The OKR Method – Introduction to Objectives and Key Results

What is OKR?

OKR is an acronym that stands for “Objectives and Key Results”. It is a framework for setting objectives and measuring key results, as well as a critical approach to continuous improvement – in fact, an entire philosophy (which is why our seminars are not just about understanding, but about experiencing and internalizing). OKR promotes intrinsic motivation.

The question is best answered by applying OKR. The method is:

Introduction to the OKR method – with goals to success

Agility versus continuity

OKR combines long-term and medium-term goals (vision, mission statement, corporate strategy) with short-term goals and tasks. OKR is an agile method and allows agility while at the same time ensuring a certain degree of continuity.

Agile strategy implementation – implementing the strategy in VUCA times

OKR is a system of continuous learning – from successes and failures/mistakes. It is a system that allows self-observation and thus promotes further development and evolution. OKR is a method for “learning strategy development” in which smaller measures are started before the evaluation of various alternatives has taken place – a slow, tentative approach to the strategy process.

Combination with other agile methods

The OKR method can be introduced well in agile organizations that are already working with other frameworks, such as
Scrum
and
Kanban
– as well as with scaled Scrum frameworks such as SAFe®, LeSS and Nexus. Also the approaches of the Lean Startup Model: e.g. the Build-Measure-Learn cycle, the MVP approach and much more. can be easily combined and supplemented with OKR. Here is an article on how OKR can complement SAFe and SAFe OKR.

OKR in the various organizational forms

OKR also works in any organizational form for the implementation of corporate goals: Line and matrix organization, squads/chapters/tribes (Spotify model), holocracy or holacracy as well as sociocracy.

OKR as a management method

OKR can also be seen as a modern management method: for the management of individual teams by a manager in the sense of “servant leadership” – as well as individual employees if necessary, although we do not recommend the latter, as the team spirit can quickly be lost. OKR allows a high reaction speed to new situations and thus increases the resilience of companies.

Conclusion – OKR is much more than setting and pursuing goals

This makes the OKR method an effective tool that is gaining in importance and popularity, especially in these times of rapid change and increasingly distributed teams in home offices.

Five reasons to use the OKR method – Why is the OKR model so successful? Advantages and principles of the OKR method

The acronym FACTS is a very good way of expressing the essence of OKR: FACTS stands for Focus, Alignment, Commitment, Transparency and Stretching.

OKR history – Where does the OKR method come from?

The method originated at Intel.

OKR at Intel – Intel MbO – iMbO

The founder of OKR is Andrew Stephen Grove – in short
Andy Grove
. He was the first COO and longtime CEO of Intel.

Intel, known for its PC microprocessors and the slogan “Intel inside”, was founded in 1968 by Gordon E. Moore (known for Moore’s Law) and Robert Noyce. On the day Intel was founded, Andy Grove was also hired, who led the company as CEO in the 1980s and 1990s. He was not a real co-founder, but had the status of a founder and is therefore often referred to as a “late founder”.

Grove introduced his “OKR” approach at Intel in 1971 – he was 35 years old at the time. In 1983, the approach was documented for the first time in his book “High Output Management“. In it, he presents the method of qualitative indicators (later “Objectives“) and measurable indicators (later “Key Results“) as part of a “Breakfast Factory”. At the time, Grove called his method “iMbO – Intel Management by Objectives” – as the name suggests, it was a further development of MbO – Management by Objectives.

At first glance, OKR appears to have some similarities with the MbO method, but differs in key aspects.

Andrew Grove or Andy Grove, 1978
Source: Intel Free Press, CC BY-SA 2.0, via Wikimedia Commons

Book cover from 1983 – Copyright Random House Verlag

Advertisement: Order book (updated edition from 1995) at Amazon (commission link)

Original video of a lecture by Andy Grove from the 70s

The OKR history at a glance – the history of goal management methods

The OKR history

OKR and John Doerr – employee of Andy Grove, then Investment Manager

1974 came John Doerr joined Intel at the age of 23. He worked as a sales representative at the time and attended a Grove “OKR course” in the 1970s, probably 1975.

Doerr moved to the Silicon Valley-based venture capital firm Kleiner Perkins (then Kleiner Perkins Caufield & Byer) in 1980, where he became an investment manager.

In 1999, Kleiner Perkins invested in Google – with Doerr as investment manager.

John Doerr – approx. in 1999
Source: Book The Google Story (2018 Updated Edition): Inside the Hottest Business, Media, and Technology Success of Our Time (English Edition) Kindle edition by David A. Vise and Mark Malseed

OKR on Google

In the same year, 1999, John Doerr introduced the topic of OKR at Google. At the time, Google employed just 40 people.

The new management approach was introduced and further developed over the years – and is still a key driver of Google and Alphabet’s success today.

A separate article about: OKR on Google

Read more about how OKR made Google successful.

Google Team 1999 (Source: Google)
Source: Independent News & Media

Larry Page, the co-founder and long-time CEO of Google, later Alphabet, makes the following comments in Doerr’s OKR book “OKR: Objectives and Key Results: How to develop, measure and implement goals that really matter”:

John Doerr publishes his book on the OKR method

In September 2017, John Doerr published his book on the OKR method entitled “Measure What Matters: OKRs: The Simple Idea that Drives 10x Growth”, which has been translated into numerous languages. The German title is: “OKR: Objectives & Key Results: Wie Sie Ziele, auf die es wirklich ankommt, entwickeln, messen und umsetzen”. His website: www.whatmatters.com

Book cover – Copyright: Portfolio Penguin Verlag

Advertisement: Order book at Amazon (commission link) –
Order the book translated into German at Amazon (commission link)

John Doerr, 2013
Source: TechCrunch, CC BY 2.0, via Wikimedia Commons

Other success stories besides Intel and Google

Other OKR success stories include: LinkedIn, Twitter, Uber, Spotify and many more companies.

OKR is a “best of” various methods

As the OKR method combines the strengths and advantages of various goal-setting and management methods, OKR can be described as a “best-of” and a symbiotic further development of these:

The OKR format – What is an OKR set – the difference to other target setting methods

As the name suggests, OKR consists of objectives and key results– this is how the objectives are formulated:

The objective – What is an objective?

An objective is an inspiring, qualitative and ambitious goal. It describes what needs to be achieved. Objectives provide direction and describe the next stage in implementing or achieving the vision.

They therefore answer the question“What do we want to achieve?” or“Where do we want to go?“.

Objectives are…

Examples of optimal objectives

Objective #1

We have gained valuable new insights from an extensive customer survey.

Objective #2

We have implemented measures to optimize customer interaction.

Objective #3

Thanks to the new optimized onboarding process, we have enthusiastic new employees right from the start.

Objective #4

We are heroes at turning sales contacts into hot leads that become enthusiastic customers.

Objective #5

We have a fully automated. Test environment with extensive unit tests set up for smooth continuous deployment.

Objective #6

We have a huge influx of new customers thanks to an ingenious new pricing strategy.

The key result – What is a key result? The crucial importance of key results in the OKR method

In contrast to an objective, a key result (sometimes abbreviated to “KR”) is a quantitative key result – clearly indicating whether an objective (outcome) has been achieved. It describes how we measure the outcome of our objective. Key results thus concretize the objective in the sense of the value proposition and measure progress towards the goal (objective).

This makes the objective measurable and answers the question“How do we measure the outcome?” – progress during the OKR cycle and the result after completion of the OKR cycle.

A key result increases the probability that the objective will be achieved – but it cannot be used to measure whether we were ultimately successful or not. For this purpose, the outcome and thus also the objective must be assessed.

Key results are …

Examples of optimal KRs – Key Results

Key Result #1

Improvement in the Net Promoter Score (NPS) from -20 to 30

Key Result #2

Increase in the micro conversion rate of the order process (from shopping cart) from 30% to over 90%

Key Result #3

We increased the customer rating from 1.5 stars to 4 stars using A/B tests in the ordering process.

Key Result #4

We conducted interviews with influencers in competitive sports who posted stories on their Instagram channels with a total reach of 1 million followers have posted.

The OKR formula – the question of formulation

The following formulation by John Doerr can be used to formulate qualitative objectives and the corresponding quantitative key results:

The original formula reads: I will (Objective) as measured by (Key Results).

The exciting thing here is “measured by”: because only measurability makes a goal a real goal. If a goal cannot be measured, it is nothing more than a wish.

Interaction of an objective and several key results – What is an OKR set?

The OKR method uses so-called OKR sets. An OKR set consists of an objective and several key results:

One objective and two to four key results form an OKR set. The most relevant success drivers are selected as key results, i.e. the results with the greatest effect on target achievement. The relationship between objectives and key results is similar to that between atomic nuclei and electrons – they cannot exist without each other.

That’s what makes a good OKR set…

Tasks, tasks, activities

The activities that lead to progress towards the fulfillment of objectives, in particular key results, are tasks or projects.

In practice, it quickly happens that key results are a list of tasks, i.e. they describe the output and not the outcome. To get closer to the “outcome”, ask yourself why you want to work on a particular task, what purpose you are pursuing with it, what problem you are solving with it.

Where does that come from? Traditional target and performance systems are designed to reward activities. This means that employees are incentivized for the completion or processing of tasks – the more that is done, the better.

Far too little or no attention is paid to the benefits. OKR sets – Objectives as well as Key Results, however, focus on the outcome, the benefit, the effect.

MOALs – Mid-term gOALs – medium-term objectives and milestones

In principle, the OKR method can also be used for annual OKRs. MOALs are mid-term gOALs, usually annual targets in the form of OKR sets or formulated as a target (“Goal”) and supplemented with target KPIs. These targets for an entire year are then broken down into quarterly targets.

OKR examples

Here is an example of a good OKR set:

We are happy to formulate examples based on a sample company and situation. Our sample company produces caps and jerseys for clubs and associations.

The situation: The sample company currently has low customer satisfaction and would like to address the issue and create a data-driven basis for possible measures.

Objective #1

We have gained a clear understanding of which satisfaction drivers are relevant for customers in our interactions with them

Key Result #1

We analyzed 500 responses to an extraordinary online customer survey to develop measures

Key Result #2

We validated our hypotheses for the development of measures by conducting 15 qualitative personal interviews with our top-selling customers who had bailed out

Why should you use OKR?

As with any tool, the OKR method also depends on the correct application, because “A fool with a tool is still a fool“. The right environment, the “milieu”, is also important: management style, practiced corporate culture and much more.

Used correctly, OKR helps to implement the company’s vision in iterative cycles:

The OKR cycle

The OKR cycle is divided into three phases: Planning phase, execution phase and completion phase.

The OKR cycle is iterated over and over again. The duration of a cycle, the so-called cadence, can range from two to 6 months – most companies work with a cadence of 3 months.

The main person responsible for implementing the OKR process and OKR coaching is the OKR Coach, OKR Master, OKR Shepherd, OKR Facilitator, OKR Champion … – So far, no standardized term for the role has been established – in contrast to the Scrum Master in Scrum, for example.

Here is a brief overview of the OKR cycle:

The OKR cycle

The planning phase – setting objectives for the entire company

The OKR cycle begins with the planning phase. As part of this, the OKR sets are created at the beginning of the OKR cycle in so-called OKR planning(definition of OKRs), initially at the organizational level or company level (top-level OKR sets) with the mostly strategic objectives. Then the departments create their OKR sets based on the top-level OKR sets and then, based on the department OKR sets, the teams, if possible in self-organization. In some cases, OKR Planning is divided into OKR Drafting and OKR Refinement.

Tuning: top-down, buttom-up and horizontal

Vertical coordination from company level via departments to the teams is called top-down coordination. In addition, teams can propose ideas for OKR sets to the departments and the management or leadership team. This allows teams or departments to create individual / local targets in parallel to the top-down process and negotiate them with the next higher level. This voting is called bottom-up voting.

Parallel to this, horizontal coordination takes place between the departments and teams.

The execution phase – now the work really begins

During the execution phase of the OKR cycle, work is carried out on the actual target fulfillment and progress is measured and monitored. OKR events – both daily and weekly check-in meetings – are held for this purpose. The daily stand-up meetings are called Daily Huddles. The weekly meetings are called OKR Check-in or OKR-Weekly.

If completely unexpected, very drastic events such as a pandemic lockdown, 9/11, … occur, extraordinary OKR planning can also take place during the execution phase and new OKR sets can be created.

The final phase – we measure the result and learn from success and mistakes

At the end of the OKR cycle (usually at the end of the quarter), the OKR sets are measured in the OKR Review in all teams in the final phase and the achievement of the target (the objectives and key results) is assessed. In addition, at the end of the cycle, the OKR process and collaboration are assessed in an OKR retrospective in all teams, thereby optimizing the method and collaboration. The content-related and methodological findings are incorporated into the next cycle. The relatively short cycles of typically 3 months create a relatively high level of agility throughout the company.

The OKR meetings at a glance

Here is an overview of the OKR meetings. Certain meetings may already be established, such as the Daily Standup or Daily Scrum or a weekly status meeting or one-on-one meeting – the agenda is then changed or supplemented in terms of OKR.

Conserve resources – combine meetings

It can also make sense to combine them with other meetings, such as the OKR Weekly with a Scrum sprint review. The duration given is a guide value, but may vary from company to company, depending on the company level and number of participants.

The degree of target achievement

With a key result, a simple yes or no assessment is possible: Was the goal achieved or not?

What if the target was only just missed or 80% achieved? Although the target was not achieved, progress was made. This means that a certain degree of success has been achieved.

In order to do justice to this fact, the results are evaluated on the basis of the degree of target achievement (or “score”) on a percentage scale ranging from 0 to 100 percent or from 0 to 1.0.

The OKR traffic light

The degree of achievement or score is divided into three areas and assigned to the traffic light colors red, yellow and green. This is why it is also referred to as the OKR traffic light:

Failure is an option

In traditional target systems, we are used to having to achieve or even exceed 100 percent. In the OKR methodology, it is perfectly fine to achieve 70 percent or 0.7.

It is important that the company has a healthy error culture and that it is accepted that a goal can be missed. Because the goals are very ambitious. This also applies to the micro conversion rate of over 90 percent in our example.

Confidence level

The score can also be viewed according to the traffic light system in the weekly OKR status meetings. At the beginning of an OKR cycle, however, the traffic light always shows red, as no progress or no major progress has been made. For this reason, it is much more important in this phase to monitor the assessment or the so-called confidence level.

This indicates the probability, i.e. the confidence, of achieving a result of 0.7 or better at the end of the OKR cycle (or at any earlier point in time defined in the key result).

As this is a purely subjective assessment, the confidence level values defined as percentages are assigned corresponding descriptions in practice, for example:

KPIs – Key Performance Indicators

In parallel to the OKR method, the teams can use KPIs to measure and monitor their operational performance. Operational targets can also be defined with KPIs – targets for a cycle, up to the end of the year or even for long-term corporate goals. If a focus topic arises for an OKR cycle, a KPI can also be used for a key result for an OKR set.

Scrum meets OKR – Interaction of agile methods and OKR

The OKR method can be combined well with agile frameworks such as Scrum and Kanban.

OKR ensures progress towards the vision or mission statement. Scrum or Kanban supports the operational implementation of tasks and helps with the iterative implementation of projects and tasks, thereby contributing to the progress of key results.

OKR is the ideal complement to SCRUMThe Scrum Product Owner is responsible for creating business value: he/she creates and prioritizes the product backlog and puts the most urgent or most important backlog items at the top of the list, thus ensuring that the items with the highest business value are completed first. And the OKR sets help to prioritize the business value correctly!

SCRUM is the ideal complement to OKR: in today’s world, the implementation of goals requires
VUCA world with rapidly changing requirements and framework conditions of a very iterative and agile approach. This is where Scrum or Kanban comes into play and ideally complements OKR.

SCRUM ensures agility with short sprints – OKR helps to ensure a certain continuity with longer cycles.

More on “SCRUM goes OKR”, how the cycles and meetings should be coordinated, and much more. here

OKR introduction / implementation in organizations – how we successfully introduce the OKR process as part of our consulting services for our clients

70% of all OKR implementations fail.

The following tried-and-tested eight-step OKR introduction process ensures that all important requirements are met in order to start the OKR process. The eight stages that we clarify in our OKR consultation with the client are:

1. define success criteria,

2. appoint OKR Process Owner,

3. name a C-level sponsor,

4. determine the scope of the initial OKR introduction,

5. set OKR cadence / cycle duration,

6. set up OKR meetings,

7th OKR publication and

8. internal communication.

The focus is on people

The Agile Manifesto states: “Individuals and Interactions over Processes and Tools.” It is also important in connection with OKR, especially with the introduction of OKR, that the focus is on people. Individuals and interactions are more important than processes and tools. This is not to say that the OKR processes and tools are unimportant, but rather that the aim is to pick up people and colleagues in an appreciative manner and take them along on the OKR journey.

Prerequisites

It is often said that OKR requires agility. We believe that OKR does not presuppose agility – it supports agility and creates the right focus. It is the “lubricant” for successful agile teams.

At the same time, OKR helps companies that are not yet agile to develop in the direction of agility. Agility leads to the iterative and effective redesign and optimization of products, services and business models.

Questions and answers

What is the OKR method?

OKR (Objectives and Key Results) is a target management and strategy execution method to create focus, alignment, commitment and transparency around ambitious measurable targets.

The targets are normally set, tracked and reassessed on a quarterly basis. The aim is to ensure that everyone is moving in the same direction, with clear priorities, at a constant rhythm.

For which companies are OKR methods suitable?

OKR can be used in companies of any size – from start-ups and SMEs to large corporations. OKR is suitable for companies in any industry – not just IT companies, even if its origins go back to Intel and Google.

OKR can also be used in any organizational form, from structural or line organizations to multi-line organizations such as matrix organizations to network organizations such as squads/chapters/tribes (Spotify model), holacracy or holacracy and sociocracy.

Are there different OKR methods?

The beginnings of OKR go back about 50 years. The founder of OKR is Andrew Stephen Grove – Andy Grove for short. He was CEO of Intel for many years.

John Doerr, formerly a sales representative at Intel, introduced the OKR method to Google in 1999 as an investment manager at the venture capital firm Kleiner Perkins, when Google still had 40 employees. In 2012, Rick Klau from Google Ventures presented OKR in the video “How Google sets goals: OKR”. Since this publication, the OKR method has experienced an enormous surge in popularity.

There is no official institution for OKR, as there is for Scrum, e.g. Scrum.org or the ScrumAlliance. In detail, OKR has slightly different characteristics depending on the company, consulting firm or consultant – but is largely based on the approaches of Andy Grove and John Doerr.

How long does it take to establish an OKR method in the company?

In the case of organizational structures, the introduction typically lasts depending on the instance depth (number of hierarchy levels) and cadence (duration of an OKR cycle): Instance depth x cadence + 1 cadence, i.e. with an instance depth of 3 and a cadence of 3 months, approx. 12 months if the introduction requires one OKR cycle for each level.

The introduction can also be carried out more quickly – fully establishing and living the philosophy behind OKR and the associated mindset can also take longer, depending on the framework conditions. The introduction can take place at any time, even during the year.

Who is responsible internally for implementing a specific OKR method?

The OKR process requires a main person responsible for driving it forward and monitoring it within the company, analogous to the Scrum Master in the Scrum process. No name has yet been established for the role.
Terms such as OKR Coach, Expert, Master, Shepherd, Manager, Ambassador, Facilitator, Champion and Process Owner circulate. Accordingly, different training providers offer different certificates.

Do I need an OKR professional to learn the OKR method?

The OKR method appears very simple at first glance. There are books, online courses, seminars and workshops for learning the method. Despite its simplicity, however, teams and employees often find it difficult to implement the method.

Many OKR introductions fail due to a lack of practical experience on the part of employees or managers. Creating OKR sets is the classic – it takes some experience and practice. All too often, unfortunately, key results are just lists of tasks.

The Daily Huddles and the moderation of the first OKR-Weekly’s, OKR-Reviews and especially the OKR-Retrospectives also require some practice. Support from experts with practical experience is therefore recommended.

When will I see the first results once I have implemented the OKR method?

Results from the OKR method are often positively noticeable right from the start. The discussion surrounding the creation of the first OKR sets alone creates focus and a uniform direction.

Commitment and transparency in the further course. Overall, OKR usually contributes significantly and quickly to greater success through ambitious and measurable goals.