Every person or organization has goals they want to achieve. When goals are set and there is a commitment to achieve them, performance improves. In the business world, setting key goals and objectives translates into improved people performance.
There are two types of goals set by companies: challenging goals and measurable goals. The mixture of both improves performance.
OKR (Objectives and Key Results) is a robust framework used by companies to plan, track and measure progress. When looking to set goals and key results for your teams, the OKR structure is one of the best frameworks to use.
Unlike KPIs, which are primarily data-driven, OKR combines ambition and data.
What is an OKR?
OKR is the acronym for Objectives and Key Results. It is a goal-setting framework used by individuals and teams. What sets OKR apart from other goal setting frameworks like KPIs is that it offers the opportunity to set ambitious and challenging goals. However, you must back it up with measurable results.
An OKR is a collaborative goal-setting tool and keeps teams and individuals on track to achieve them with measurable results. They can be used for aspects both for financial objectives in the company and for personal objectives.
In essence, an OKR consists of two variables: objective and key result. An target is what is planned to be achieved. Inspiring and action-oriented values are the building blocks of all goals.
El key result, which is the second component that makes up the OKR, is the benchmark we use to measure progress toward our goal and makes goals work.
Objectives without key results are nothing more than mere aspirations. Unlike objectives, key results are measurable, verifiable, and time-bound.
The end of the time period established for the key results represents an opportunity to evaluate whether or not the established objective has been met. The objectives are fixed and lasting, while the key results can change as the work progresses.
OKRs are periodically analyzed, established, tracked and evaluated. For example Google does it quarterly. The time frame is not standard. Different companies and industries may use alternative time frames that are more operational for them.
The beauty of OKR lies in its fast process and its inclusiveness and suitability for top-down and bottom-up analysis. With the common framework of OKRs, teams can move in the same direction without canceling each other out.
How they fit in with stated goals
OKR is a framework used by organizations to set goals and track their results. Let's turn our attention a little to understand what "goals" mean.
what are goals
Goals can have different meanings depending on the context. For businesses or organizations, they are the desirables that a business or organization plans to achieve at a future date.
The dictionary defines a goal as "the end toward which effort is directed" or "the act of clearly indicating what you want to achieve or what you want another person to achieve."
Setting a goal reflects a commitment to achieve a result. Goals are guides that help companies and individuals to focus their efforts and resources on what is essential. They take two forms: general and operational.
General goals focus on the big goals of the company, while operational goals focus on smaller aspects, such as those of a department or team. It is key to keep all members of the company informed who have a role to play on the company's goals.
goals vs. Objectives
Differentiating goals from objectives is a challenge. The similarities between goals and objectives are too subtle and it is difficult for the non-specialized profile to know if there is such a difference. Both goals and objectives speak of the desired result. In many situations, they are used interchangeably.
Separating goals from objectives is a technical matter. With OKRs, there is no need to differentiate the two terms.
SMART goals vs. OKR
OKRs are a framework for setting and tracking partial goals. The difference between goals and OKRs lies mainly in their application. OKRs are primarily used for large business aspirations, while OKRs objectives have more general use.
Although clear in its definition, it is also difficult to use this formula to track company-wide or departmental goals. The SMART formula is better suited to people.
OKR fits into your plan and drives alignment across the board. The framework does this by creating goals and key results that are measurable and easy to understand at both the team and company level.
The goal set by OKR should be something that gives clear direction. For example, the objective of a company is to expand its production chain to Asia.
Key results are the measurable or quantifiable expressions, usually in numerical form that track progress towards the stated goal. When setting your key results based on your goal, be specific and use only the key results without introducing additional metrics that can distort the perception of having achieved the goal.
OKRs and stretch goals
The idea of setting goals beyond what seems feasible can be done effectively with OKRs. Google, the Internet giant, has applied it well since the beginning of its history. They deliberately set goals beyond the threshold of their team's ability and then work to achieve them.
Stretch goals push beyond limits and help unravel people's strengths. However, creating these stretch goals means that the team or company will fail. While you may not achieve 100% of your OKR with stretch goals, each attempt indicates significant progress (see Brief history of OKRs).
When using strict goals in OKRs, it is necessary to communicate the clear expectation and threshold for success. Achieving 100% of your OKR is an extraordinary performance. Google sets its OKR success mark at 70%.
View stretch goals as an opportunity for your team or departments to push the limits of their performance. Setting high goals also improves the quality and development of people.
OKR Application Examples
OKRs have been responsible for the extraordinary growth of many companies, including Google. However, for some organizations, OKRs have not proven to be as effective. To better understand your application it may be interesting to see examples of correct and incorrect use.
Several factors influence what makes an OKR good or bad. The main determinant is your adherence to the OKR model, therefore it implies a complete understanding of the same model and when to apply it.
Good OKR Apps
example one
Let's say you've gathered your team to discuss OKRs for your organization. The likely path the meeting will take would be as follows:
First, you'll want to define the goal.
Objective: Increase the company's income in the next two quarters.
Once you have set the goal, the next step is to set the key results to achieve the stated goal. For this example, there are three key results.
Key Result 1: hire five more salespeople to help the sales department
Key Result 2: sell more than 1000 units of products per month
Key Result 3: secure more long-term subscribers for the product
For this example, there are three key results to help achieve the goal. The OKR target for this example can be made even clearer if we add a figure to the target.
Objective: Increase company revenues by 10% in the next two quarters.
The number of goals and key results you can achieve depends on the needs of individuals and teams.
Taking inspiration from the Google model, you should have three to five goals to capture your organization's ambition. Also, for each objective that is set, there should be between two and five key results attached (see OKR: Cycle definition).
example two
Suppose a car company wants to make cars from the traditional, non-environmentally friendly way to clean electric cars. The unique selling point that will appeal to your target audience is green cars.
This is how executives will integrate it into an OKR framework.
Objective: Design and create electric cars that offer the greatest environmental value to consumers.
Key Result 1: By 2024, 100% of our company vehicles will use an electric motor instead of diesel or gasoline.
Key Result 2: To be the leading local electric car producer by 2029.
This OKR clearly expresses the objectives and key results that the company wants to achieve. Everyone involved in turning the goal into reality can easily see what the company wants to achieve. They will have a clear perception of what the company expects from this guide.
example three
Let's see how OKR can work for a soccer team. The manager of a professional team can use OKR to set a goal for the team.
Objective: win the championship.
Key Result 1: Win a average 2 points per game during the football season.
Key Result 2: Average of a goal difference of 2 or more per game during the season.
Key Result 3: Have an average possession of 60% per game.
As of this OKR, the overall goal the team wants to achieve is to win the championship. The key results reflect an offensive-minded team that wants to win it with an offensive style.
example four
Another scenario for a successful OKR is for a self-employed person. Let's say you're a freelance web designer and you're having trouble getting clients to know about your service. You've used freelancing websites and you're still not getting clients.
You can use the OKR goal setting framework to help solve this problem.
Objective: Create a website for my freelance web design business.
Rekey result 1: Research and buy or obtain a domain name before March 31.
Key Result 2: Write more than 10 blog posts on the website with an SEO strategy and publish them before April 14.
Key Result 3: Promote the website on social media platforms and use ads before April 15.
Clear resultand 4: get your first web design contract with a client before April 30th.
Bad OKR Applications
While flexibility is a key feature of OKR, if done in excess, it becomes bad practice.
When you create an OKR that is unrealistic, unmeasurable, or doesn't have a time frame attached to it, it's a bad OKR.
example one
Objective: Provide benefits packages for new hires. (Without result)
Key Result 1: train employees on how to use the benefits platform (Not measurable)
Key Result 2: update the company database with the new employee benefits
A better OKR would focus more on measurable results. A better approach would be the following.
Objective: Improve the satisfaction of people in the organization.
Key Result 1: enroll more than 90% in a better benefits package.
Key Result 2: increase the average satisfaction from 6.0 to 9.0
example two
Objective: make viral videos on YouTube
Key Result 1: improve YouTube SEO
Key Result 2: Get more followers on YouTube
Key Result 3: Earn more money with YouTube
This example is not an OKR and key results goal, rather it is a goal with its associated to-do list. Objectives can be aspirational goals, but key results must be a measurable reflection of the objective.
