In the 1970s, Intel president Andy Grove implemented a simple approach capable of creating alignment and engagement around measurable goals. The method addressed how to set OKRs (Objectives and Key Results) and later spread to many different institutions, especially startups and technology companies in general.

The planning and execution of business strategies have been presenting challenges for organizations for as long as anyone can remember. In the extremely competitive globalized context, a well-established strategy is essential for these institutions to function.

How are OKRs used?

OKRs should hierarchically connect corporate, personal and team goals to measurable results, getting all employees to work together in a single direction. They ensure that each individual knows what is expected of them in their respective role.

Hence why OKRs should be made public for everyone in the organization, so people and teams can move in the same direction and share the same focus.

OKRs are typically part of a recurring quarterly progress review process. But some companies also set annual and even monthly OKRs – it depends on the commercial strategy of the business in question.

The structure of OKRs

The simplicity of the OKR model can be seen in its structure:

  • Objectives: begin by defining four or five key goals at company, team or individual employee level. The objectives should be ambitious, qualitative, time-bound, and actionable by the person or team in question.
  • Results: under each objective, define no more than three to five measurable outcomes. These results should be quantifiable, achievable, lead to objective classification, and be complex but not impossible.

OKR results can be based on growth, performance, revenue or engagement. They are often numerical, but can also show whether something has been done, or undone.

How to implement OKRs?

Once defined, communicate OKR objectives and key results to all stakeholders and make sure everyone understands them clearly. As people get to work, it is important that they update their bottom line indicators regularly—weekly, if possible. You can use OKR templates to identify each owner, time frame, objective and measurable key result.

A goal is achieved when about 75% of its results have been delivered. If 100% of the objective results are achieved, it can often mean that the goal is not ambitious enough. Review your OKRs regularly as required, and be flexible. If your company, team, or personal goals change, feel free to change the OKRs along the way.

The benefits of implementing OKRs

1 – Focus and prioritization: OKRs “force” companies to prioritize the business results that are most important over a given period. This generates focus and facilitates new layers of prioritization across all areas and hierarchical levels. Furthermore, it is scientifically proven that establishing goals increases focus.

2 – Greater alignment: the major purpose of aligning your OKRs is to unify your company at every level. The objective is for everyone to truly understand what is going on, and how everyone can contribute to the company’s loftiest goals.

This alignment happens in two ways: temporal and organizational. In practice, the company creates its strategic OKRs in line with its mission and vision. Then, annual OKRs are created in line with the strategic OKRs: this is known as time alignment.

3 – Transparency: the alignment effect is enhanced by the fact that OKRs are transparent. By default, everyone can access everyone else’s OKRs. Unlike traditional goals, dependencies and contradictions in OKRs can be quickly identified, discussed and resolved.

4 – Motivate professionals: it is scientifically proven that difficult but attainable goals increase people’s motivation in relation to the tasks they are asked to perform.

As OKRs are less directly linked to employee compensation – in other words, they are a management tool and not a compensation tool – big goals should be set, to encourage innovation at work.

5 – A culture of results: “result-focused” employees can clearly differentiate efforts and outcomes. Some efforts and results are often confused; here are some examples:

  • Having a sales meeting is an effort. Closing a sale is a result;
  • Implementing a system is an effort. Reducing accounting and financial errors is a result;
  • Developing a new feature for an e-commerce shopping cart is an effort. Increasing conversion rate is a result.

The relationship between an effort and an outcome is always relative and not absolute. It is always important that the OKRs of an individual or team have key-results based on results relative to the person who owns the OKR.

The benefits of using OKRs

The main benefit is keeping the company’s vision, goals and objectives permanently emblazoned in the minds of your teams and collaborators. Everyone will know exactly what is expected of them, which facilitates the process of aligning individual work with team, area and company goals.

OKRs are really simple, and don’t take long to implement or carry out. Just a few hours are required to check and review OKRs every quarter, although it’s helpful to check them on a weekly basis, as a reminder and marker of progress.

OKRs are often prioritized by leaders and managers because they help employees understand the purpose of their work at the company, and move towards achieving important goals, rather than just “getting things done”. Increased focus and productivity are the typical results of a well-executed OKR process.

OKRs don’t consume a great deal of time or resources, but they are capable of delivering major benefits to a business’s productivity, focus, culture and strategic innovation. Like any Agile method, you have to be ready to fail. However, with a lot of effort and continuous improvement, the results and routes are corrected faster and faster, and you’ll begin to see results.

Having learnt how to set OKRs, regardless of how we define objectives and key results, it is important to understand their importance for companies and employees looking to improve results.

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