What are Objectives and Key Results?

Objectives and Key Results was created by Andy Grove at Intel and is used by large tech companies such as Intel, Oracle, LinkedIn, Amazon, Spotify, Microsoft, Twitter, Slack, Uber, Netflix, Google, and also many smaller companies.

The basic idea is that a limited number of goals and measurable results are used to track progress, create alignment, and encourage engagement. OKRs promote accountability and focus and are often seen as a clear and scalable goal-setting framework.

Google's co-founder Larry Page has said that the goal-setting methodology has been very helpful.

“OKR have helped lead us to 10x growth, many times over. They’ve helped make our crazily bold mission of ‘organizing the world’s information’ perhaps even achievable. They’ve kept me and the rest of the company on time and on track when it mattered the most.”

OKR

OKR consists of "Objectives" and "Key Results". Two parts should be seen as interconnected since they depend on each other. For each goal, measurement and follow-up are linked. "O" should be seen as a desired state and "KR" as the measurable result.

OKR thus clarifies what is important, focuses efforts, and shows how far the company has come together with the combined efforts of its employees. When the OKR method is implemented correctly, everyone gets the opportunity to influence their own work, their team's and department's goals, and thus the company's goals.

Objectives

Objectives should be clear, ambitious, concrete, and long-term goals that promote action. They are intended to foster creativity and set a high level of ambition.

Objectives are thus what should be achieved. The goals are set jointly between the manager and the employee and are public within the company so that everyone can see their colleagues and the company's priorities. This, in turn, should lead to improved focus and communication.

What is required and by whom is clarified, making the goals easier to achieve and follow up on. The goals should be linked to the strategy and inspirational.

Key Results

A limited number of objectives (3-5) and a limited number of key results (3-5) lead to focus. Key results make goals measurable and correctable during the journey toward the goals. They should also contribute to being able to answer how to achieve your objective.

Key results should not be too dependent on each other, time-bound, and measurable. A goal is long-term and long-lasting (think one year), while key results are developed with work effort. When all key results are achieved, the goal is achieved. Measurability and verifiability are important and something to strive for in both key results and goal setting in general.

The key results that are linked to a goal tell you how to reach the goal, help you grade how well the goal has been achieved, and make you think about improvement suggestions. The measurement is intended to lead to adjustments and changes along the way to the goal.

Goal-Setting Using OKR

The first step in goal setting within OKR is to determine what overall result you want to achieve - something that is often defined by company management. The overall result is then broken down into 3-5 objectives, just like all objectives within OKR.

The company goals are often broken down quarterly and are the most important and ambitious goals. To define these goals; imagine that you can only collectively achieve three goals. What would those be?

Google allows employees to set 60 percent of their goals to ensure a "bottom-up" and freedom regarding creativity and problem-solving. It is also possible to integrate individual goals with team goals and work more "top-down" with OKR to ensure direction and a shared focus throughout the business.

There are different ways to roll out goals in the organisation, here is an example:

• An objective is broken down into 3-5 key results, which define the most important sub-goals to achieve each objective. Each key result is then distributed to underlying operations, where each individual operation should not receive more than three key results in total.
• These key results then become the operations' objectives. In addition to the three assigned objectives they have been given, they can define an additional 1-2 objectives of their own to also provide a bottom-up perspective. Then the procedure starts again where objectives are broken down into key results for units further away from the core of the organisation.

Long-term SMART goals

Good objectives can be described as 'stretch goals' (long-term) and are almost unachievable to encourage continued development. If it is not possible for management or a manager to give sufficient authority to fulfill the goal, the goal is not sufficiently broken down.

Short-term goals are best linked to activities, and long-term goals should be linked to results. There are similarities between Agile Project Management (such as SCRUM methodology) and Objectives and Key Results, but they are different methodologies.

Agile Project Management and agile project management tools manage activities and are inherently short-term in their goal formulation. OKR, however, aligns well with the SMART goal formulation (Specific, Measurable, Assignable, Realistic, and Time-related).

What Does OKR Mean for the Individual Employee?

OKR affects work from the company level, to the business area level, to the team level, and ultimately to an individual level.

The individual chooses what they want to work on based on the goals, stays within the framework, and presents and implements relevant solutions that benefit the individual, the team, the business area, and the company, while still being allowed to be a creative problem solver (sanctioned risk-taking).

What the individual wants to work on and what the manager wants the individual to work on may sometimes result in conflicting goals. The conflict may persist even with OKR, but OKR clarifies the direction, which facilitates dialogue and makes goal-setting more circular instead of linear and top-down.

OKR streamlines communication

In a real-life example, a product manager at Google-owned YouTube was asked by another product team if they could promote their product on YouTube's homepage. Before the question was asked, it was helpful for the product team to know what goals the product manager was being measured in that quarter (if the question was relevant). Thanks to OKR, they already knew in advance if and when they should ask the question.

The methodology, goals, and what's important for Google also affect interpersonal communication, as the example shows, and become an internal "negotiating tool" that creates results and direction, and answers questions like: What are you working on? What are your goals? What are your skills?

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