Goal setting is today’s topic and what do companies such as Google, LinkedIn, and Twitter have in common other than being examples of young, highly successful, top tech companies, when it comes to this crucial activity?
Answer: They each use a performance management system that is built around Objectives and Key Results.
When Google was a start-up, one of its investors was John Doerr and he introduced the Objective Key Result (OKR) formula for goal setting to Googles founders and senior team. The system was rapidly adopted across the business and is still used today. Not only this, OKR’s have been adopted by companies across Silicon Valley.
Why is the OKR system so successful and what can we learn from it is the subject of this article. So let’s get started.
What Are OKR’s?
Objective Key Results originated at Intel where John Doerr started his career and is a framework for defining and tracking objectives and their outcomes. They were originally created by Andy Grove the CEO of Intel in the 1970’s.
The view was that a goal needs to describe two elements, what you will achieve and how you are going to measure its achievement. Without measurement, you simply do not have a goal, all you have is a desire to achieve a goal.
As we can see, there are two parts to OKR’s. Objectives and Key Results, but what do we mean by each component?
Objectives: These are memorable qualitative descriptions of what you want to achieve. Objectives should be short, inspirational and engaging. An Objective should motivate and challenge the team.
Key Results: Are a set of metrics that measure your progress towards the Objective. For each Objective, it is suggested that you have between 3-5 Key Results.
Key Results are meant to be quantifiable, achievable, lead to objective grading, and they need to be stretching without being impossible.
OKR’s can be based on growth, performance, revenue or engagement.
Marissa Mayer, a former Google Vice President, once said: “If it does not have a number, it is not a Key Result.”
What Are The Benefits Of Using An OKR System
Connecting: Using an OKR system allows a company to connect the vision, company, team and personnel objectives, by doing so, they are always in front of employees.
Clarity: Kevin Lee, Head of Marketing at Buffer, talks about the clarity he sees people gain when working with OKR’s. At any moment in time, everyone understands what is expected of them and how their own work aligns with not only their team but the wider department and ultimately, company goals.
When talking to our own clients who use this system, they talk about a methodology that is simple to use and talk less time to implement and work with.
A well-functioning OKR process brings focus, teamwork and increased productivity as collaboration becomes necessary for individuals to achieve their own OKR’s .
Personally, I notice an enthusiasm when talking with individuals and managers about using the process which stems from their ability to see progress towards important company goals rather than what they describe as less important tasks.
Google has used this system since 1999 and it has spread to many tech companies such as Twitter and LinkedIn. OKR’s are popular in Start Ups, Why? Because the system helps managers to manage individuals and teams to reach their goals.
How Do Companies Use OKR’s
The starting point is for the Executive Leadership or board to set the company OKR’s. Once these are defined for the whole business, these are communicated to the heads of each department who can then start the process of setting departmental OKR’s. The process then cascades down the organisation.
It is important to ensure out the outset that the company OKR’s are clear and the stakeholders understand them.
Once people start working with their OKR’s, it is usual that they update their results indicators regularly, in the same way as any goal setting system.
When Is An OKR Achieved?
This is where OKR’s differ to SMART Objectives. An OKR objective is considered complete when 70-75% of its results have been achieved. If 100% of the objectives results are completed, the objective is regarded as not ambitious enough.
OKRs are regularly reviewed, and it isn’t unusual; for them to change during a quarter if company, team or personal goals change.
The OKR system has become so widely used that unsurprisingly in the tech world we now live in, software has been developed to support its implementation.
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Nic Hallett
With over 30 years of experience as a global leadership and communication skills training and coaching team, Excel Communication continue to discover that ‘goal setting and performance management’ isn’t always easy for managers.
If you would like to discuss your organisation’s leadership and management capabilities further, our leadership training and coaching experts deliver programmes in various languages, across four continents. Get in touch today on +44 (0) 1628 488 854.