First off, what exactly is OKR?
OKR is a goal-setting methodology originally developed by Andy Grove, former CEO and Chairman of Intel. In his management classic, High Output Management, he describes OKRs as being the answer to two questions:
- Where do I want to go? (The answer provides the objective.)
- How will I pace myself to see if I am getting there? (The answer provides the key results.)
In short, the objective is what you want to achieve, and the key results are the benchmarks for how you’ll get to that objective. For example, here at Know Your Team, perhaps one of our objectives is for our software to be the #1 resource for new managers who want to become better. Accordingly, for this objective, a key result might be that “we have X number of users”, or that “Y% of users rating our software positively” – or both.
John Doerr, who learned OKR from Andy Grove while at Intel, was the one to teach and instill OKR at Google. He explains that the objective can be broad, aggressive, and even inspirational. But for the key results, the more specific, measurable, and verifiable, the better. He cited in his book about OKRs, Measure What Matters: “As prize pupil Marissa Meyer would say, ‘It’s not a key result unless it has a number.’”
Doerr recommends setting a limit of three to five OKRs per cycle, and generally, that each objective should be tied to five or fewer key results.
At the end of each cycle, you then grade each of the OKR, with roughly 70% being the ideal score to shoot for. Along the entire process, these OKRs are made publicly known to everyone within the organization.
Why do some companies choose to use OKRs?
At first brush, the appeal of OKR is obvious. It simplifies everything. By calling out objectives, you help your team identify and zero in on what matters most. With the key results, you create measurable benchmarks that help clarify what tangibly needs to happen, and likely hold folks accountable for those outcomes. And lastly, it’s probable that OKRs promote alignment and transparency across the team since everyone knows what each others OKRs would be.
This piece written by Niket Desai, who worked at Google for a handful of years, espouses how much he and his team benefitted from OKR. He also wrote a template that can be found here on how to roll-out OKRs in your organization.
Recommendations (and caveats) if you do decide to use OKRs
However, like anything, there’s nuance around how effective OKR are in practice. Doerr himself admitted that “goal setting isn’t bulletproof” and OKRs should not be blindly nor rigidly adopted.
In our Watercooler community, the managers who did roll-out OKRs had a some key learnings and caveats that they recommended that folks keep in mind.
Here are some of the biggest learnings from managers in the Watercooler community who use OKRS:
- Know why you’re implementing them. In order for OKR (and, well, most things in life) to work, you have to have a deeper “why” for how OKRs might help you achieve that performance. Most Watercooler members who implemented OKR discussed how their deeper “why” for instituting OKR was to achieve better team alignment.
- Quarterly cadence, with monthly reviews. Most of the Watercooler members who use OKRs share how they have an OKR every three to four months. Then every month, everyone in the organization reviews their OKR. Watercooler members remarked how this keeps everyone on the same page and accountable.
- Focus on supporting participation and fostering rhythm . One Watercooler member mentioned how, in rolling out OKRs, he asked employees to create their own personal OKRs, as a way to make sure buy-in was established at the most core level. He believed this helped with OKRs being positively adopted by his team.
- Emphasize it’s a very imperfect, iterative journey. Another Watercooler member mentioned how “we were not going to get it right the first time and it would most likely take us multiple quarters to really figure out how to make OKR’s work for us. We gave ourselves room to fail, re-do things, etc.”
- More isn’t always better. Most OKR resources have stated that you don’t want more than 3-5 objectives per time period, and you also don’t want more than 3-5 key results per objective. Watercooler members attested to this. Too many objectives or key results and a team’s focus becomes muddled.
- Spend the time to craft effective OKRs. Creating good OKRs can be somewhat of an art. Doerr wrote how Google CEO Sundar Pinchar admitted that “his team often ‘agonized’ over their goal setting process[… and] that’s part of the territory.” Using the precise words and phrases to frame your OKRs properly makes a difference, according to Watercooler members.
- Separate OKRs from compensation – and try hard to separate it from performance reviews. Tying OKRs to compensation can have deleterious effects, such as causing employees to purposefully set lower goals in order to achieve them. And, similarly, combining performance reviews with OKRs can be counterproductive, since a someone’s past performance is more nuanced than the binary result of whether or not the goal was achieved. Not to mention, it is always possible to get the goals wrong. However, Watercooler members, along with John Doerr himself, admit how hard it is to do this in practice. In fact, several Watercooler members mentioned how they realized that it’s nearly impossible to separate this from performance reviews: Someone who hits their OKRs is going to look better than someone who totally fails to hit them. As a result, it’s important to consider the unintended negative consequences OKRs might have on your team’s performance.