful time.”
Impuls zum Diskutieren:
OKR only work if management is committed to it, but doesn’t dictate them top-down.
Are you interested in a German language OKR Podcast? Then please listen in here.
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