Good business leadership requires setting the right goals and putting a system in place that can orient the entire organization toward those goals. A sound goal management system will be focused on meaningful outcomes, not merely the quantity of employee output.
The best leaders know that an effective organization doesn’t only function top-down, but bottom-up, side-to-side, and diagonally. In other words, companies need to be fully integrated to keep everyone pulling in the same direction. Effective goal management will require input from everyone across the organization and transparent communication throughout.
OKR (Objectives and Key Results) achieves these standards. Well known today for its use by John Doerr working with Google, OKR was developed by Andy Grove at Intel. Grove’s work is based on, but also complicates and even in some ways inverts the “management by objectives” theory of Peter Drucker.
Objectives: Inspiring Destinations
In the most basic sense, objectives are goals. In OKR, objectives are specific types of goals. A good OKR objective should be bold. It should aspire to greatness and inspire your employees to be daring and creative.
So objectives need to stretch your teams, but not break them. A common way to think about this is to aim for a 70% success rate in your quarterly objectives. Some will go beyond. Hopefully, very few will fall below, and you’ll know you aren’t settling for easy, uninspiring achievement.
Objectives are active. This is both motivational and practical, giving your employees a clear vision of where they’re going. OKR is designed to target specific areas of opportunity, so objectives should be focused on a definable outcome.
Key Results: Maps and Timelines
If objectives are the destinations, you want your employees to set out for, key results are the maps and timelines they will use to get there. Teams and individuals need these maps in order to prioritize company goals while taking ownership of their unique contributions to the whole. All employees should be involved in the process of setting and monitoring OKRs.
Key results are the quantifiable targets that, when achieved, add up to the objectives. Commonly coming in at 3 to 5 key results per objective, they should be specific, objectively measurable, and directly relevant to the success of the objective. They should also be trackable; that is, a key result target for the quarter should be something you can check in on the progress week-to-week.
Key results should also be ambitious. While probably written in a more prosaic style than your objectives, if they are to add up to an ambitious goal, key results must also lie in that ambitious but possible realm.
Begin Using OKR Today
If you want to fundamentally transform your work, your team, and your organization, you don’t just need a grand vision, you need a system. OKR creates the structure you need to achieve more than you ever thought possible and do so with the enthusiasm and dedication of everyone involved.
