To be executed, a strategy must be managed, communicated and understood. OKR is a lightweight yet powerful framework for strategy execution, to be used to communicate strategy, creating alignment and achieve goals.
OKR – Objective Key Result
Companies tend to be one-dimensional when they describe their strategy and strategy is rarely described with a consistent, concise and systemic view. This way strategy is not easily understood at all levels of organization and alignment is missing. Without alignment, searched positioning and competitive advantage is not reached, thus frustrating the effort of the strategic process.
How does it work? The Objective-Key Results system gives transparency about initiatives to be started and empowers individuals and teams. Empowered individuals and teams are better initiatives managers and learners, and their feedback will nurture more challenging future objectives
The loop is reinforcing itself in a virtuous cycle, and it can also work in the opposite direction. When Goals are not clear, wrong initiatives are started, and bad choices are made at any level of the company thus leading to demotivated individuals, ill-managed initiatives and so on.
So what exactly is OKR? OKR, the Objective-Key Results system, is a two-levels goal-setting tool for value creation, invented at Intel by Andy Grove in the 1971. It became really popular after its adoption in Google in 1999. How does it work? The goal sets the direction, and key measures are the acceptance tests for the achievement of the goals. Key measures are, in the words of Andy Grove, the “Did I do that,or did I not do that?” the litmus test of your Execution. Objectives are (very) challenging goals, and Key Results are specific Values connected to the goal. An example of Objective is “We want to dominate the PC market” and “Growing our Market Share to 32%” is a Key Result.
OKR, when properly applied, could help in balancing the different dimension of strategy and achieving a successful execution. OKR is not a theoretical system,it’s all about Action and Execution
Due to its apparent simplicity OKR is expecially popular in Silicon Valley, Tech and Knowledge companies like Google, INTEL, Linkedin, Twitter and can be applied in startup as well as in multinational companies. The framework has its roots in the Management view of Peter Drucker, who firts introduced the world to the concept of MBO Management by Objectives. However, compared to a classic MBO system, the OKR tends to be more transparent, more aggressive in the goal setting and more frequently updated. Also, compared to MBOs systems, OKR are forward looking, and they are better used when divorced from annual performance bonus reviews.
Goals are cascaded at the Business Unit and Team levels, and Initiatives are started to support Goals.
Using OKR @ Google
OKR can be particularly useful in Agile Companies. Here’s the story of how Sundar Pichai, now the third Google’s CEO, used OKR to bring a new innovative Chrome Browser to the Market
Pichai was on a mission to rethink the browser as an application platform. Values of his Team were User first, Speed, Moonshot audacious Goal . In this context with a customer centri culture strongly inclined towards innovation and speed, he set the ambitious goal of achieving in 2008 20M users for its browser. He stopped short at 11M but, staying with same objective, he upped the target key results at 50M for the 2009. Again, he fell short at 38M, but upped the target again to 100M in 2010, and finally he got it with 111M users
- Mission: rethinking the browser as a computing platform Objective: Best Browser in the world
- Key Results: seven days active users. Target from 20 to 100M
- Off-line TV capaigns (i.e Dear Sophie, Chrome Fast)
- New distribution channels (Chrome for OSX an Linux)
- Chrome Technical Development
Simple but not easy, there is no unique tried and true way to implement the system. Introducing OKR is a change Managemnt journey, and if your company is new to it, you should start gradually with a pilot.
A good Objective is motivating but not directly measurable. Key results, instead, should be directly and clearly measurable. Any Objective must have initiatives meant to achieve the desired results. Initiatives are output, not outcome, and should not be implemented per se, but only with focus on Objectives and Key Results.
Objectives and Goals should be cascaded at the Business Unit and Team level, frequently discussed and co-created with the Team and Business Unit Manager, allowing for learning feedbacks.
Marcello Del Bono is coaching and leading Agile Teams, supporting Transformation programs. He has multi-year experience as a Product Owner, Scrum Master and Agile Coach in e-commerce, IT, Marketing and Decision Support Systems in Media, Finance, Fashion industries.
Contact him on LinkedIn https://www.linkedin.com/in/marcellodelbono/