In 2014, Rick Klau gave a seminar on OKRs at Google. He explained how the multi-billion dollar company started using this methodology as their internal grading system since they were a 40 man team. What is more astonishing is that more than a decade later, Google still uses OKRs across the entire organization. Suddenly everyone wanted to jump on the OKRs or Objectives and Key Results bandwagon. Quite a few Silicon Valley companies already use OKRs extensively to manage their goals.
So what sets OKR’s apart from other goal-setting frameworks?
Some of the earlier methods advocated setting organization’s goals for the entire year at one go. It may have been great at one point of time when the work environment was relatively stable. Today everything is changing at a rapid pace. Every other day there are technological advances that could potentially change the entire dynamics of how an organization works. Setting rigid goals for the entire year is not only unwise, but also harmful to the organization.
Fundamentals of OKRs:
OKR follows a different train of thought. It recommends setting goals at 3 levels of the organization i.e. Company level (Strategic in nature), Team level (Tactical goals) and at Individual level (operational goals). Team and individual OKRs are typically set for shorter durations, either monthly or quarterly depending on the situation. Whereas company goals are set for longer durations, mostly annual as they can’t be altered every now and then. At every level there are 3-4 objectives and for every objective there are 3-5 Key results. This varies across different departments and teams.
Justifying The Hype
Intel and Google have been using OKRs for more than a decade now and have set an example for others to follow. OKRs are now regularly being used by LinkedIn, Zynga, Sears, Samsung, Schneider Electric and many others. Each of these has seen moderate to phenomenal success after the implementation. Some of these have even detailed out how OKRs helped to transform their work culture.
When Kenton Kivestu joined Zynga in 2011, it was being trumped by its biggest competitor, Texas Poker. In his own words, their “position in the mobile poker market was borderline comical.” Having worked with Google prior to Zynga, Kenton was already familiar with OKRs and decided to adopt the framework to turn the tables. He made sure that the entire organization was on board with the concept and began implementing OKRs for everyone. In six months, Zynga beat Texas Poker and became the #1 top grossing iOS game.
Similarly, Jeff Weiner was able to transform LinkedIn to a $20 billion company today. The emphasis on creating stretch goals and achieving them within a particular time made sure everyone had a sense of urgency and higher focus on completing their tasks. Additionally, Jeff concentrated on conducting weekly meetings to discuss how everyone is faring with their OKRs. This discussion was meant to keep the team focused on their goals and help them as and when required.
Are OKRs compatible with Agile methodology?
Agile methodology has overcome most of the drawbacks faced by teams following traditional methods. Going Agile has helped them deliver value-driven products within the desired team while maintaining quality. Though one thing still missing is the team’s ability to track how the product, despite having all the bells and whistles, will help achieve the company’s objective. Not all products, despite being feature-rich, may appeal to the target market. It is necessary to get this information first and then plan your products accordingly.
OKRs help fix this gap. They can be used to prioritize the top focus areas that have the potential of achieving company objectives. Thus, rather than focus solely on building product features, teams are encouraged to focus on iterations that will enable them to achieve their key results. Organizations use OKR’s (particularly the key results) to gauge if the product enhancements are helping to meet the objective.
The Other Side Of The Coin
There is another side to the coin. There have been a few minor cases where a company has not been able to understand how OKRs work and wasn’t able to implement it correctly. Many companies started using it but couldn’t manage it all levels and thus eventually gave up. One such case is Contactually who (famously) abandoned OKRs because they found planning OKRs was a nightmare. They were at a stage where the company was growing rapidly and needed quicker iterations cycle as opposed to locked-in OKRs.
Not every concept will be universally acceptable. However, OKR’s have earned a reputation for acting as a company’s guardrails for staying on track. When coupled with a methodology for frequent checkpoints like Agile, it can be very powerful tool for meeting goals and ensuring alignment across the organization.
This post is by Yatin Pawar. Yatin is a Product Marketing Manager for UpRaise, a performance management JIRA plugin. You can read more about OKR’s on their blog.