You have a high-caliber team that’s highly knowledgeable and skilled. But is that enough to develop a long-lasting and successful company?
When you think of companies that are built to last and grow rapidly? What comes to your mind?
Google, Amazon, Adobe, Netflix, and even Spotify!
But how do these companies keep the pace going? How do they grow and know what direction to take their endeavors? The answer––at least for most successful organizations––is having aggressive OKRs in action.
Wait! What! ORk? No no OKRs… What’s that?
If you don’t know what OKRs are, you should definitely take the time to learn about them.
Looking for ways to grow your business? Implementing OKRs into your growth strategy might just be the key.
Let’s take a look at how the use of OKRs can help move the needle for your business in the next quarter––and forever after.
What are OKRs?
OKR is actually an acronym that stands for: Objectives and Key Results. In the business world, it is an extremely popular management strategy for goal tracking and management that provides businesses with an effective strategy. The best way to think about OKRs is by using what is called Doerr’s Goal Formula (coined by John Doerr, a wildly successful venture capitalist).
Doerr’s OKR Formula: I will (Objective) as measured by (this set of Key Results).
Example: I will increase traffic to my website by 10% (Objective) by increasing my twitter followers by 25% (Key Result 1), Blogging twice a month instead of once (Key Result 2) & Promoting my content on a new channel i.e Reddit (Key Result 3)
The concept behind OKR that makes it work is that it helps to align the efforts of the company, its teams, and individual employees so that they are all operating toward the same ultimate goal(s) and direction. Because each individual’s goals are in line with the company goals, there is little guesswork about what’s expected of them at work. Employees are also always in the know about what others are doing as well.
While OKRs are commonly used in high-level, corporate settings to drive the entire company toward success, the OKR framework is also used on a team or individual
employee as well.
Let’s take a look at what each individual component of the OKR framework entails.
What is an Objective?
The Objective––which is what the ‘O’ in OKR stands for––represents a high-level goal that the company is aiming to achieve in the future. The Objectives help to provide a clear understanding of the direction the company wants to go in and provides a source of inspiration for future actions. In short, the Objective is the end goal (until the next goal is announced).
What is a Key Result?
The Key Result––which is what the ‘KR’ in OKR stands for––is a means for measuring the company’s progress toward the goal or goals set forth by the Objective. Key Results are basically checkpoints that let the company know when they have reached a certain level of progress toward achieving the objective/goal. If the goal is achieved by reaching
100% completion, a key result may be used to indicate that the company is at 80% progress toward achieving that goal.
How to Structure Effective OKRs
In order to have effective OKR
frameworks for your company, it’s important that the OKRs are
strategically structured to promote continuous (and rapid) progress.
Here’s a quick rundown of how you should structure your OKRs. This is a fairly standard method of structuring them, but you can make slight tweaks if need be.
In most cases, you should list anywhere between 3 to 5 high-level goals (objectives) for the company, team, or employee. A great OKR strategy will set goals at all levels of the organization, from macro to micro.
Following the principle of setting SMART goals, objectives should be
Goals should be very ambitious in nature (60% chance of success), giving the company, team, or employee big goals to strive for.
For each of the 3-5 high-level goals set, aim to define anywhere between 3 to 5 measurable key results.
Again, key results are like milestone achievements that show progress toward the ultimate goal, or Objective.
In most cases, key results are represented in numerical value i.e easily measurable. However, they are also sometimes indications of something being done or not done, which could also be represented in numbers (a binary 0 or 1).
How to Implement OKRs -Your Company's Growth Strategy!
Once you’ve clearly defined the Objectives and Key Results for all levels in the company, it’s now time to communicate these OKRs with all levels of the organization.
While the talk track may be a bit different depending on which level of the organization you’re presenting to (the company leaders, teams, or individual employees),
make sure that the same general information is shared with all parties. This will ensure that everyone has a common understanding of the company’s high-level goals.
Once the OKRs are set into action, individual employees should then start providing regular updates on result indicators, usually done on a weekly basis. Once around 70 to 75 percent of a specific objective has been achieved, that objective is considered done/completed. Again, OKRs are intended to be rather ambitious in nature to help move the company’s needle. Having 100% results completion for each objective may mean that your original objectives were not quite ambitious enough.
As the company progresses forward and new challenges arise, you may need to adjust and continue readjusting goals to make sure that they are not only ambitious but realistic as well. Nothing is more demotivating than being presented with a goal that is farfetched.
The Benefits of OKRs
There are quite a few great benefits of OKRs that make them extremely popular in the business world:
Agile Goal Setting
Rather than setting lengthy year-long goals, OKRs offer much shorter goal cycles so that changes in direction and growth can be made as the business adapts to changes.
OKRs apply to all levels of the company, from employees to management staff to key organizational leaders. They help to keep individual performance aligned with the high-level objectives for the company.
Unlike other goal-setting methods, OKRs are very easy to implement in a business environment. They’re rather straightforward and allow staff to reduce the amount of time invested in setting goals on a daily, weekly, or monthly basis.
Basically, management and employees can spend more time achieving goals versus defining them.
Rather than having a long list of goals for the company, OKRs restrict goal setting to 3-5 objectives. This helps to keep the company focused on the actions and goals that will have the greatest impact on growth and success.
Because all levels of an organization work toward the same ultimate goals on the OKR framework, there is a much-appreciated level of transparency that is fostered. Each employee knows what others are doing at any given time.
Potential for Unexpected Success
As mentioned earlier, OKRs are set to be extremely ambitious and motivational in nature. Because of this, individuals within the organization will be working diligently to contribute toward those goals. In many cases, companies utilizing OKRs see unexpected yet very welcomed results that are even better than they set out to achieve.