How to Make OKRs Work in Your Scaling Business
If you read anything about business methods these days, you’ve no doubt come across the term “OKRs”. The concept first came to prominence when Google revealed its internal processes in 2014. Since then it has taken on a life of its own.
Listening to all the coverage over the past few years, it would be easy to believe that OKRs are a miracle cure to your business challenges. The concept is so wrapped up in Google-related hype and mythology that it can be next to impossible to get at the truth of OKR’s actual benefits, and conversely, limitations. Here we will cut through all the hype and take an honest look at what OKRs can actually do for scaling businesses.
OKRs are an extremely simple, but and potentially useful strategy for goal-setting and tracking that you may want to add to your repertoire. They may well transform the way that you think about your goals and help you accelerate your company’s growth; however, they are not a silver bullet. Rather, they are but one part of a much larger system of prioritization and accountability that you should implement to align your teams, increase transparency within your organization, and drive productivity.
OKR basics—what do the letters mean?
OKR stands for “Objectives and Key Results.” Each OKR is comprised of one major goal, which is the objective, and several measurable steps you are meant to take to achieve that goal, which are called the key results.
While the basic structure is easy to understand, effectively implementing OKRs in your organization is not as simple. The key to doing so is ensuring that your objectives are ambitious, measurable, and actually followed. The first two you can address in the planning stages – the third comes down to your dedication, workflow, and supporting systems.
Let’s break down the acronym further and take a look at each part individually to see how you can make this strategy work for your company.
Okay, these are the big guys—the major goals that will advance your employees’, teams’, and company’s mission. In our opinion, you need to set big-picture, action-oriented objectives that define where you want to go and what you want to do within a certain time-frame; we like quarterly objectives. In a scaling business, the status quo is never an acceptable objective. Instead, be ambitious: push the envelope and get out of your comfort zone – otherwise OKRs won’t really impact your business. You might fail to reach your objectives, but if you set intelligent and ambitious goals, you’ll still accomplish more doing so than you would have meeting a safer goal.
For example, doubling your revenue could be an effective objective, but continuing to develop leads at your current rate would not. Set the bar at least a little bit higher than you think you can reach – if doubling your revenue seems easy, try tripling it. You might surprise yourself with what you and your team can accomplish. Just remember to be specific enough so you can actually measure your performance against your goal.
We know we said we’d get away from Google hype, but it turns out there are some useful lessons to be learned from their use of OKRs. Let’s take a look at how future CEO Sundar Pichai used ambitious OKRs to launch Google Chrome. His first quarterly goal was to go from zero users to 20 million. He failed but the attempt made him rethink his approach. Two years later he reached his new goal of 111 million users, up from 38 million the year before. Now, Chrome is one of the leading browsers, and Sundar Pichai is at the helm of Google.
Let’s keep it simple: key results are the stepping-stone goals that you need to reach in order to accomplish your objective. All results should be SMART (specific, measurable, actionable, realistic and time-bound). Using these parameters will help you see progress toward the objective. Since you know specifically what the expected outcome is, it is easier for teams to be accountable for SMART objectives and results. Taking the example of doubling revenue, key results might be 25%, 50% and 75% increases in revenue by the next quarter.
A goal is not an effective key result if it doesn’t have a number associated with it. For instance, “get more customers” is not an effective key result, whereas “add 200 net customers” is. Another trap to avoid is making your key results actions rather than the results themselves. In other words:
- Goal: Double newsletter open rate and readership
- Effective Key Result: Acquire 20,000 new subscribers by Q4
- Ineffective Key Result: Create 10 social media posts promoting the newsletter
Again, the theory itself is simple enough, but it can be surprisingly difficult to stick to concrete, measurable goals. However, we’ve found that the benefits of instilling that kind of discipline in your goal keeping and tracking to be worth the effort.
OKRs do have several limitations, which we’ll get into next, but they can have a significant impact on how you manage and set goals, and on your performance as a result.
- Consistent goal setting. Whether you use OKRs or another system, it’s important to formalize the goal setting process in order to avoid losing sight of the big picture. In order for your activities to have direction and purpose, you need to regularly decide where you want to go as a company and track your progress.
- Concrete and measurable. One of the things that we find most useful about OKRs is that they are measurable. Instead of setting nebulous and untrackable goals, you can tell how much progress you’ve made and at what point your goal has been reached. Importantly, everyone knows what their priorities and responsibilities are, and whether or not they are on the right track.
- Flexibility and scalability. One of our favorite aspects of OKRs is that they can be set at the individual, team, and organizational level, meaning that you can implement them across your company. This makes them particularly suited to play a part in a broader effort to bring transparency and accountability to your workflow – allowing your employees to see how their responsibilities and goals work together to support your company’s big-picture outcomes.
How do you make it work?
While OKRs can be extremely useful tools, they’re not going to be an overnight solution. As with any organizational change, expect some challenges along the way. We’ve included some tips we’ve heard from clients and business coaches on what’s helped them as they implement new systems within their companies :
- Commit to the change from the top down. OKRs will only work if you truly commit and get full buy-in from all levels of the organization. Otherwise all you will get out of bringing OKRs into your organization is more meaningless planning with no follow through. When employees see upper management practicing what they preach they are more likely to have faith in the process and champion it themselves.
- Expect a learning curve. No one is going to be an expert at adopting new habits or writing SMART goals right off the bat. It will take some time investment for your company to learn and successfully implement a new system into your existing workflow. If using a software to implement OKR tracking, try rolling out to a specific team before adopting throughout the organization. The small team will learn how the system works for them and can distill takeaways and best practices to the rest of the company. We also suggest designating a “champion” who will be the go-to resource for questions and making the new system work. Additionally, work with your advisor – that is what they are there for. They will take a personalized approach with you and your team to demonstrate strategies they’ve seen be successful for company-wide buy-in and adoption. In order for OKRs to have a significant impact on your company, you need to make them a fundamental part of operations. That means getting your employees familiar with the process and training them on how the system works – which can be time consuming.
- Accept the radical transparency that comes with it. OKRs make your company, team and individual goals visible at all levels of the company. Everyone can see how they’re performing, how their peers are performing and how the company is performing overall. There is a ton of research out there about the benefits of transparency and its effects on company culture and productivity. But this can still be a scary concept for many. The executive team may be apprehensive to share too much, but keeping key performance metrics under wraps can create a culture of rumors and can undermine trust. Everyone in the organization should know what the company’s financial and performance goals are, not just upper management.
So, should you use OKRs?
OKRs may not transform you into the next Google, as some would have you believe, but they are an extremely useful tool. When implemented correctly, they really can have a huge impact on how your company sets and reaches its goals. And, as part of a greater system, they can help foster transparency and collaboration throughout your company. But, OKRs alone won’t get you across the finish line. You’ll need other systems of accountability, communication, and task management, are needed to help you hit those key objectives.
Ultimately, it’s up to you and your organization to discover whether OKRs work for you. If you’re looking for ways to get clarity into where your company is headed and bring your teams into alignment, we suggest that you consider making OKRs a part of your strategy.
Align’s strategic planning and priorities management features are great for implementing OKR. Want to learn more?