Perhaps surprisingly, OKRs are not new. They’ve been around for a long time, but are having a resurgence because measuring success across businesses is becoming more important. That said, there’s still a lot of confusion about what OKRs are and what they’re not. In this blog, we’ll explain the difference, as well as how to set OKRs, and the common pitfalls to avoid.
OKR stands for objective key result. It’s the method of setting a goal for leaders to communicate what needs to be accomplished and how success will be measured incrementally. These objectives can apply to everything – from office operations to product development, and from top-level north star goals to individual goals.
OKRs are goals taken to the next level. They tie in how we’re going to communicate a goal and measure the results to know we’ve accomplished it.
A KPI (key performance indicator) is when we’re measuring something we do today. We know how we do it. We know what our performance needs to be to continue to do it well.
An OKR on the other hand, is about improving and measuring for change.
John Doerr, author of Measure What Matters, talks about choosing objectives in terms of FACTS:
Focus: Is the objective focused? A carefully chosen set of objectives will provide a rallying point when disruptions arise.
Alignment: Is it aligned with the organisation’s higher-level goals and the products and services you offer? And is everyone aware of the objective, so you can all orient to the same targets?
Commitment: Is there commitment across the organisation to participate? If you don’t have that, the likelihood any change is going to happen is minimal.
Track: How are you tracking it? You need to update progress routinely, and then make decisions to pivot or persevere.
Stretch: Is it forcing the organisation to stretch and grow? Your objectives should empower teams and individuals to set goals beyond the everyday, making significant changes for the betterment of the organisation.
A KPI (key performance indicator) is when we’re measuring something we do today. We know how we do it. We know what our performance needs to be to continue to do it well. An OKR on the other hand, is about improving and measuring for change.
There are four common mistakes that people make in relation to OKRs. They are:
The number of clicks on a website or followers on social media might make you feel good, but they won’t necessarily help you achieve your goal. These types of ‘vanity metrics’ may help gauge traffic and interest, but they may not give you future decision-making capabilities and insight into your business’s success or failure. Make sure they’re not the only thing you’re measuring.
Check whether the metrics you’re tracking are communicated clearly and concisely.
Ask yourself whether people are truly participating in their success. If you’re just clicking buttons in a tool, you’re not going to affect a change.
Make sure your ratios are fair, consistent, and achievable.
As a general rule, if you have more than one or two OKRs being measured in a quarter at the individual level, they need to be very finite and clear.
Allow the refinement of the OKR at each level to be done by the person who will ultimately contribute to its success.
Make sure your OKRs are targeted, aligned with corporate adjectives, and valuable. And make sure you measure your key results frequently.
Don’t link OKRs to employees’ performance reviews either. That way, if market conditions change and you have to adjust an OKR, individuals won’t be penalised.
If you’re not using OKRs, you’re not alone. Nearly half of the people we polled during our webinar on measuring transformation success don’t use OKRs, while 30% are just starting to dip their toes in the water.
We suggest starting with a leadership workshop to understand what are the known goals or objectives for the organisation, rather than setting OKRs at the team and individual level. This will help you understand what those goals mean and establish what you really want to achieve for the company.
We can support your organization’s transition to OKRs, making sure you avoid the common pitfalls and implement the right tool to measure success.
Need help getting started with OKRs? Get in touch.
“As a leader in an organization, it’s incumbent upon you to communicate what you’re doing and why.”
Tina Behers, VP Enterprise, Aligned Agility