Introduction to OKRs
Objectives and key results, a clear path forward
Aligning your people around the strategic goals you have set for yourself can be a daunting task. The traditional way of defining a strategy is through a paragraph of text, and if you aren’t careful you might end up defining a very vague generic strategic statement, one that your employees have to connect the dots and read between the lines to be able to act on the strategy. See our post on crafting strong strategic statements.
If you are, say, running a coffee business, sentences such as “We want to the best in breed when it comes to coffee” means different things to different people. Your baristas will try to buy the expensive beans because that’s the best coffee for the customers, focus on the experience and try to build a relaxing and a soothing environment. Meanwhile your CFO might think that the statement was a direct message for him to drive down costs. He might buy the cheapest beans on the market and beat the large coffeehouse chains at their game, leveraging economies of scale like never before.
The problem here is that to different people, words mean different things. When you give them a vague goal, each person will invent their own measure of success. If you give them a measure of success but not a goal, they might all head in different directions. The key is to lend context to those metrics or goals.
A good way to align people and clarify what those strategic goals are is the use of OKRs. OKR is an abbreviation for Objective and Key Result. The aim is to give your measures context by assigning them to a strategic goal. The technique, first used by Intel has in recent years been rebranded and made popular by the search giant Google. Let’s have a look at the definitions.
Any business strategy has an objective or a collection of objectives. Each objective describes an aspect of your business in a future scenario. The goal of writing down an objective is to be able to tell if you have reached your goal, and you have a clear path towards that goal.
When you set an objective, when do you know if you’ve reached it. Let’s say you define the objective “Get more paying customers”, technically you could say that you’ve reached your goal when you just get one more. Remember earlier we stated that people will connect the dots and invent their own measures. Steve from accounting won’t be content until you’ve added 100 new customers, but Joe from sales might be happy if he manages to close 10 new deals.
Key results are numerically defined measures for your objectives. Using Key Results, you can measure how successful you really are. Note that each objective might have more than one Key Result.
There are different ways to define your OKRs, just make sure they are anchored and support your business strategy. Defining OKRs without having a strategic linkage (see our blog on strategic linkage) will result in your management driving your company in one direction and the employees in another direction.
If you want to know more about OKRs, please have a look at our other blog articles below, or just send a message our way if you’d rather talk in person.