What Is the OKR Framework?
Objectives and key results (OKR) is a management framework that helps organizations set clear business goals and track their progress toward those goals. Some of the key benefits of using OKRs include alignment of goals across the entire organization, increased focus and productivity, improved employee engagement, and increased transparency within the company. Generally speaking, OKRs will be tracked on a quarterly basis, but some goals may be tracked over an entire year.
History of OKRs
The basic idea behind OKRs can be traced to Peter Drucker’s book The Practice of Management where he describes the process of management by objectives. This is an idea where an organization sets goals that are agreed upon by both management and employees in order to increase productivity. The modern OKR framework we use today is credited to Andy Grove, the “father of OKRs” and co-founder of Intel. The framework was further popularized when venture capitalist John Doerr introduced the idea to Google.
At the time, Google was a relatively small company, and following company OKRs played no small part in helping them become the tech powerhouse we know today. These days, countless successful companies use OKRs including Amazon, Dell, LinkedIn, Microsoft, Spotify, Uber, and more. Whether you use individual OKRs or keep it at the corporate level is up to you, but it’s a pretty safe bet the OKR process can help your business too.
Difference from KPIs
Key performance indicators (KPIs) are another way that organizations can keep track of their progress toward objectives. While they likely seem extremely similar to OKRs at first glance, the biggest difference is that KPIs tend to track easily attainable progress whereas OKRs tend to have more ambitious goals. KPIs are a good option if you’re trying to track progress toward an objective that you’ve already completed in the past, and they’re also better for personalization, so you can track performance from individual team members.
Breaking Down OKRs
The OKR framework can be divided into a couple of basic ideas to get a full understanding of the process.
Objectives: These are the main goals that make up your overall company strategy. Objectives should be easily understandable and communicated clearly so that each team lead and their employees know how to focus efforts. Objectives need a set time period like being completed by next quarter, or you could have annual objectives. A good example of a shorter-term objective would be to increase sales by 10% compared to last quarter. A long term objective could be to become a market leader in your niche.
Key Results: KRs are the metrics by which you track your progress toward your objective. In the example of increasing sales by 10%, if you see that sales have risen by 4% in the first month, you’ll know you’re on track to reach your objective by the end of the quarter. KRs are clearly definable, and they’ll help you determine if you’ve set too ambitious goals or if you should aim for more challenging ones in the future.
Setting Good OKRs
Once you understand the OKR process, you’ll need to figure out how to make it work for your business. Typically, you’ll just want to set a few objectives at a time so you can easily track them. Your quarterly objectives should support your annual objective, and you can quickly alter your approach to quarterly objectives if KRs indicate they aren’t working out. You can either assign an ambassador to decide company objectives, or you can gather ideas from employees by asking them what they think the most important goals should be.
Once your OKR plan is set, you can easily monitor your progress with reliable OKR software. These OKR tools make it easy to keep track of which departments and team members are assigned to each task, and you can gauge employee performance to see who’s making the biggest impact for each goal. Each day, business owners and team leaders will be updated on overall progress, and employees can be easily informed of any changes to strategy.