On OKR’s
The trend of Objectives and Key Results in an organization
I’m currently finishing up John Doerr’s book “Measure What Matters” and learning about the current OKR wave. What are OKR’s and what is the history? How are OKR’s different or the same as traditional organizational goal setting? What are the potential challenges or pitfalls of OKR’s?
John Doerr is quite well known in the venture capital world as a successful investor, and also as a coach and sage to venture startups. If you’re in Silicon Valley having a conversation about anything startup or venture related his name or one of his concepts for success is going to come up.
This book on measuring what matters encapsulates what he considers one of the major methodologies for success in any organization. He is the Johnny Appleseed of OKR’s. All of his invested startups are trained in using OKR’s to focus their energy on what matters.
OKR’s when done correctly as part of a corporate culture can lead a startup to success or lead a lagging company through a turn-around. If you’ve ever worked in an organization that seems to be drifting along with no ‘true north’, you’ll appreciate the focusing impact of OKR’s
The history of OKR’s comes from a man named Andy Grove at Intel. Andy was an executive with unparalleled energy, intellect and innovative spirit. He looked at the challenges that Intel was facing and knew that the current way to manage the company towards its goals was not working. He decided that in order to survive and thrive Intel needed something new. Through energetic experimentation and iteration, building on earlier works of Drucker and others, he created the OKR approach that drove the incredible success of Intel through the 80’s and 90’s.
John Doerr was one of Andy’s students in this awakening and took the concepts of OKR’s into his practice as a venture capitalist.
What’s an OKR? OKR stands for Objective and Key Results. They force the organization to declare an objective and then define how they are going to measure progress towards that objective. This is a transparent and collaborative process where everyone has a role in setting objectives at all levels.
How are OKR’s different than traditional goal setting exercises? How are they the same?
Traditional businesses in the 20th century were based on an Army model of management. The folks at the top set the goals, then those goals cascaded down in whatever form through the layers of the management structure. The employees at the bottom set their goals at the start of the year.
The annual reviews happened at the end of the year. It wasn’t a great process for anyone involved and did not produce the results that the leaders wee looking for. Anyone who has had to suffer through annual reviews as a manager or an employee knows what a waste of time and effort they are.
What is different is that the OKR process forces an alignment at all levels with the purpose of the organization. The objectives set are measurable, focused and few. This forces the organization to agree on what the most important things are and how you’ll know if you’re getting there.
The other major difference is that OKR’s are not ‘set and forget’ like traditional goal setting exercises. They have a much shorter review cycle with many touch points along the way to recalibrate. They are used every day for guidance. This allows organizations to attack focused challenges with smaller sprints, then reevaluate quickly based on the measurable learning and pivot to better approaches.
Unlike traditional goal setting exercises these are not ‘lip service’ by the leadership team. They are management led and imbedded in the culture. The leadership is transparent as to what the organization is trying to achieve.
If you run into any employee of an OKR led company and ask them what the objectives of the organization are, they can tell you straight away and then tell you how they are tied into that. The transparency creates alignment and purpose throughout the organization. A purpose driven workforce will accomplish amazing things.
The OKR’s give the employees their ‘why’, the Key results define the measurable ‘what’ and the employees are set free to deliver with the ‘how’. When done right the OKR’s create a focused, aligned and purpose driven organization.
Let’s circle back to those ‘amazing things’ that these organizations are capable of. Once the OKR engine is turned on and functioning, creating that focus, alignment, and purpose, then the organization is ready to embrace ‘moonshots’.
A moonshot references how John Fitzgerald Kennedy, as president of the US, set a giant goal to put a man on the moon by a certain date. It was a big objective, outside the cope of anything ever done. It was also very clear and measurable. It enabled the teams at NASA to focus and align behind a purpose.
In an organization, moonshots take the form of a stretch goal. Like doubling the company’s revenue. Something that seems aggressive and audacious. This becomes something that the whole company can rally around. The existing OKR process give the organization the ability to look at the moonshot and credibly ask; “OK, what do we have to do to get there?” then iterate quickly to fundamentally pivot capabilities to make it happen.
When done right the OKR organization is very flexible, resilient and agile in its performance. The transparency of objectives at all levels creates lateral collaboration – breaking down silos- to get things done. OKR’s bring sacred cows to the surface quickly.
Those companies, like Intel and the rest of the case studies in the book, that have embraced Doerr’s OKR mantra are very successful. Especially with startups that tend to hit wall when they scale to a point where the founders run out of bandwidth. OKR’s enable that scaling by institutionalizing what matters.
It’s no doubt that an OKR driven company is successful. How about the employees? Certainly, any of us would rather be part of a purpose driven company that is doing well. But, somewhere in the back of my mind a little voice was asking “Isn’t this a way to wring more productivity out of the workers?” Clearly this was Andy Groves starting premise, Doerr states this early on. How do you get more production out of an organization?
One could argue that an aligned organization creates more output with the same amount, or less, effort because everyone is pulling in the same direction. This is true. But looking at the flywheel nature of an OKR driven company the speed of the treadmill is going to be cranked up with each subsequent moonshot.
In the case studies you see how the key employees worked long hours and moved mountains to make the moonshot. I wonder if this isn’t a methodology that plays on our natural tendency to lose ourselves in a worthy cause larger than ourselves.
That’s my take on OKR’s so far. I think it is a very effective alternative to traditional management techniques and goal setting. Clearly OKR’s can transform a company’s culture for the better and enable the achievement of big things.
Like all management methods OKR’s are sure to run their course in the next few decades and see spectacular successes and failures. But, it’s one of those things that you need to be aware of in today’s organizations.