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StrategyNov 09, 2020

What Are OKRs? Application to Business Strategy

Cameron Weinert

Organizations have a variety of ways to track individual, team, and company-wide progress. Goal setting with the SMART framework, yearly performance reviews, and even mentorship seeks to bring awareness and accountability to the work and progress of an individual or team.

These all sound good on paper, and in some organizations, are a very successful process. However, there is a disconnect in many organization—only 6% of human resources leaders think annual performance reviews are worth the time they take. Goal setting becomes solely focused on the individual or team aspirations. However, what if those aspirations do not align with the overall business strategy?

A common phrase to break this habit is encouraging everyone on the team to row the boat in the same direction. One of my favorite books, The Boys in the Boat, sums it up well: "Perhaps the seeds of redemption lay not just in perseverance, hard work, and rugged individualism. Perhaps they lay in something more fundamental—the simple notion of everyone pitching in and pulling together.”

How can something seemingly so simple become lost in the sea (no pun intended) of corporate bureaucracy? How can organizations get everyone rowing in the same direction?

To achieve the answer, some of the largest organizations (Google, Intel, Netflix) have implemented objectives and key results (OKRs) as a means to get everyone in the organization on the same page and moving in the same direction.

what are objectives and key results?

Objectives and key results were first introduced at Intel by Andy Grove in the early 1980s (quotes later in this post and many of the statistics are from John Doerr’s book Measure What Matters, which highlights Grove’s work at Intel and beyond). They provide the structure and alignment for organizations to execute on strategic initiatives across the company.

Objectives are a clearly stated, specific goal that supports an organization’s corporate strategy. It drives what the organization wants to achieve. These are action-oriented, ambitious (but achievable), and measurable. Key results are the metrics or milestones that track progress toward achieving an objective. They can range along a spectrum from expected to stretch.

OKRs are a helpful goal-setting methodology that will encourage employees at every level to prioritize their tasks to align to the overall business strategy, hold every level accountable to their OKRs, and ultimately lead to exciting growth opportunities for the company and individual employees.

prioritization

"Each time you make a commitment, you forfeit your chance to commit to something else."

Every organization is challenged by opportunity costs. Ideas and growth strategies are abundant, but the challenge persists—which ones should be chosen? As the list grows longer, the more daunting it is to select which areas to focus on, and the more difficult it is to have everyone on the same page striving after the same goal. This rings true for many professionals—studies show that only 7% of employees fully understand their company's business strategy (Harvard Business School Press).

OKRs bring everyone onto the same page.

Teams and individuals can take company-wide objectives and build their own to make sure everyone is aligned on the strategic direction for the organization. The first step in building out an organization governed by OKRs is prioritizing which objectives to focus on.

accountability

"By clearing a line of sight to everyone's objectives, OKRs expose redundant efforts and save time and money."

Once the OKRs have been prioritized, it’s imperative that teams and individuals are held accountable. Studies show that people want just that—92% of working U.S. adults say they would be more motivated to reach their goals if colleagues could see their progress.

As organizations, teams, and individuals align and prioritize their objectives, it's important to make sure everyone is making progress toward their goals. OKRs encourage open sharing of goals across the organization to give everyone line of sight into what is being accomplished (companies like Google have employees upload their OKRs to the internal network).

We want to be held accountable to our work and provide the opportunity to share in everyone's success. OKRs provide that structure by encouraging accountability across the entire organization.

growth opportunities

"Conservative goal setting stymies innovation. And innovation is like oxygen: You cannot win without it."

Once the organization has prioritized objectives and shared their OKRs across teams, the machine can begin to run. As the quarters go by and OKRs are refined, updated, and accomplished, the transformation that occurs can provide areas for growth not only for individuals, but also for the company. Since OKRs are meant to be bold and audacious, growth will naturally come as individuals push themselves to reach the goal.

We see that when companies focus on a value-driven model where workers are given a common sense of purpose (think objectives) and are given the chance to take risks (think bold key results), they perform much better than their competition. 94% of surveyed companies who fall under this value-driven model reported an increase in market share (Boston Research Group).

OKRs help create a common sense of purpose, empower individuals to own their work, and build better collaboration across the organization.

credera & objectives and key results

Internally at Credera, our innovation team has been using OKRs to track our progress. We set some lofty goals this year and have hit many of them, and in full transparency we will miss on a few of them. But that's what OKRs challenge us to do—set lofty objectives to push ourselves to grow as an organization as well as professionals. To encourage adoption of OKRs, we have built a methodology that will help your organization start, scale, and enhance your goal setting process with OKRs to walk you through the continuous process of the OKR cycle.

Our methodology includes the following process and questions we consider:

  1. Identify objectives: What do we think our team/team members need to focus on?

  2. Align with strategy: Do our objectives align with the overall company objectives?

  3. Develop key results: How will we achieve the objective?

  4. Communicate and deploy: How do we roll out the OKRs?

  5. Track and evaluate: To what degree is progress being made?

  6. Assess OKR effectiveness: Did we achieve our objective?

OKRs can unlock potential across the organization and provide employees a common objective to rally behind and achieve extraordinary results.

If you would like to learn more about our OKR methodology and how it can impact you and your organization, reach out to us here at findoutmore@credera.com.

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