Comprehensive Guide on Objectives and Key Results (OKR) Framework

What is OKR Framework?  A magic bullet?  Let us look into something that has become the buzzword in Silicon Valley.

The problem with most companies is that the various levels of its leadership, management and workers go off into different directions.  They do not act as if they are one whole organism.  This is because they are not driven by the power of results and objectives.

A new technique of managing work based on Objectives and Key Results – popularly called OKRs was first developed by Andy Grove at Intel.  It was then made popular by John Doerr from Kleiner Perkins  It has since powered some amazing companies all over Silicon Valley to rise and do great work.

Andy Grove put forth two questions that were to propel teams to greater heights:

1. Where do I want to go?
2. How will I know I’m getting there?

First was a qualitative understanding of where one wanted to be at a certain point in time.  And second, a quantitative way to find out if one was there!

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How OKRs Helped Google and Linked-In

OKR is the approach which has been used by companies like Google, Linkedin, Zynga, and General Assembly to get to meteoric growth in the last few years.

Here is a story of how Linkedin became a $20 Billion company using the OKR framework.

OKR helps align company, team and personal objectives to measurable results.  This pushes everyone in the right direction.  It is the ability that it provides to individual performers to see how what they do directly impacts the company’s objectives.  It is the cascading of the OKRs that is critical to the success of the whole framework.  When John Doerr, the man who gave OKRs their popularity was asked about his love for OKRs he said:

 It was also incredibly powerful for me to see Andy’s OKRs, my manager’s OKRs, and the OKRs for my peers. I was quickly able to tie my work directly to the company’s goals. I kept my OKRs pinned up in my office and I wrote new OKRs every quarter, and the system has stayed with me ever since.

Doerr was able to plant OKRs in Google as an investor in that company via Kleiner Perkins.

Duggan: Tell us about your first OKR meeting at Google.

Doerr:  Kleiner Perkins had just invested in Google, and as a strong advocate of OKRs, I offered to introduce the OKR system to Larry, Sergey, and the leadership team. The entire company was standing around a Ping-Pong table and I stepped through the goals, benefits, and implementation details of OKRs. Larry and Sergey saw the value immediately. They liked the idea of having a quarterly set of priorities for the company. It took a couple of iterations, but we figured out the right cadence and model and to this day, Larry writes his own personal OKRs and Google’s corporate OKRs every quarter. In my experience, this is a trial-and-error process and it usually takes a company 1-2 quarters to figure out.

Here are some slides and screenshots from Google.  These include slides from the original presentation that Doerr gave at Google which started the company’s adoption of OKR process to propel it to such great heights.

Elements of OKR

6 Steps to Implement OKR Framework

OKR process is a participatory endeavor where the actions from the top of the organization down to the last employee are dovetailed.  It is important to follow the Top-Down process which manifests from the Vision & Mission of an organization.  Here are the 6 important steps to implementing the OKR process

1. Organization’s executives, managers, and each employee make a list of 3 objectives they will aim for
2. Create a list of 3-4 key results to be achieved for each objective
3. Communicate the cascading objectives and key results to everyone
4. Employees should regularly update their results on a 0-100% scale
5. When objective’s results reach 70-80% the objectives are consider done
6. Review OKRs at every level regularly and set new ones

Here is an excellent video from Google’s Ventures on how Google uses OKR Process to achieve its goals.

Best Practices for OKR Framework

OKR framework is very powerful and has helped numerous companies to grow exponentially.  The lessons learned from these companies can be listed as best practices.  They are:

1. OKRs need to set annually and quarterly: Stock market evaluates every company on a quarterly basis and on an overall annual performance.  We need to align to how the overall evaluation is done.  So a quarter and a year are the timeframes that work best.
2. Right Number of OKRs: Best practice is to have 3 Objectives and 3-4 Key results for each of those objectives.  The maximum one should go for – if needed – is 5 objectives and 4 Key results.  Beyond that, the whole process and exercise stop being serious and achievable.  It is best to have the small set of areas to make the maximum impact in as opposed to spreading one’s wings wide.
3. Ambitious and Challenging: Objectives and KRs should be challenging both for the organization and individuals.  It is important that the targets stretch everyone’s ability and skills.  The more we push each other and ourselves to achieve more for ourselves and our group, the more the organization will grow.
4. Measurable: Key Results have to be measurable.  While Objectives are qualitative in nature, key results are quantitative.  They need to be measurable.
5. Public and Visible: The OKRs of everyone should be visible to everyone.  There is no secret in the work that one is doing and how everyone’s work dovetails into the overall organizational mission.  So why not make it public and visible at all times.

What are the benefits of OKR Process?

Well, for one OKR process sets start-ups for amazing success.  The success that has been spectacular at that for these companies.  However, the best way to understand how its components impact people who work hard in a real way one should read the experience of this employee at Bluenose in an article in New York Times.

Bluenose, a software start-up in San Francisco, uses the BetterWorks software to track employee goals on a digital dashboard that everyone at the company can see. One employee, Marin Perez, said he did not have an issue with that public scrutiny. He tends to be reserved, he said, so he likes that his accomplishments are made public without him having to do things like send self-congratulatory emails.

“Like it’s rock-solid in the numbers,” he said of his completed goals.

1 Aligns Organizational and Individual Direction:  OKRs are the best way to achieve alignment.  With the cascading of the objectives and key results and regular monitoring it becomes much simpler to align them.  When Dick Costolo, former CEO of Twitter who had also worked at Google was asked to share what was the greatest learnings from Google that helped him at Twitter the most, he replied:

“The thing that I saw at Google that I definitely have applied at Twitter are OKRs – Objectives and Key Results. Those are a great way to help everyone in the company understand what’s important and how you’re going to measure what’s important. It’s essentially a great way to communicate strategy and how you’re going to measure strategy. And that’s how we try to use them. As you grow a company, the single hardest thing to scale is communication. It’s remarkably difficult. OKRs are a great way to make sure everyone understands how you’re going to measure success and strategy.”

2 Improves Focus for the Whole Organization: Have you been in a situation where organization announces that it has a certain focus in the future, but when you look at actions and discussions of the different executives, you find they have to compete and even conflicting priorities.  Priorities!  That is the operative word here.  Setting priorities across the organization that helps take everyone along is the key for any growing organization.  That is where the tremendous impact of OKRs comes into effect.

3 Accelerate Growth: When you are on a framework which helps everyone drive in the same direction, then you are as good as its substantive structure.  Since OKRs implicitly comprise Key Results which are ambitious and somewhat tough to attain, faster growth is assured.  Not only is the organization’s effort spent in conflicting actions – while pushing it in one direction top-down – but the distance that everyone wants to cover is more than what people generally would like to commit to.  The public socialization aspect of OKR is a great way to keep the employees seeking for more.

 

Resources for OKR Framework

We have tried to cover as many aspects of OKR as possible, but you can get access more resources below for further information.  If you have implemented the OKR process anywhere and are excited about it, then please do share with us here.