OKR Systems. How to set ambitious goals for the company and achieve them?

OKR is an acronym for Objectives and Key Results, a system used by teams and individuals to set ambitious goals that yield measurable results. OKRs allow for tracking progress, ensuring that different teams in the company "play to the same goal" and facilitate the implementation of changes to achieve the set tasks.

The history of OKRs dates back to the seventies of the twentieth century, when Andre Grove, one of the co-founders of Intel, introduced this system in his company. OKRs became loud when at the end of the nineties, they became the basic methodology used by Google – a company that was one of the most innovative companies in Silicon Valley. Since then,
OKRs have been used by many companies from Silicon Valley and a lot of companies from the new technology industry with Samsung, Spotify and Netflix at the forefront.

What are OKRs?

OKRs consist of two basic elements: objectives and key results. Objectives are very clearly defined, they should be "unattainable", inspiring, specific and action-oriented. Their main role is to set a clearly defined direction of action. Key results, this is already a way of monitoring, comparing and assessing to what extent these goals have been achieved. Well-defined key results are specific, time-bound and aggressive. Most importantly, they should be measurable and verifiable. There is no room for doubt. In the case of OKR implementation, achieving a result at the level of 70% of key results is already considered good.

Creating an OKR involves setting a goal, e.g. "Application X will be in the TOP 10 applications in the App Store in Poland" and defining two or three key results needed to achieve it: "The increase in the number of users in the quarter will be X%", "The time of using the application will increase by X%", "Churn rate will decrease by X%". Goals can be even more general and give direction to the development of the entire organization. For example, the goal "Let's create an amazing customer experience" can be defined by such Key Results as "Net Prompter Score will increase to X" or "The cost of acquiring a customer will drop to Y".

OKRs vs KPI

Many companies use KPIs, or Key Performance Indicators. These indicators are used to measure performance, but they do not tell what needs to be changed or improved to improve these results. On the other hand, OKRs help in making decisions about what needs to be changed, fixed or improved. The assumption behind OKRs is also that they should be super ambitious - they are to set goals for the company that seem impossible to achieve. Just like in Moore's law, created by Intel's second founder Andy Moore, who stated that the number of transistors in an integrated circuit should grow at an exponential rate and double over time. This seemed unrealistic, but Intel and other semiconductor companies managed to achieve it. Intel's first processor consisted of 2250 transistors, current ones - of several tens of billions. However, this does not mean that KPIs and OKRs are mutually exclusive. KPI can be part of OKR.

- I often use KPIs as Key Results, which is a component of OKR. - explains Iza Klat, OKR Consultant, Head of People & Culture at Prowly and ex-Googler.

- In short, I would say that KPIs are often more down-to-earth (target, revenue, growth, etc.), while OKRs allow for daydreaming. That is, they allow for letting your imagination run wild and reaching for what seems impossible at first glance. OKRs often sound absurd and are considered funny by many managers who are firmly grounded. These are most often the managers who set their goals briefly - growth of 100% year on year. But after working at Google, we know that OKRs can also be very strongly based on numbers and this also has a chance to work - adds Klat.

What does the introduction of OKR in a small company or startup give?

OKRs are a methodology successfully used in large, well-known technology companies. However, the question remains whether it is worth considering it in a small company or startup.

- I supported the introduction of OKRs in several Polish startups and in large, mature organizations. Drawing on this experience, I can say that OKRs can work everywhere, but under very specific conditions. Where do I think they will work best? For example, in companies building their products or services, in companies that plan to scale their services, and finally in companies that plan to enter the acquisition process - explains Iza Klat.

John Doerr, Intel's manager, who was responsible for introducing the OKR system at Google, described the advantages of this methodology with the acronym F.A.C.T.S.

• Focus. OKRs allow you to focus on a small set of carefully defined priorities.
• Alignment. Aligning the organization's goals at every level to the highest level and key goal.
• Commitment. OKRs influence increased commitment and adherence to established priorities.
• Tracking. Tracking progress, evaluating them after a certain time (e.g. quarter) and the possibility of changing tactics to achieve the assumed goal.
• Stretching. Expanding, stretching goals beyond the standard business as usual and allowing significant changes in the organization. 

Of course, it is not the case that OKRs are a system without flaws and a panacea for all company challenges.

– The disadvantage of OKRs may be that it is not a self-play, as many companies think. OKRs cannot be left alone, they need to be nurtured and watered with a solid dose of interest. OKRs also unfortunately do not specify the resources that will be needed to achieve a specific goal. Separate planning is needed for this. OKRs are quite difficult to use in some departments that have a purely operational function such as accounting - explains Iza Klat.

Implementing OKR in the company

The introduction of the OKR system in the company consists of several stages. You need to have a clearly defined company strategy and set goals. It is very important that the system is implemented and introduced by the founders or main managers of the company. The organization should also decide how it will introduce OKRs - whether it is "top-down" or starts with individual pilot departments. OKRs should also have their own ambassador - a person who will be responsible for this methodology being implemented throughout the organization. The next step is to create a coherent OKR program - how many goals are set or how often progress is assessed. Finally, the last stage is employee education.

OKR is a system that seems simple, but implementing it in practice, especially in an organization that is already following a certain path and has its history, is a challenge.

– Generally, OKRs are quite a demanding system. It seems simple and intuitive and that's true, because creating OKRs is not exceptionally difficult. However, several conditions must be met so that the OKRs do not die of neglect. First and foremost – the desire for change. And not at the level of one person who strongly believes in this system in the company and will be the driving force of this initiative. OKRs must be "bought" and understood primarily at the management level of the company. If the CEO does not have his own OKRs and does not take the topic seriously, I give half a year to this daredevil who decided to implement them – Iza Klat convinces.

In her opinion, consistency and conducting regular so-called check-ins, i.e. meetings checking progress in implementation, are also extremely important.

– This is a methodical and burdensome action, but only thanks to this progress is possible. Thirdly, the introduction of OKRs makes sense when the company is implementing a specific strategy and OKRs can help in its implementation. I never undertake to support the implementation of this methodology where there is only a vague outline of what the company wants to achieve in the next year. This is my iron rule and I always advise it as the first step – a thoughtful strategy, agreed with the interested parties and written down – Klat summarizes.

The Objectives and Key Results methodology is quite simple in assumptions, and at the same time a powerful tool for setting goals and measuring results in organizations. In the rapidly changing business landscape, OKRs facilitate the setting of development direction and encourage continuous improvement. Therefore, it is certainly worth considering the introduction of the OKR system in a technology company, which has innovation and an appetite for development on global markets in its DNA, as well as a well-defined mission.