OKR (Objectives and Key Results) is a method belonging to management for project management. First of all, it is necessary to synchronize team and set goals. The OKR method was developed at Intel, after which the corporation became widespread in large technology companies, including Google, LinkedIn, Zynga.
There are many ways to use OKR, and each company or team can adjust them to suit themselves, creating new and new variations. But there are several common principles.
Instead of using static planning for a year ahead, OKR follows an Agile approach. Using shorter goal-setting cycles, companies can more easily adapt and respond more quickly to changes in the market.
In the original Intel model, goals were reviewed monthly, requiring the process of setting them to be exceptionally easy. Therefore, OKRs are easy to understand and use.
Companies that have implemented OKR reduce goal-setting time from months to days, and as a result, spend resources not on discussion, but on achieving the goals set.
The main task of OKR is to align within the organization. To do this, OKRs are made public at all levels, and every employee is given access to all set OKRs. The CEO's OKR is usually published on the Intranet.
OKR takes into account that strategy and tactics exist at different frequencies, and the latter changes much faster. To resolve this mismatch, OKR applies two rhythms:
- Strategic cadences with high-level and longer-term OKRs for the company (usually annual).
- Tactical cadences with shorter OKRs for teams (usually quarterly).
- Operational cadences for tracking results and initiatives (usually weekly).
Bidirectional Goal Setting
Instead of the traditional top-down cascade model that takes a lot of time and does not add value, OKR uses a bidirectional approach based on market requests.
Knowing the company's strategic OKRs, teams better understand how to interact to match the overall strategy. In such a process, about 60% of tactical OKRs set by teams are aligned with the company's strategic goals, and then fixed with managers from the bottom up.
This model increases employee engagement and their understanding of the strategy as a whole, and the process becomes fast and simple.
According to the philosophy of OKR, if a company always achieves 100% of all declared goals, then they are too simple.
Instead, OKR encourages setting inspirational and ambitious goals and believes that teams can set themselves such bold goals that require unprecedented performance that they will have to rethink their current ways of working to achieve them.
Separation of Rewards
Separation of OKRs and rewards/promotions is critical to setting ambitious goals. It is very difficult to set ambitious goals while keeping in mind that you will have to pay for your child's college with the bonus. Employees must be confident that they will not lose their money if they set overly ambitious goals.
OKR is a management tool, not a staff appraisal.
Shorter planning cycles allow for more frequent adjustments, improve responsiveness to changes, and stimulate innovation, while reducing risks and unwarranted expenses.
Alignment and Cross-Functional Interaction
The presence of common OKRs improves interaction between teams, resolves internal interdependencies, and standardizes competing initiatives.
Shorter Goal Setting Time
The simplicity of OKR speeds up and facilitates the goal-setting process, significantly reducing the required time and resources.
Thanks to transparency and simplicity, teams better understand the goals and priorities of the organization as a whole, as well as the contribution that each individual participant can make.
The "bottom-up" approach used in working with OKR links individual employees to the company's goals, increasing their engagement.
Autonomy and Responsibility
Teams are given a clear direction and can choose themselves what to do to achieve their OKRs. They take responsibility for their goals, with clear success criteria known throughout the company, creating mutual obligations.
Focus and Discipline
The small number of goals allows the organization to focus on selected initiatives and direct efforts more specifically.
Separation of OKR from rewards, as well as the use of stretch goals, allows teams to set bold goals.
- Why is transparency important? Why would you want people across other departments to know your goals? And why does what we’re doing matter? What is true accountability?
- What’s the difference between accountability with respect (for others’ failings) and accountability with vulnerability (for our own)?
- How can OKRs help managers “get work done through others”? (That’s a big factor for scalability in a growing company.)
- How do we engage other teams to adopt our objective as a priority and help assure that we reach it? When is it time to stretch a team’s workload—or to ease off on the throttle?
- When do you shift an objective to a different team member, or rewrite a goal to make it clearer, or remove it completely? In building contributors’ confidence, timing is everything.
Definition of done
- Structure and clarity: Are goals, roles, and execution plans on our team clear?
- Psychological safety: Can we take risks on this team without feeling insecure or embarrassed?
- Meaning of work: Are we working on something that is personally important for each of us?
- Dependability: Can we count on each other to do high-quality work on time?
- Impact of work: Do we fundamentally believe that the work we’re doing matters?