In their relentless pursuit of effective tools for managing and executing strategies, organizations have explored various methodologies over time.
The origins of OKRs trace back to the era of Peter Drucker. The importance of defining effective goals was consolidated with Doran’s proposal to make them SMART: specific, measurable, achievable, relevant, and time-bound. Later on, Kaplan and Norton introduced the Balanced Scorecard as a valuable strategic framework, although with limitations in execution.
The convergence of these influences gave rise to OKRs (Objectives and Key Results), and when Google implemented this methodology in 1999, it sparked a wave of interest and adoption. OKRs, by integrating previous learnings, became a key component in organizational management.
What does it mean? It has a dual definition. On one hand, OKR is a way to structure objectives. On the other hand, it is a framework containing a set of rules and best practices to help manage all these OKRs in your organization.
Important: OKRs are meant to help achieve common objectives, not to reward or penalize.
Why are OKRs important for an organization?
- It contributes to making it an excellent place to work by granting greater autonomy to teams, who take responsibility for the objectives without being imposed on how to achieve them. This allows every member of the organization to visualize the desired direction and understand how their work contributes to this purpose.
- It provides a clear path to success by offering greater clarity on strategic priorities. This clarity helps everyone in the organization focus on what really matters, directing their efforts towards meaningful and strategically relevant goals.
- It helps teams consistently achieve their goals by allowing them to follow a simple structure backed by real data. This ensures they are effectively and efficiently driving the company forward, thanks to an informed and results-oriented approach.
The importance of Differentiating Between Objectives, Key Results, and Initiatives
In the implementation of OKRs, it is essential to understand the hierarchy and relationship between the fundamental elements: Objectives, Key Results, and Initiatives.
Objective:
- They answer the question: “Where do we want to go?”
- Inspires and sets the direction, appearing at the top of the OKR hierarchy.
- It is advisable to avoid expressions that do not “push” for challenging goals and use tangible, objective, and unambiguous expressions. It should be obvious to an external observer whether the objective has been achieved or not.
Key Results:
- They answer the question “How do I know I’m reaching my objective?”
- These are measurable intermediate milestones that, if achieved, lead to the objective.
- There are 3 to 4 per objective.
- They should describe deliverables, not activities. If they include words such as “analyze,” “design,” or “participate,” they are describing activities.
- They must include evidence of fulfillment, and this evidence must be available, credible, and easily accessible.
Initiatives:
- They answer the question “What will I do to reach my objective?” Concrete and actionable actions that bring the goal closer.
Example of objective and 3 key results:
Accelerate revenue growth:
- Make service 3a available to all users by December 23, 2024.
- Implement initiative 2 to increase revenue per user by 26%.
- Launch a pilot test in segment B to identify the 3 service factors with the highest impact on revenue.
Best Practices When Implementing OKRs in Your Organization
To maximize the effectiveness of OKRs, it is recommended to follow some key practices:
- Start with the Mid-term Objective
- Use the company’s vision and mission to build the main objective.
- This objective will last for decades and will guide the creation of annual OKRs.
- Definition of Annual OKRs
- Leaders define annual OKRs based on the ultimate goal.
- Teams and departments derive quarterly OKRs from the annual ones.
- Regular Tracking and Review
- Track quarterly OKRs at least every two weeks to assess progress.
- At the end of the quarter, review the OKRs and capture learnings to inform the OKRs for the next quarter.
Here are some questions that can guide you when establishing OKRs:
- Do a team’s OKRs connect with any of the organization’s OKRs?
- Are EVERYONE’S OKRs visible to EVERYONE?
- Do a team’s priorities make it more likely to successfully achieve the organization’s OKRs?
- Are there aspects on which other teams think this one should be working?
- Are there more than 3 or 4 priorities for this quarter? Remember: It’s not a checklist; OKRs mark priorities. And many priorities mean you have none.
In summary, OKRs have become an essential tool in every organization’s toolbox. They facilitate strategic execution, foster transparency, and contribute to a goal-oriented and results-driven work environment. Adopting OKRs drives organizations towards sustainable long-term success.
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