Objectives and Key Results (OKR) are important for any serious entrepreneur and business owner. OKR is not a new concept. It was invented by the giant tech company Intel and was popularised by John Doerr, who worked for the company in the 1970s. He later became a venture capitalist who helped develop some of the most important companies this century, including Google, Amazon, LinkedIn, Intuit, Symantec and others.
What is Objectives and Key Results (OKR)?
Objectives and Key Results (OKRs) is actually a pretty simple yet innovative concept. The “objectives” part of OKR are the goals your organization plans to achieve. The “key results” part of OKR is the measurement of your progress towards that goal based on impact.
However, OKRs is not just about defining your business’s goals and measuring the results. OKR is a framework for team members to develop cross-functional collaboration. OKR is about critical thinking as a cohesive group. Through the OKR framework, contributions by each member is measurable and there is accountability. Most importantly, OKR makes sure that there is clarity of purpose, which is important when striving towards a long-term goal and/or your business has a lot of moving parts all happening at once.
Difference Between OKR and KPI
Key Performance Indicator (KPI) might seem similar to Objectives and Key Results (OKRs), but they actually have fundamental differences. OKR is a more of a strategic framework. KPI, on the other hand, are measurements that exist within a framework. Essentially, OKR is a lot more broad and takes a black & white approach to objectives, but implements specific metrics to track the steps you take towards your goals.
Typically, but not necessarily, your business will set up to five high-level objectives. You would then have around 3 to 5 key results per objective. Again, your OKR framework will be dependent on your business model, your goals as a company, and other factors that are unique to your organization.
OKR Example Case Study
The overarching goal for your business is generally isn’t measurable, but that’s where the key results part of OKR comes in. Let’s take a look at an example of OKR at work. In this example, we’ll just use three objectives and a single key result for simplification.
Your company is a young start-up in Melbourne. Your business model is selling locally-grown coffee beans to cafes and individuals. You hold a meeting with your talented and energetic team. The topic of the meeting is your brand’s OKR. You then write down the following on your iPad that’s connected to the big LCD screen:
Objectives and Their Key Results
1. Deliver High-Quality Products
Key Result: attain good reviews from customers
2. Provide Great User Experience
Key Result: Increase repeat customers
3. Increase Brand Visibility
Key Result: increase engagement on social media
Once your team understands the objectives and the metrics, you can then assign tasks to certain members or small groups that are focused on a particular project. For instance, one team can tackle Objective #1, and so on and so forth.
However, don’t forget that the OKR framework encourages collaboration, so different task units in your team should cross-collaborate. For instance, the marketing unit would work with the web development unit to create funnel pages. The acquisition department will work with the task unit who monitors reviews about certain products, so that they know which coffee bean suppliers to keep buying from and which ones to drop.
Now that you have a fundamental understanding of what OKRs are, you should introduce this framework to your team, especially if you have big goals coming up. It is a substantially rewarding way of working together as a team and will make those seemingly scary goals look like a piece of cake.