In the first article of this series, we identified the six points that your startup must adhere to in order to implement the OKR (Objective and Key Results) goal management method – a popular framework that has been adopted by the likes of Google, LinkedIn, and Uber. The concept was originally developed by Andy Grove, who implemented the system at Intel. Under Grove’s leadership, Intel increased revenues from $1.9 billion to $26 billion – a fact that he fully credits to the setup, implementation, and constant use of the OKR method.
To recap, here are the six points that your startup needs to have ready before implementing the OKR method:
- A clear and ambitious mission
- A willingness to commit part of your team’s time and efforts to make the OKR program run smoothly
- OKR is a true and sincere aspiration of the leadership team
- You and your team are ready for transparency
- You have identified a person in the team who can manage the OKR program
- Your startup and its departments often track KPIs, or Key Performance Indicators.
Having covered the prerequisites for adopting OKR, today we’ll take a look at how to implement it. So, what is necessary to create OKRs for a company?
Usually, in every company, there are three to six goals its leadership team decides to achieve in a time frame of the next 12 months, every year. These “things” or “places” should be passed on to everyone in the company, and every person must be given the chance to give their input in the system. Employees should pass on what they think should be top priorities to their respective management teams, and so should management pass on their assessments of priorities to the directors.
But what are Objectives and Key Results exactly, and how can they be set? In the words of Andy Grove, the inventor of the OKR method, Objectives are the direction. They must be significant, concrete, action-oriented, and inspirational. Key Results are how we meet our objectives. They must be: specific and time bound, aggressive yet realistic, and measurable and verifiable. They must be able to be measured with a simple conclusion of yes or no – have I reached my Key Result or not?
John Doerr, Intel’s legendary employee and the great refiner and evangelist of the OKR method, said “using OKRs is an effective way to rally employees and focus everyone on getting the necessary jobs done”. Thus, OKRs should be kept simple and easily understood.
Objectives are the “what“ and Key Results are the “how“. Doerr stresses that “a few overarching and far-fetched objectives helps every member of the team to keep the focus on what is most important”.
Google, one of the first companies where Doerr introduced the OKR method, usually sets Objectives that will mean at least a 10x improvement in a project’s goal – whether it is a replacement of one of their services, or an aggressive move against a competitor.
Two examples illustrate this well are Chrome and Gmail. When Chrome was introduced, the Objective was “to create the best browser possible”. The Key Results were not speed, cleanliness, or design; the KR was “number of users”. So, in the first three years, the KRs for Chrome were, respectively: 20 million, 50 million, and 100 million. The real achievements were: around 10 million users, 37 million users and in the third year they got an amazing 111 million users, surpassing their KR goal. Of course, each year they were changing their marketing, PR, and media strategies, and the results finally paid off in the third year.
In the case of Gmail, not everybody will remember, but the great appeal was having one free gigabyte of storage per user – hundreds of times more storage space than other email services at the time. Adoption was massive, and this was one of the main reasons – the 10x principle in practice.
In order to create and implement OKR in your startup or company, follow these three mandatory steps:
- Focus on a few fundamental Objectives
- Track and trace OKRs to determine progress
- Set pairs of OKRs with CFR (Conversation, Feedback, Recognition) regular meetings
Let’s start with the first step – focusing on a few fundamental Objectives that are hard and challenging. This has the power of inspiring people who want to stay and develop the company, while distancing those who don’t want to commit. It also usually leads to breakthroughs, rather than incremental improvements. Without big goals, innovation and breakthroughs rarely take place. In terms of employee turnover, HR departments have found that employees tend to stick to companies with challenging goals rather than companies with modest and common goals. This may give the team a bigger sense of purpose, as some psychologists would suggest.
Doerr maintains that OKRs work because they incorporate specific hard goals. He notes that the business literature points to the OKR method as a robust forecast of success. People tend to rally around “audacious” goals more than modest ones.
When you set your OKRs, everyone in the organization must participate in the discussions and the project leader must ensure everyone in the organization creates his or her own OKRs. The fundamental detail is that all the individual and department OKRs must be aligned with the company’s general OKRs. Each Objective should have three to five Key Results, and every person in the organization should aim for a personal stretch.
Once all members of the crew have their OKRs decided and set, these documents must be put in a public place – either online or offline, or better yet, both. Sharing your OKRs with everybody else gives you the right to see what others have set and are pursuing, and creates more transparency, a sense of unity, and opportunities for cross-sector cooperation.
What are the three main Objectives that you must achieve every 45 days? And every quarter? How will you achieve them? That is, how will you measure whether you have achieved them – what are the Key Results paired to each Objective?
It’s the leadership team’s task to make sure that everyone in the company understands why the Objectives and Key Results were chosen, so they can think about how to align their own OKRs for the common good. Although all OKRs should be respected and stuck to, they can be adjusted should the need arise. Needless to say, take time choosing your Objectives so that you won’t have to adjust them later. It’s difficult, but good OKRs can take months to set.
One of the results that most teams report after adopting OKR is that employees are less prone to work at cross purposes and in different directions. Achieving Key Results also drive up commitment and satisfaction at work more than financial rewards do.
Regarding the second step, the best strategy is to hire a web platform service to track and trace your company’s Objectives and Key Results. There are a few out there like Gtmhub.com, Weekdone.com, Wrike.com and Trakstar.com. Those platforms support easy recording, tracking and searching of OKRs, even across thousands of employees. It helps having a neutral place where the sense of self-commitment and managers’ reminders will push people to record and post their OKRs, along with changing, adapting or abandoning them when needed and reporting ideally every 30-45 days – and minimally every quarter.
For the management and for the directors’ board, it is wise to mark individuals’ progress against OKRs and to balance it with the Key Performance Indicators of the company.
The third step of matching OKRs with CFR (Conversation, Feedback, Recognition) is the most difficult, and many startups and established companies will definitely fail here – either because there is a toxic work culture in place or there is no culture at all, despite several attempts of individual members and groups within the organizations. In those companies, directors and managers do what they think is best without following through on what was agreed upon at the last meeting or the annual strategic general meeting. There are always excuses for lack of communication or miscommunication. Often, in these cases, each individual rarely reads other employees’ emails from start to finish, and end up making comments in following meetings that are biased and lack the fundamental information, logic, and common orientation that should be present at any decision-making level. No, I am not talking about your startup. I am talking about the majority of the companies that fail, and the many that thrive because either they have many resources or their competitors quit before them (See Joh Nash’s Game Theory explanation about finite and infinite players).
Remember, you are creating a work culture based on transparency and a meritocracy and this will, of course, not be the best news for some colleagues in your workplace. Nevertheless, if you are successful in making peer-to-peer conversations a habit and listening to feedback from all levels of hierarchy, you also have more of a basis for recognition and reward. And those are powerful incentives for the human mind. Besides, regular peer-to-peer conversations and the posting and reporting of OKRs are powerful tools to keep awareness about individual performances as well as teams’ needs, concerns, and demands. When this cycle starts to happen continuously, managers will feel relieved about giving more precise feedback of any employee’s work, including their own. OKRs work as a spark to initiate discussions and fix problems in general, while keeping the main Objective on the horizon.
OKRs and CFRs together create a flat, open, autonomous, accountable and collaborative work culture, with recognition tied to progress under the OKR framework. In this environment, all the team is pushed to provide feedback and peer recognition.
When people experience a greater sense of support and appreciation, and are able to better measure their performance, the result is that engagement and retention increases to new levels, as every individual begins feeling responsibility for their roles and tasks in order to not be left behind and not drag the company with underperformance and needless quarrels.
Don’t get me wrong, creating an OKR oriented culture is one of the toughest challenges of any company, be it a startup or an established company. It all comes down to the basic values of each individual and these values are aligned with the values of your organization. A few will leave, however hopefully the majority will stay. And in staying, they will make it worth it to everyone who stays to work together towards the same goals, with the same values. Anything that causes attrition and disengagement begin to die when OKR arrives, because then it becomes irrelevant. All that matters is not what you know or what you have done – it’s what you can execute now.