What is OKR?
In a nutshell – a method for setting and measuring organizational goals. It was adopted by Google and many other giants such as Adobe and Dropbox.
How does it work?
The management selects 3-5 objectives, namely: annual overarching goals and strategies, which serve to focus all annual organizational activities.
Middle-tier managers, examine these goals and formulate 3-5 objectives for their own departments. In other words, they formulate a departmental strategy as part of the organizational strategy.
These objectives are measured by numbers – Key Results.
This is what it looks like in the departments:
In some companies, each employee is also required to work according to quarterly indices, that form part of the department’s goals.
But why complicate things?
Why introduce metrics and goals in the organization? It’s a process, its time consuming, it requires filling out documents, holding meetings, more meetings, and often a dedicated system as well. After all, we are trying to reduce the number of meetings, not to add more.
Focus, focus, focus.
The market is changing very fast; new technologies are introduced every day, surprising competitors are springing up like mushrooms after the rain, and companies are in a race. Many of them, especially emerging companies, feel like mice in a maze trying to figure out how to adapt to the changing environment. They use a buckshot and trial and error approach in as many channels as they can. The internal setup of the organization, however, does not change so quickly and is often one step behind the strategy. In practice, this causes a situation in which different departments promote different goals and are unsynchronized. In addition, resources are wasted trying to examine which of them works. A company that focuses its activities on a small number of overarching goals will be able to maximize its ability to execute them – in other words, to deliver!
Measure What Matters Most – Not only that, but it calls for a quarterly review (at least!) of these goals, which requires the company to constantly make sure it is on the right path and that the chosen goals are still relevant to the market. This also reflects savings – with OKR the company does not measure all activities, but only the ones that affect the company’s strategy and primary goals.
After all, KPIs (an old measurement method) have been around for a long time. Companies have been measuring themselves and their employees for decades…
The difference is in the way it is done
Small companies and start-ups, in particular, feel that measuring performance turns the organization into a ‘corporate’. Some part of the family atmosphere, the unmediated communication and even the coolness (yes… let’s be frank, this is an important element), gets lost when you start talking numbers. “We’ll lose our creativity” is a claim we hear a lot. There’s a fear that if we talk only in numbers, we’ll lose our inspiration and vision.
Compared to others, the OKR method, allows employees to take part in setting goals. They discuss company goals and come up with ideas on how they can contribute – as individuals and as teams. In the end, programmers, salespeople, and operations people alike must think business. The responsibility is given to them and the option to have their voices heard, increases motivation to do above and beyond. At first, it’s hard – it’s like a new and foreign language, but once practiced, employees help set challenging goals and push themselves and the company to succeed beyond expectations. There’s a good reason why one of the phrases associated with the method is ’10X Growth’.
At the same time, the vast awareness of employee engagement (click to download the complete guide to employee engagement –המדריך המלא למחוברות ארגונית), encourages managements to generate for their employees, through OKR, a sense of purpose and influence by creating a direct connection between the employees’ tasks and the bottom line. The employees’ ability to see the fruits of their work and influence the success of the company gives meaning to their tasks – they now have a beginning, middle and a positive end. And as you may know, there’s nothing like meaning in order to produce motivation and increase productivity.
In addition, in global companies, in which employees work in remote sites, this method helps to ensure that everyone is working in the same direction. They are independent in their work, and at the same time work in a way, that benefits the company.
This can also work in your organization
The method is built as a layer upon layer. Some companies will go ‘all in’, fully implementing it, and formulating work plans as part of the overall goals. Some will prefer to start with the inspiration and engagement culture that the method provides and wait for the measurement. You may start with a department or implement it into the entire organization. The advantage is in the custom tailoring and the identification of the most significant added value for your company at a given moment.
To ensure the success of the process 3 elements are required:
- Formulating a process that’s tailored to the needs of the company;
- Available resources to launch a new process and having the executives on board;
- Perseverance, perseverance, and more perseverance.
Yes, the decision to implement an organizational process that changes the rules of the game is not necessarily easy. It requires time, resources, and having the executives on board. The good news is that results soon follow. Organizations that take care to synchronize between their different departments and to regularly adjust and measure their selected goals, eventually realize them and even surpass them. It is for good reason that well-known companies, from which we can only learn, chose OKR to manage their organizational strategy.
Ask us for our guide to implementing OKR in organizations