A startup is defined by growth. To attain sustainable growth the team needs to be focused and moving smartly. It is very hard to work on the right things, prioritize and not be distracted by other things. This is where OKR (Objectives and Key Results) can help you.
OKRs are an effective goal setting method whose purpose is to help you achieve great execution by keeping your team focused and working towards the same result. OKRs are used by successful companies like Google, LinkedIn, Twitter, Uber, MongoDB and many organizations across Silicon Valley. In this post, you will see what OKRs are and how you can make them work for your startup.
“If you want to understand startups, understand growth. Growth drives everything in this world.”Paul Graham, Startup = Growth
OKRs were initially invented at Intel in the 1970s. The original system which gave birth to OKRs is the MBO (Management by Objective) system. Andy Grove, Intel’s former CEO, wrote in his book High Output Management: “The idea behind MBO is extremely simple: If you don’t know where you’re going, you will not get there.” Or, as an old Indian saying puts it, “If you don’t know where you’re going, any road will get you there.”
OKRs are an evolution of this model that helps you be focused on.
In 1999, when Google was less than a year old, John Doerr who previously worked at Intel presented OKRs to Google’s leadership. They saw the benefits of the method and Google has been using it ever since to support its growth from less than fifty employees to thousands today. But the popularity of OKRs came late in 2013 when Rick Klau a partner at Google Ventures posted his presentation How Google sets goals: OKRs. The presentation got a lot of views and the concept of OKRs started becoming very popular.
What are OKRs?
OKRs are a list of qualitative goals, set for a period of time. Usually, OKRs are defined quarterly. Each objective has less than 5 key results which are quantitative metrics. The objective is what you have to accomplish and the key results are how you are going to get that done. The key results help to measure whether the objective has been reached at the end of the period.
For each period, OKRs are set at every level of the organization: company, departments, teams, and individual employees. The main goal of OKRs is to help employees focus their efforts and move in the same direction to succeed. OKRs allow you to set real coordination in your organization, communicate accurately and establish indicators to measure success. So you will always know how far you are in achieving your goals. This helps you and your team keep the momentum and intensity high.
Main characteristics of OKR
To be effective, OKRs must have the characteristics below :
- Ambitious: Your objectives must be ambitious, even appear impossible to achieve. They should feel somewhat uncomfortable but keep them realistic and definite.
- Measurable: Objectives are measurable by their key results. Key results must be easily measurable by a number. It can be a percentage or a number based on a specific metric. Google uses a 0–1.0 scale to grade each key result
- Public: Every OKR at any level in the organization must be public. It is necessary to help you know what matters and what everyone else is working on.
- Aligned: To keep everybody focused and moving in the same direction, objectives must be aligned and connected.
When you set your objective, the targeted achievement grade is between 60% and 70%. But if you get less than that, don’t take it as a failure but as an opportunity to learn and do better next time. If you hit 100% of success, your OKRs are not ambitious enough. And it is very important not to use OKRs as a performance evaluation.
By setting clear goals, everybody on the team can focus on a unique and same result. OKRs help you always keep in mind your priorities and keep you away from any distraction. With ambitious objectives, you always try to do more and go beyond what seems impossible. OKR helps everyone on the team stay engaged and productive because they know exactly what has to be done, what is expected from them and how this contributes to the company growth.
OKRs are a powerful method to set, execute and achieve goals. But to make them work for your startup, make sure that everyone is involved and committed. When they are well implemented, OKRs establish a real culture of goal setting and accomplishment in startup teams. This is the key to growth. Now that you know the basics about OKR. Are you excited to try them at your startup? Read part 2: Steps to successfully implement OKRs